EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 28.10.2004 
COM(2004) 721 final 
. 
REPORT FROM THE COMMISSION 
15th ANNUAL REPORT ON THE IMPLEMENTATION OF 
THE STRUCTURAL FUNDS 
 
2003 . 
 
EN 2   EN TABLE OF CONTENTS 
1. Simplification.............................................................................................................. .3  
2. Assessment.................................................................................................................. .3  
2.1. Implementation of the budget ...................................................................................... 3  
2.1.1. Commitments ............................................................................................................. .. 3 
2.1.2. Payments ................................................................................................................ ...... 3  
2.2. Implementation of programmes ................................................................................... 4  
2.2.1. Objective 1 ............................................................................................................. ...... 5  
2.2.2. Objective 2 ............................................................................................................. ...... 5  
2.2.3. Objective 3 ............................................................................................................. ...... 6  
2.3. Contribution of the Structural Funds to the Lisbon and Göteborg Strategy ................ 6  
3. Programming in the new Member States..................................................................... 6 
4. Consistency and coordination ...................................................................................... 7 4.1. Consistency with the other Community policies ......................................................... 7  
4.1.1. Competition............................................................................................................. ..... 7 
4.1.2. Environment............................................................................................................. .... 7 
4.1.3. Internal market ......................................................................................................... .... 7 
4.1.4. Transport ............................................................................................................... ....... 7 
4.2. Coordination of instruments......................................................................................... 8 4.2.1. The Structural Funds and the Cohesion Fund.............................................................. 8 4.2.2. The Structural Funds and the EIB/EIF......................................................................... 8 5. Evaluation .................................................................................................................. .. 9 
6. Inspections................................................................................................................. ... 9 
7. Opinions of the Committees....................................................................................... 11 
The information set out in this report is pr esented in greater detail in the Commission 
technical document (Annex I attached). 
 
EN 3   EN This report is presented in accordance with  Article 45(2) of Regulation (EC) No 1260/1999 
laying down general provisions on the Structural Funds. It is th e fifteenth annual report on the 
implementation of the Structural Fu nds, covering activities during 2003.  
1. S IMPLIFICATION  
Following the work begun in 2001 and 2002, 2003 saw the introduction of a number 
of measures to simplify implementati on of the programmes financed by the 
Structural Funds. On 25 April the Comm ission adopted a Communication “on the 
simplification, clarification, c oordination and flexible mana gement of the structural 
policies 2000-06” (C(2003) 1255). The Commission worked in partnership with the 
national administrations to prepare this Communication so that they could decide 
together on improvements which might be made to the management of the structural policies.  
After the adoption of this communication, some of the measures in the 
“simplification package” already had a clear impact in 2003. These included the measures on amending programmes, inspections , result and impact indicators and the 
performance reserve. As a result, severa l Member States simplified their output, 
result and impact indicators and simplified thei r lists of indicators used to allocate the 
performance reserve.  
2. A
SSESSMENT  
2.1. Implementation of the budget 
2.1.1. Commitments 
The 2003 commitment profile reflected the normal annual instalment level 
corresponding to the Berlin profile. Co mmitments made totalled €31 109 million, 
practically 100% of the to tal available appropriations. 
2.1.2. Payments 
In 2003 implementation of payments reached th e highest level ever for the Structural 
Funds, amounting to €26.2 billion. Signifi cant progress in budgetary implementation 
was achieved across all Obj ectives and programming periods. The under-utilisation 
of payments appropriations that  used to be a distinctive feature of the implementation 
of the Structural Funds took a very significant turn for the better in 2003 with the 
overall level of under-utilisation falling fr om 29% in 2002 to 11%, mainly due to the 
good progress of the programmes on the ground.  
In 2003 the payment outturn totalled €26 243 m illion, or 89% of the budget, leaving 
€3 311 million unused of which the bulk (73% of the total) was due to the earlier 
programmes. The comparable outturn in 2002 was 71%. Of the payment appropriations available for the 2000-06 programmes 96% was used, a significant 
departure from past under-implementation and indeed the major highlight of 
implementation in 2003.  
 
EN 4   EN For the 2000-06 programmes, Member States  are invited to group their payment 
applications in three batches over the year. The pattern of actual payments shows that 
this procedure has been followed in a less than smooth way.  
Overall budget implementation was best for Objective 1 (95%). The Peace 
programme consumed only 48% of its approp riations in 2003 due to delays caused 
by the negotiation of a new decision a nd corresponding programme complement. 
The implementation of Objective 2 showed a substantial improvement (91% of the 
available appropriations instead of 48% in  2002). The Community Initiatives are still 
lagging behind with an implementation rate of only 48%.  
Compared to 2002, there was also a signifi cant improvement in the closure of the 
1994-99 programmes, even if it was not possibl e to clear most of the old outstanding 
commitments for the earlier programmes in 2003 as planned. At the end of 2003 these commitments stood at €9.2 billion, 59%  below the figure at the end of 2002. 
However budgetary payment commitments were revised downwards by €5 000 million following adoption of an amending budget in 2003. Closure payments were 
lower than planned because th e bulk of the final payment claims was received only 
just before the final deadlin e of 31 March 2003. This led to  an extreme concentration 
of payment claims and many closure pack ages did not include all the required 
supporting documentation. In 2003 deco mmitments from old outstanding 
commitments for the 1994-99 programmes amounted to €2 848 million. 
In terms of Objectives, Objective 1 and 2 programme implementation stands out as 
excellent. This is to be contrasted with  the considerably lower implementation in 
both the former Objective 5(a)/FIFG non-Obj ective 1 programmes an d, especially, in 
the Community Initiatives, which continue  to lag behind the implementation of the 
main programmes considerably. For the ear lier period programmes, implementation 
of Objective 3 and the Community Initiatives remained very poor. 
During 2003, a number of transfers were proposed by the Commission and accepted 
by the budgetary authority. There were no tr ansfers of commitment appropriations. 
However, transfers of payment appropriations  were comparatively large. The transfer 
out of the Interreg Community Initiative accounted for 66% of its initial payments budget, again illustrating its poor budget implementation in 2003. The transfer of 
payment appropriations out of the Equal Co mmunity Initiative was also significant 
(38% of its initial budget). The transfer to the Financial Instrument for Fisheries Guidance (FIFG) – Objective 1 was almo st 46% of its initial budget. ERDF 
Objective 1 received the highest transfer amount, €1.5 billion, or 17% of its initial 
budget. Part of this amount, €515.4 million, was funded by transfers from outside the 
Structural Funds. However, most transf ers were made between the different 
Structural Funds budget lines. 
2.2. Implementation of programmes 
Overall, taking all Objectives and Funds together, assistance
1 from the Structural 
Funds was divided equally over the three ma in categories: basic infrastructure, the 
                                                 
1 The analysis of programming is based on the breakdown of programme complements by sector while 
the analysis of implementation relates to certif ied expenditure notified by the Member States. 
 
EN 5   EN productive environment and human resour ces. An analysis by sectors shows, 
however, that two sectors which together account for over a quarter of programming 
for 2000-06: “Transport infrastructure” (15% ) and “Aid to SMEs  and craft firms” 
(11%) dominate. By contrast, sectors such as “Positive action for women on the labour market” and “Telecommunications infras tructure and the information society” 
accounted for only 2% and 3% of the amounts programmed respectively. These differences may be explained, at least in part, by the large variations in cost per 
project from one sector to another or  by the very nature of the projects. 
These relative priorities al so appear in the rates of implementation (certified 
expenditure compared with amounts in the programme complements): the sectors 
with the largest funding, su ch as “Transport”, have hi gher implementation rates 
while in those less well funded, such as “T elecommunications infr astructure and the 
information society”, implementation is slow est. Here too the na ture of the projects 
may go some way to explaining these differences. It is nevertheless true that the 
sector concerned with the information soci ety suffers from a combination of a low 
profile and considerable diffi culties in implementation. This  is particularly worrying 
at a time when competitiveness and gr owth, with which the information and 
communication technologies ar e closely associated, are becoming a priority for 
cohesion policy. 
2.2.1. Objective 1 
Programming under Objective 1 gave clear prio rity to basic infrastructure (41% of 
the funds allocated). It should be noted that  this category is also the one with the 
highest rate of programme implementation (2 8%). This is mainly because transport 
infrastructure alone accounts for 20% of Objective 1 and has an implementation rate of almost 35%. 
Apart from transport infrastructure, two other sectors had implementation rates above 
30%: “Aid to small firms” and “Aid to large firms” (31%). 
Two sectors in the “Basic infrastructure” category (Social infr astructure and public 
health: 29%; and Environmen tal infrastructure: 25%) a nd two in the “Productive 
environment” category (R&D and i nnovation: 28%; and Forestry: 26%) had 
implementation rates lying between 25 and 30%. 
2.2.2. Objective 2 
Objective 2 has a somewhat di fferent programming profile from that of Objective 1. 
The leading category is no longer ba sic infrastructure but the productive 
environment, which alone accounts fo r over half the financial resources 
programmed. 
In sectoral terms, there was a clear concen tration of resources with two-thirds of 
finance concentrated in four sectors: aid to small firms, the improvement and 
restoration of sites, R&D and innovation a nd tourism. The sector  “Aid to SMEs and 
craft firms” alone accounted for one-third of programming. 
Since the programming of Objective 2 bega n later than that of Objective 1, its 
implementation rate might be expected to be lower. This is far from being the case. 
 
EN 6   EN In terms of the rate of implementation of programmes, Objective 2, at 24%, is at the 
same level as Objective 1. 
In terms of sectors, “Social infrastructure  and public health” has the highest rate of 
implementation (36%) but accounts for only a small percentage (1%) of the Objective as a whole. By contrast, the s econd sector, “Aid to SMEs”, with an 
implementation rate of 32%, is considerably  more significant because it accounts for 
one-third of the Objective. 
Two other sectors have significantly above -average (28%) implementation rates. 
These are R&D-innovation (10% of Objectiv e 2) and environmental infrastructure. 
The implementation rate for transport infrastructure is the slowest (15%). 
2.2.3. Objective 3 
Recently there has been a move towards more balanced ESF assistance across the 
different employment guidelines, in line with the renewed European Employment 
Strategy and the Employment Recommendati ons. The ESF has played a significant 
role in the implementation of the EES a nd the National Action Plans at both national 
and regional level in the Member States w ith a substantial percentage of overall 
public expenditure going to employment policies. 
2.3. Contribution of the Structural Funds to the Lisbon and Göteborg Strategy 
The main links between the St ructural Funds as a financia l instrument and the Lisbon 
Strategy is that the Structural Funds pa rt-finance investment in areas which are 
priorities under the Strategy and stimul ate the development of decentralised 
frameworks for delivering these policies. Th is latter contributi on of the Structural 
Funds to the Lisbon priorities will become  more significant following enlargement of 
the EU. 
In the guidelines for the mid-term revi ew from August 2003, the Commission asked 
Member States to dedicate special attenti on to Lisbon and Göteborg priorities in the 
forthcoming mid-term review of  Structural Fund assistance. 
3. P
ROGRAMMING IN THE NEW MEMBER STATES  
2003 also saw the programming of the €16 b illion allocated from the Structural 
Funds to the applicant c ountries which became members of the Union on 1 May 
2004. All the negotiations cont inued and were concluded during 2003, so that the 
strategic programming documents could be  finalised in December 2003. Meeting the 
deadline of 31 December 2003 was an essen tial condition for the eligibility of 
expenditure from 1 January 2004, in acco rdance with the Act of Accession.  
Of the 41 (NUTS 2) regions concerned, 38 are eligible under Objective 1 and three 
(Prague, Bratislava and South Cyprus) under Objective 2. in view of the short time 
available (May 2004 – December 2006) for completion of the programmes, during 
the negotiations the Commission paid particular attention to the mechanisms for implementing the programmes. This followed the considerable effort made by the Union in the past to improve the administ rative capacity of the new Member States. 
 
EN 7   EN 4. C ONSISTENCY AND COORDINATION  
4.1. Consistency with the other Community policies  
4.1.1. Competition 
Regulation (EC) No 1260/1999 states that assistance a pproved by the Commission 
must include all the elements required for the ex-ante assessment of the compatibility 
of state aids with the common market. Accordingly, during 2003 the Commission 
paid particular attention to assessing the compatibility with the Treaty of the measures in the operational progra mmes and single programming documents on 
assistance from the Funds in the new Member States in 2004-06 and on the assessment of certain major projects e ligible under Articles 25 and 26 of the 
Regulation. 
4.1.2. Environment 
Programming for 2000-06 includes some  €25 billion for measures for the 
environment in the broadest sense. This is 13% of the €196 billion in the programme 
complements. It is interesting to note that the rate of implementation of the 
environmental measures is higher than the general average for th e Funds (20%). This 
is particularly true of expenditure on stri ctly environmental infrastructure (25%). 
In the past, the start of certain measures was delayed or blocked in some Member 
States by the lack of an environmental legal framework which complied with the 
legislation in force. This situation continued in 2003 even though improvements 
could be noted in, for example, the area of solid waste. However, it is still unsatisfactory in other sectors, such as  the treatment of urban waste water and 
implementation of the nitrates Directiv e and Directive 85/337/EEC, as amended, on 
evaluation of the environmental impact. 
4.1.3. Internal market  
To ensure that public procurement proce dures comply with Community rules, the 
Commission is encouraging the adoption of  measures such as training for staff 
involved in the award of these contracts a nd the production of guides to this process. 
The Commission is also ensuring that the procedures for awarding contracts comply 
with Community law. During 2003 it consider ed more than 430 cases of potentially 
poor transposition or application of the re levant Community Directives. Specific 
cases may be considered either as a resu lt of complaints or at the Commission’s 
initiative, particularly following the audits  carried out regularly as part of the 
inspection of part-financed projects. 
4.1.4. Transport 
In 2003, the Commission took 117 decisions on the financing of TENs-Transport 
projects totalling €626.6 million and 13 TENs-Energy projects totalling €18.64 
million. 
In its Communication of 23 April 2003 (COM(2003) 132), the Commission 
examined the infrastructure situation in the trans-European network and its financing and showed the need to implement a set of measures, including support for 
 
EN 8   EN public/private partnerships. It also  continued the process of amending  the TENs 
Financial Regulation to allow an increase in the ceiling for the part-financing rate 
from 10% to 20% for certain s ections of the transport proj ects of European interest.  
The revision of the Guidelines for the de velopment of the TENs-Transport projects 
continued during 2003. Based on the reco mmendations of the High-Level Group, 
consisting of current and future Member State representatives and the EIB, and on 
the results of the public consultation, the Commission brought forward a new proposal
2 that added new projects to the list of priority projects and brings to 30 the 
total of projects on major transport ax es and put forward improved tools for 
coordination between Member States, in particular for cross-border projects. 
4.2. Coordination of instruments 
4.2.1. The Structural Funds and the Cohesion Fund 
The main instrument for coordinating as sistance from the C ohesion Fund and the 
Structural Funds is the strategic referenc e framework (SRF). Decisions to finance 
projects under the Cohesion Fund are checked to avoid double financing with 
programmes adopted under the Structural  Funds. In 2003 the candidate countries, 
which are all eligible unde r the Cohesion Fund, began preparation of their SRFs, 
alongside their programmes under the Structural Funds. 
It should be noted that because of its level of per capita GNP Ireland ceased to be 
eligible under the Cohesion Fund from 1 January 2004. 
During 2003, two information meetings were held with the Member States and the 
candidate countries, coor dinated with meetings of the Committee for the 
Development and Conversion of Regions, to increase consistency between these 
financial instruments still further. 
4.2.2. The Structural Funds and the EIB/EIF 
The main Commission initiatives in 2003 we re the growth initiative and the quick- 
start projects, which, in conjunction with the innovation initia tive 2010 and research 
and development, were of common interest  and the subject of cooperation meetings. 
In 2003, the European Investment Bank lent a total of €42.3 billion. Lending in the 
ten accession countries ran to a record €4.6 billion and in the Mediterranean partner 
countries (including Turkey) to €2.1 b illion. Within the EU-15 countries, €16.3 
billion was made available for projects in e ligible regions in th e form of individual 
loans and an estimated €6.5 billion as credit  lines to partner banks (for the financing 
of SME ventures and smaller-scale pub lic investment). Including the accession 
countries, regional development proj ects attracted €27.3 billion in loans, 
                                                 
2 COM(2003) 564 final: Proposal for a Decision of the European Parliament and of the Council 
amending the amended proposal for a Decision of the European Parliament and of the Council 
amending Decision 1692/96/EC on Community guidelines for the development of the trans-European transport network. This proposal resulted in the adoption of Decision No 884/2004 of the European 
Parliament and of the Council of 29 April 2004 amending Decision No 1692/96/EC on Community 
guidelines for the development of the trans-European transport network, OJ L 167, 30.4.2004, p. 1. 
 
EN 9   EN corresponding to 70% of the EIB’s total lending in EU-15 and the future Member 
States in 2003. 
Within the EIB group, the European Investment Fund (EIF)  now has exclusive 
responsibility for all ventur e capital and guarantee operations for small businesses 
and for venture capital (Community resource s and EIB/EIF resources). It focussed its 
activity on early-stage fina ncing, the high-tech sector and the knowledge-based 
society. The EIF took stakes worth €135 million in venture capital funds and 
provided a total of €2.2 billion in  guarantees for SME financing. 
5. E VALUATION  
Mid-term evaluation of  programmes for 2000-06 
Article 42 of Regulation (EC) No 1260/1999 re quires the Member States to submit a 
mid-term evaluation report to the Co mmission by 31 December 2003 which the 
Commission was required to examine for qua lity and relevance. The Commission 
cooperated on this process with  the managing authorities. 
The main issues raised in relation to the draft reports examined included the need for 
some degree of fieldwork, the need for cl ear presentation of phys ical and financial 
data and clear, evidence-based conclusi ons and practical recommendations. The draft 
and final reports which were submitted before year-end were clearly much improved in quality compared to previous evalua tions. The annual report for 2004 will give a 
full analysis of the results of the evaluations.  
Evaluation of the programmes an d Community Initiatives for 1994-99 
Two studies demonstrated the significant pos itive impact of assistance from the 
Structural Funds in the regions eligible under Objectives 1 and 2. These studies also 
showed that greater support could be gi ven to R&D activities in the Objective 1 
regions and to measures linked to the Lisbon strategy in the Objective 2 areas. 
Mid-term verification of the principle of additionality 
The principle of additionality prevents Community funds from replacing eligible 
national public expenditure in the same areas of assistance.  Article 11 of Regulation 
(EC) No 1260/1999 requires the Commission to verify compliance with this principle 
half-way through the 2000-06 programming pe riod. This verification showed that the 
principle of additionality had been complie d with in eight Member States (BE, ES, 
FI, EL, NL, PT, AT, SE), while three othe rs (DE, IT, IE) ha d not respected it. 
However, following a case-by-case analysis , the Commission did not consider it 
necessary to revise downwards the expend iture objective for the remainder of the 
programming period since these Member St ates still had time to make up their 
backlogs. Two Member States (FR, UK) di d not provide the information required for 
verification by the deadline. 
6. I
NSPECTIONS  
OLAF  
 
EN 10   EN OLAF’s enquiries in 2003 included 13 operational missions in the Member States. 
Six of these entailed on-the-spot inspections and verifications by the Commission to protect the financial interests of th e Community against frauds and other 
irregularities. The other seven were to  provide assistance either to national 
administrative authorities or to the judicial authorities. 
Eight missions concerned the ESF, four rela ting to cases opened in 2003 and four to 
enquiries begun in earlier years. Three co ncerned the ERDF and dealt with cases 
opened in 2000, 2002 and 2003. One concerning the EAGGF Guidance Section and one the FIFG related to cases opened in 2003. The enquiries reveal ed false invoices 
and false declarations in the absence of supporting documents. 
In addition, for 2003, the Member States notified the Commission, under Regulation 
(EC) No 1681/1994, of 2 439 cases of ir regularities involv ing a total of 
€340 173 487. Compared with 2002, both the number of cases of  irregularities 
notified and the amounts involved were smal ler, at about half the levels of the 
previous year. 
ERDF 
There were two priorities for inspection work in 2003. The first was to examine the 
“statements of assurance” drawn up under Article 8 of Regulation (EC) No 2064/97 
when the ERDF programmes for 1994-99 were  closed. This involved 744 statements, 
almost half the programmes, and resulted  in the rejection of  229, either because 
additional checks were required or because  further information was needed. The 
second priority was the audit of expenditure declared by the Member States for the 1994-99 programmes. This entailed the audit of a sample of progr ammes selected in 
the Member States and a check on the conf ormity and eligibility of the expenditure 
declared by the Member State through checks on a representative number of projects. 
To that end, 36 audit missions were car ried out on 17 programmes in 12 Member 
States.  
EAGGF 
As in the case of the ERDF, inspection work concentrated on the “statements of 
assurance”. 360 of the 381 statements we re examined and 226 accepted. The second 
priority was examination of the manageme nt and control systems established by the 
Member States for the 2000-06 programmi ng period. By the end of 2003 the systems 
for 100 of the 144 programmes had been analys ed. On-the-spot audits of 33 of these 
100 programmes were carried out. 
ESF 
2003 was marked by the modernisation of th e ESF’s audit proce dures, particularly 
through the establishment of a multiannual audit strategy based on quantified risk 
analysis and the start of work related to  enlargement (technical missions to approve 
systems in the new Member States). 34 au dit missions were car ried out in the 2000-
06 programming period, which allowed the pr actical evaluation on the spot of the 
descriptions of systems submitted by the Member States under Article 5 of Regulation (EC) No 438/2001 to  continue. Three audits concerning the closure of the 
1994-99 period were also carried out. 
 
EN 11   EN FISH 
A total of 14 audit missions  were carried out in 2003.  Eight concerned only the 
closure of 1994-99 programmes in seven Member States, three concerned only the 
verification of management and contro l systems of 2000-06 programmes in two 
Member States, and three combined clos ure and verification of systems in two 
Member States. The financial volume of  programmes audited concerning closure 
amounted to €1.114 million and that concerni ng management and control systems 
verification amounts to €814 million. In total, 58 structural projects undertaken in 
both programming periods were audited in  2003 representing an amount of €18.2 
million. A total of €1 million of Community aid was found non- eligible and a still-to-
be determined amount should be deducted when closing the programmes of the two Member States. 
7. O
PINIONS OF THE COMMITTEES  
Committee for the Development and Co nversion of Regions (CDCR) 
In its role as a Management Committee, the two main matters dealt by the CDCR in 
2003 concerned eligibility (amendme nt of Regulation (EC) No 1685/20003) and the 
interpretation of the rule on automatic decommitments, particularly the exceptions listed in Article 31 of Regulation (EC) No 1260/1999.  
ESF Committee 
During 2003, the ESF Committee worked on th e revision of Re gulation (EC) No 
1685/2003 on eligibility. It also monitored th e impact of the European Employment 
Strategy on the implementation of the ESF. 
                                                
 
3 Commission Regulation (EC) No 1685/2000 laying down detailed rules for the implementation of 
Council Regulation (EC) No 1260/1999 as regards eligibility of expenditure of operations co-financed 
by the Structural Funds, OJ L 193, 29.7.2000 p. 39. 
 
EN 12   EN Committee for Agricultural Structures  and Rural Development (STAR) 
The STAR Committee met nine times in 2003. It gave favourable opinions on 38 
rural development plans under Article 44 (2) of Regulation (EC) No 1257/1999 and 
on 14 amendments to rural development plan s under Article 4 of Regulation (EC) No 
1268/1999. 
Committee for Fisheries and Aquaculture 
The Committee was consulted on five occa sions in 2003 on a variety of subjects, 
including the revision of Regulation (EC) No 1685/2000. 
 
EN 13   EN TECHNICAL ANNEX TO THE 15TH ANNUAL REPORT ON IMPLEMENTATION OF 
STRUCTURAL FUNDS (2003)  
 
Annex 1 – a general analysis of activity  
TABLE OF CONTENTS 
1. Introduction................................................................................................................ 15 
2. Assessment................................................................................................................. 1 6 
2.1. Budgetary implementation......................................................................................... 16 2.1.1. General overview ....................................................................................................... 1 6 
2.1.2. Implementation in commitments ............................................................................... 17 2.1.3. Implementation in payments...................................................................................... 19 2.1.4. End-of-year concentration.......................................................................................... 28 2.1.5. Implementation by Member States ............................................................................ 29 2.2. Programme implementation....................................................................................... 32 2.2.1. Objective 1 ............................................................................................................. .... 35 
2.2.2. Objective 2 ............................................................................................................. .... 39 
2.2.3. Objective 3 ............................................................................................................. .... 43 
2.2.4. FIFG outside Objective 1 regions .............................................................................. 45 2.2.5. Community Initiatives and innovative actions........................................................... 46 3. Programming in the new Member States................................................................... 49 
3.1. Background and main milestones .............................................................................. 49 3.2. State of play of programme negotiations ................................................................... 50 4. Consistency and coordination .................................................................................... 51 4.1. Consistency with other Community policies ............................................................. 51 4.2. Coordination of instruments....................................................................................... 59 
4.2.1. The Structural Funds and the Cohesion Fund............................................................ 59 
4.2.2. The Structural Funds and the EIB/EIF....................................................................... 60 5. Evaluation .................................................................................................................. 61 
5.1. Mid-term evaluation................................................................................................... 61 5.1.1. The evaluation process............................................................................................... 61 5.1.2. Performance reserve................................................................................................... 62  
 
EN 14   EN 5.2. Other evaluations ....................................................................................................... 63  
5.3. Other evaluation work................................................................................................ 65 5.3.1. Cost-benefit analysis .................................................................................................. 6 5 
5.3.2. Methodological guides and tools ............................................................................... 65 5.3.3. Conference on evaluation........................................................................................... 65 5.3.4. Mid-term verification of th e additionality principle .................................................. 66 
6. Controls.................................................................................................................... .. 67 
7. Opinions of the committees ....................................................................................... 70 7.1. Committee on the Development and Conversion of the Regions.............................. 70 7.2. ESF Committee .......................................................................................................... 71 7.3. Committee on Agricultural Struct ures and Rural Development................................ 71 
7.4. Advisory Committee on Fisheries and Aquaculture .................................................. 72 
 
EN 15   EN ANNEX 1 – A GENERAL ANALYSIS OF ACTIVITY  
1. INTRODUCTION  
2003 was marked by an acceleration in the imp lementation of the programmes, with 
significant progress made across them all. In all, 96% of payment appropriations 
available in 2003 for the programmes of the 2000-06 generation were used, up from 
91% the previous year. 
Simplification 
Following the work begun in 2001 and 2002, 2003 saw the introduction of a number of 
measures to simplify implementation of th e programmes financed by the Structural 
Funds. The Commission wished to respond positively to the Member States’ request to 
ease the procedures and to facilitate the management and implementation of the appropriations. To this end, it decided to  enter into dialogue with the national 
administrations through the Structural Funds Committees, with a view to identifying the 
extent and nature of the pr oblems that needed solving. This work resulted in the 
Commission proposals put to the Member States in September 2002 in a document 
entitled “Note on the simplification, clarific ation, coordination and flexible management 
of the structural po licies 2000-06”. This document was di scussed thoroughly in Brussels 
on 7 October 2002, when Mr Barnier, Ms Di amantopoulou and Mr Fischler met the 
Ministers responsible for regional policy in the 15 Member States. Following this 
meeting, the Commission worked in partners hip with the national administrations in 
order to decide together on the improvements that could be made to the management of the structural policies. As  a result of this work, on 24 April 2003 the Commission 
adopted the “Communication on the simplif ication, clarificati on, coordination and 
flexible management of the structur al policies 2000-06” (C(2003) 1255).  
Following adoption of this Communication, the impact of some of the measures in the 
“simplification package” was already cl ear in 2003. These included the measures on 
amending programmes, inspections, result a nd impact indicators and the performance 
reserve. Some Member States thus simplifie d their output, result and impact indicators 
(Italy and Greece in particular), by reduci ng their number and focussing on the most 
important ones. In the case of the allocati on of the performance reserve, some Member 
States (Greece, Belgium, Finland, Spain and Portugal) used to good advantage the 
measures in the communication to simplify the list of indicators chosen for allocating the reserve.  
The quantitative impact of th e simplification measures on th e mid-term review and the 
allocation of the performance reserve can be measured only in 2004, however, when 
those two particular tasks will  have been completed. While it is too early to gauge the 
quantitative impact of this simplification, the qualitative impact of a more flexible 
decision-making process and the appreciable reduction in the time needed to amend the programmes and programme complements has had a beneficial effect on programme 
implementation by lessening the administrativ e burden on the authorities managing the 
programmes part-financed by the Structural Funds.  
 
EN 16   EN 2. ASSESSMENT  
2.1. Budgetary implementation 
2.1.1.  General overview 
As Chart 1 shows, the commitment appropria tions entered in th e budget for 2003 are in 
line with the consolidation of the Structur al Fund allocations as determined by the 
Berlin European Council.  
Chart 1: Commitment and payment appropriations entered in the budget4 from 1994 to 2003 
(€ million) 
05.00010.00015.00020.00025.00030.00035.00040.000
1994 1995 1996
1997
1998
1999 2000
2001
2002
2003
Commitments Rebudgetisation Payments 
Chart 2 shows the actual implementation of commitments and payments (including the 
amounts carried forward) each year from 1994 to 2003. 
Chart 2: Commitments and payments (all types of appropriations from 1994 to 2003 
(€ million) 
0500010000150002000025000300003500040000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003commitments
payments
 
                                                 
4 Including all transfers during the y ear but excluding amounts carried over. 
 
EN 17   EN While the commitment profile of 2000 a nd 2001 was skewed by the delays in the 
adoption of the new programmes at the beginning of the 2000-06 programming period, 
in 2002 and 2003 the commitments were back to the normal annual  instalment level 
corresponding to the Berlin profile.  
Those delays (in the adoption of the programme s), as well as the slower than anticipated 
closure of the programmes of the pre-2000 period, were behind  the low level of 
payments in 2001 and 2002 (around €20 billion). However, in 2003 the implementation of payments reached the highest level ever for the Structural Funds , amounting to €26.2 
billion. This reflects some progress in th e closure of the pr e-2000 programmes, but 
essentially is due to good implem entation of the 2000-06 programmes.  
Annex 4  contains a detailed table of outtu rn in commitments and payments. 
2.1.2.  Implementation in commitments 
In 2003 the commitment appropriations for the Structural Funds totalled 
€31 129 million, i.e. 91% of the appropriations for structural  operations and 32% of the 
budget. On top of these budget appropriations , carryovers of €1 million brought the total 
appropriations available to €31 130 million.  
Table 1 gives details of the appropriations available by Objective and by Fund, making 
a distinction between the appropriations ente red in the budget and those carried over.  
 
EN 18   EN Table 1: Appropriations available in 2003 (including any transfers) 
  ANNUAL APPROPRIATION CARRYOVERS TOTAL
  EAGGF FIFG ERDF ESF TOTAL EAGGF FIFG ERDF ESF TOTAL   
Objective 1 2.755 392 13.426 4.895 21.468         0 21.468
Peace5 9 1 70 29 109         0 109
Objective 2     3.284 368 3.652         0 3.652
Objective 3       3.719 3.719         0 3.719
FIFG 
(outside 
Objective 
1)   172     172         0 172
CI 354   1.003 510 1.866 0       0 1.867
M & TA 2 4 92 45 143     1   1 143
TOTAL 3.120 569 17.875 9.566 31.129 0 0 1 0 1 31.130
 
The appropriations availabl e increased slightly relativ e to 2002, when the available 
appropriations totalled €30 868 million. As fo r the carryover of appropriations, the 
pattern of 2003 is back to normal (the carr yovers of the precedi ng years, €8 226 million 
from 2000 to 2001, and €172 million from 2001 to 2002, were due to delays in the adoption of programmes in the first y ears of the 2000-06 programming period). 
Table 2 gives details of implementation by Fund and by Objective. Commitments made 
total €31 109 million, practically 100% of the total available appropriations, as would 
be expected under the essentially automatic commitment procedures
6; only €21 million 
in appropriations was not committed eventually. All appropriations carried over were committed. 
This very high rate of utilisation reflects the fact that the vast majority of the 
programmes for the new period were adopted before the end of 2001. Small amounts under the Community Initiatives, innovative meas ures and technical assistance were not 
committed either in 2002 or 2003. Some €314 million in under-used appropriations in 
innovative measures was car ried forward to 2004.  
                                                
 
5 Peace is an Objective 1 prog ramme in the United Kingdom 
6 Each of the annual instalments entered in the financi ng tables for the programmes is committed at the start 
of the year with no requirement beyond the initial Commission decision. Therefor e, after adoption of the 
programmes, total or near-total utilisation of commitments is to be expected 
 
EN 19   EN Table 2: Implementation of the commitments in 2003 
  ANNUAL APPROPRIATION CARRYOVERS TOTA
L 
  EAGG
F FIFG ERDF ESF TOTAL EAGGFFIF
G ERDF ESF TOTAL   
Objective 1 2.755 392 13.426 4.895 21.468         0 21.468
Peace 9 1 70 29 109         0 109
Objective 2     3.284 368 3.652         0 3.652
Objective 3       3.719 3.719         0 3.719
FIFG 
(outside 
Objective 1)   172     172         0 172
CI 347   1.003 504 1.854 0       0 1.854
M & TA 1 3 92 39 135     1   1 136
TOTAL 3.112 568 17.875 9.554 31.108 0 0 1 0 1 31.109
% 100% 100
% 100% 100
% 100% 100%   100%   100% 100%
The automatic commitment rules do not appl y in practice to Chapter B2-16 (Innovative 
measures and technical assistance), where new decisions are taken each year. That said, 
the utilisation rate for these instruments was again very good, even if it has slightly 
decreased when compared with the two pr evious years (96% in  2001, nearly 100% in 
2002 and 94.5% in 2003).  
2.1.3.  Implementation in payments 
a) Overview 
The storyline of the 2003 budget implementation is be st illustrated by Chart 3. It shows 
that the under-utilisation of payments, which used to be one of the most distinctive 
features of Structural Funds implementati on both in absolute amounts and in relative 
terms, has taken a very significant turn fo r the better in 2003. The overall level of 
under-utilisation has fallen to 11% from last year's 29%7. While this is due in part to 
more pro-active budget management, it is also a direct cons equence of the good 
progress of the programmes on the ground. This is suggested by the h eadline increase in 
the absolute amount of payments: €26 243 million8, up from €20 312 million in 2003, 
an increase of almost 30%. 
                                                 
7 This trend is similar to the one in the earlier programming period, where the first two years (1994 and 
1995) were also marked by substantial under-utilisa tion, especially when measured in relative terms 
8 Over €1 billion in acceptable paymen t claims were received after 31 Oct ober in 2003 and only paid out in 
2004 – these are not accounted for here. While the Commission endeavours to settle payment claims 
 
EN 20   EN Chart 3: Under-utilisation of pay ment appropriations from 1994 to 2003 
(Left-hand scale: absolute amounts in milli on, and right-hand scale: relative rate) 
02.0004.0006.0008.00010.000
19941995 1996
1997 1998
1999
20002001
2002
20030%5%10%15%20%25%30%35%
Rate of under-utilisation
Under-utilisation
 
Table 3 shows the payment appropriations available by  Chapter and by Fund (all 
appropriations together). A distinction is made between appropriations for payments on 
programmes in the current period 2000-06 a nd payment appropriations for programmes 
from earlier periods. The appropriati ons available totalled €29 554 million9. 
                                                                                                                                                             
received after 31 October before the end of the year , this is not always possible. Article 32(3)(f) of 
Regulation (EC) No 1260/1999 requires Member States  to present their interim payment claims to the 
Commission in batches three times a year, the last application being presented no later than 31 October. Member States are also requested to  include any payment claims to be presented after the 31 October of 
any year in their payment for ecasts for the following year 
9 The appropriations in the initial budget amounted to €3 3 688 million (of this amount , €3 254 million for the 
payment of earlier programmes had been carried over from 2002). Over the year, a net transfer of 
appropriations reinforced the Structural Funds budget by €866 million. Unavoidable delays in settling many of the final payment claims  for the earlier programmes, the bul k of which were received, often 
incomplete, just before the final deadline of 31 March 2003, led to deducting from the budget, in amending 
budget No 6, €5 billion of the associated appropriations. 
 
EN 21   EN  
Table 3: Payment appropriations available (all appropriations together and including 
transfers)10 
  NEW PROGRAMMES 
  EAGGF FIFG ERDF ESF TOTAL OLD PROGRAMMES TOTAL 
Objective 1 2.167 430 10.513 3.739 16.849 3.091 19.940
Peace 13 1 78 3 95  95
Objective 2    2.569 253 2.822 1.128 3.950
Objective 3       2.925 2.925 502 3.427
FIFG 
(outside 
Objective 1)   138     138 156 293
CI 146   264 243 653 1.032 1.686
M & TA 3 3 70 36 113 49 162
TOTAL 2.329 572 13.494 7.199 23.595 5.959 29.554
The outturn (see table 4 below) is €26 243 million, or 89%, leaving €3 311 million 
unused, most of which involves earlier progra mmes (all Objectives combined). In fact, 
the amount unused in the earlier programme s (€2 431) accounts for 73% of the total 
surplus11. Seen another way, this means that 96% of the payment appropriations 
available for the 2000-06 programmes was use d, which is a signifi cant departure from 
the under-implementation of recent years,  and indeed the major highlight of 
implementation in 2003. 
Overall budget implementation was best for Objective 1 (95%). The implementation of 
Objective 2 shows quite an improvement - to  91% of the available appropriations (48% 
in 2002). The Community Initiatives are stil l lagging behind, with an implementation 
rate of only 48%.  
Relative to 2002, the 2003 performance im provement extended beyond the 2000-06 
programmes. There was also a significant improvement in the payments for the earlier programmes, which increased from €1 174 million to €3 528 million. However, it has not been possible to clear most of th e outstanding commitments for the earlier 
programmes in 2003, as had been planned. This  was because the bulk of the associated 
final payment claims was received just befo re the final deadline  of 31 March 2003, and 
this extreme concentration of payment claims, together with the fact that many of them 
                                                
 
10 Most of the "completion of earlier programmes" lin es and the Peace line are shared between a number of 
Funds, with no specific budget appropriation voted by the budgetary authority for the different Funds; 
hence their inclusion in the table as an aggregate figure 
11 An amount of €61 million of unused appropriations in the earlier programmes was carried forward to 2004. 
 
EN 22   EN did not include all the required supporti ng documentation, slowed down the payments 
procedure. Thus the Commission was unable to pay in 2003 all the final payment claims received for the earlier progr ammes, and €5 billion of  the associated payment 
appropriations was deducted from the budget in  Amending Budget No 6. It is expected 
that the outstanding commitments for these programmes will be cleared in 2004, save 
for the small amounts associated with  cases undergoing legal proceedings. 
b) Analysis by Objective and by Fund 
Table 4 gives a breakdown of outturn by Objective and by Fu nd. The rates of 
implementation relative to available appropriations are shown in the last column and row. 
Table 4: Payments in 2003 
  NEW PROGRAMMES 
  EAGGF FIFG ERDF ESF TOTAL OLD PROGRAMMES TOTAL % 
Objective 1 2.167 401 10.512 3.693 16.773 2.166 18.939 95,0%
Peace    44 2 46  46 48,4%
Objective 2    2.569 233 2.802 785 3.587 90,8%
Objective 3       2.415 2.415 133,5 2.548 74,4%
FIFG 
(outside 
Objective 1)   87     87 89 176 60,1%
CI 88   243 162 492 309 801 47,5%
M & TA 2 2 70 26 99 46 145 89,5%
TOTAL 2.257 490 13.438 6.531 22.715 3.528 26.243   
% 97% 86% 100% 91% 96% 59% 89%   
Significant progress in budgetary implemen tation was achieved in 2003, across all 
Objectives and programming periods. The ov erall implementation rate across all 
programmes (89%) was considerably higher th an in 2002, when it stood at 71%. The 
new programmes reached an implementation rate of 96%, although the Peace programme, where no payments were made last year, consumed only 48% of its 
appropriations in 2003 due to delays caused by the negotia tion of a new decision and 
corresponding programme complement. 
 
EN 23   EN Table 5, comparing payment rates in 2002 and 2003, illustrates this situation clearly. 
Table 5: Comparison of payment rates in 2002 and 2003 
2002 2003
old new total old new total
Objective 1 18% 96% 82% 70% 99% 95%
Objective 2 15% 77% 48% 70% 99% 91%
Objective 3 0% 84% 72% 27% 83% 74%
Ex-obj 5a/ 
FIFG(out. Obj. 1) 33% 54% 41% 57% 63% 60%
CI 12% 52% 25% 30% 75% 48%
IM & TA 56% 91% 76% 94% 88% 90%
TOTAL 16% 91% 71% 59% 96% 89%
 
In terms of Objectives, progr amme implementation for Objec tives 1 and 2 stands out as 
excellent. This is to be contrasted with the considerably lower implementation of the 
programmes under former Objective 5(a)/F IFG (outside Objective 1) and the 
Community Initiatives, which lag considerab ly behind the implementation of the main 
programmes. The implementation of progra mmes from earlier peri ods has remained 
very poor in the case of Objectiv e 3 and the Community Initiatives. 
Chart 4 compares utilisation by Fund in 2002  and 2003, including that relating to the 
“completion of old programmes” lines. The ERDF  is still the best at implementation, 
but there were significant improvements across all Funds.  
Chart 4: Utilisation rate by Fund in 2002 and 2003 
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%PEACEEAGGFFIFGERDFESFTOTAL
2002 2003 
c) Analysis of under-utilisation in 2003  
The under-utilisation in 2003 was mainly due  to the earlier programmes. Table 6 
summarises the outturn. Budgetary implementa tion issues clearly differ between the 
programmes of the earlier periods and thos e of the current pe riod, so justifying a 
separate analysis. 
 
EN 24   EN Table 6: Payments on old and new programmes 
Appropriations
available Outturn %
Old programmes 5.959 3.528 59%
New programmes 23.595 22.715 96%
Total 29.554 26.243 89% 
(*) Appropriations available are af ter transfers and Amending Budgets  in the course of the year 
Payments on old programmes 
Only €3 528 million was paid out of €11 023 mil lion of payment appropriations initially 
available. The actual payments for the year were quite low, particularly given that the appropriations available corresponded to the amounts Member States had forecast they would claim before the final deadline for th e presentation of final payment claims for 
this programming period.  
The reasons for the low outturn are twofold. First, the bulk of the final payments claims 
were received just before the final d eadline of 31 March 2 003. Second, many payment 
claims lacked the required supporting docum entation. This slowed down considerably 
the final payments and closure of the pr ogrammes. The Commission reacted quickly, 
proposing in the autumn an amending budget to return to the bud get €5 billion in 
payment appropriations that could not be  used in 2003 (eventually adopted by the 
budgetary authority in December as Ame nding Budget No 6). Decommitments of 
outstanding commitments amounted to €2 848 million (the 1994-99 rules had no "n+2" 
or similar clause, meaning that the bulk of  decommitments associated with unexecuted 
programmes occurs at the end of the pr ogramming period, at the closure of the 
programmes). Thus the outstanding commit ments at the end of 2003 stood at €9.2 
billion, 59% below the level of outsta nding commitments at the end of 2002 (€15.6 
billion). 
The Commission now expects to clear the bul k of these outstanding commitments in 
2004, either through final payments or decommitments. This will necessitate a significant increase in the re levant appropriations in the 2004 budget, originally 
intended only for programmes undergoing legal proceedings.  
Payments on programmes  for the 2000-06 period 
From an allocation of €23.6 billion, €22.7 bill ion, i.e. 96% of th e appropriations 
available, were paid. In 2002, only some €400 million of the total payments made were 
payments on account (for programmes whose adoption was delayed to late 2001 or 
2002). In 2003, the payments on account amounted to €17.9 million. All of these payments were made to Community In itiative programmes (Interreg, Urban and 
Leader+).  
The implementation of new programmes on the ground has contin ued to pick up 
strongly in 2003. That said, the budgetary impl ementation of payments is still lagging 
behind original expectations for the programme s in this period. This is illustrated in 
Table 7, which compares actual implementatio n with the assumptions implicit in the 
original financial perspective. At the end of 2003, accumulated payments are trailing initial expectations by around €20 billion. 
 
EN 25   EN The “backlog” of payments in relation to the estimates contained in the financial 
perspective has again increased in 2003. Howe ver, the annual incr ease of the backlog 
has been lower than in the two preceding years. 
Table 7: Comparison between assumptions in financial perspective, budgets and budget 
outturn 
€ billion 2000 2001 2002 2003 TOTAL
Financial Perspectives 9,2 19,6 25,6 27,6 82,0
-of which, payments on account 8,0 6,0 0,0 0,0 14,0
-of which, reimbursements 1,2 13,6 25,6 27,6 68,0
Outturn 5,9 14,7 19,2 22,7 62,5
-of which, payments on account 5,9 7,7 0,4 0,0 14,0
-of which, reimbursements 0,0 7,0 18,8 22,7 48,5
Differences vis-à-vis FP -3,3 -4,9 -6,4 -4,9 -19,5
-of which, payments on account -2,1 1,7 0,4 0,0 0,0
-of which, reimbursements -1,2 -6,6 -6,8 -4,9 -19,5 
The schedules on which the financial perspec tive and the first budgets were based have 
not been able to account fully for the time la gs caused by the new payments rules. In the 
current programming period, af ter the initial payment on acc ount, interim payments are 
based on the reimbursement of actual e xpenditure on the ground. However, programmes 
have taken off at a slower rate than origin ally anticipated, which is probably linked to 
the trough in the economic cycle that started in 2001.  
This led the Commission, with the support of the budgetary authority, to revise payment 
appropriations downward to accommodate the slower than expected progress of the 
programmes in the new period. Table 7A illustrates this point. 
Table 7A – Differences between (origi nal) Financial Perspective and Budgets 
b illio n  € 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
FP 19, 6 25, 6 27, 6 30, 2
Budget s 21 21, 1 23, 6 26, 3 
Budget 2001 was the only one above the fi nancial perspective assumption. However, 
this was entirely due to the initial dela ys in the adoption of  many programmes, and 
consequently in the disbursement of s ubstantial payments on account in 2001 rather 
than in 2000. The total payment on account fo r the new period is some €14 billion, of 
which only €5.9 billion was paid in 2000. This left payments on account of €8.1 billion for 2001. Deducting this from the budget,  the budget for interim payments 
(disbursements) was already lower than the one implicit in the original financial perspective (€12.9 billion against €13.6 billion).  
The relaxation of the macro-economic cons traints will probably mean that the 
forthcoming period will be marked by be tter financial implementation of the 
programmes. This expectation has already be en reflected, to some  extent, in the 2004 
budget. The Preliminary Draft Budget for 2005 should confirm this trend. 
 
EN 26   EN 2003 was also the first (real12) year of application of th e N+2 rule on decommitments.  
d) Transfers made in 2003 
A few transfers were proposed by the Commission in 2003 and accepted by the 
budgetary authority (see table 8). Ther e were no transfers in commitment 
appropriations, but relatively significant tran sfers of payment appropriations were made.  
                                                 
12 We say "real" because the advance payments made in 2000 and 2001 cancelled out to a significant extent 
the practical impact of the rule at the end of 2002 
 
EN 27   EN Table 8: Transfers between the Structural Funds in 2003 
Transfers 2003 in the Structural Funds
In Euro Commitment % of Payment % of To/From
appropriation initial budget appropriation initial budget
Budgetary Autority transfers (decision)
Innovative measures & technical assistance B2-164 -189.051 -0,22%To : B2-602 : 
Completion of other regional measures
Financial Instrument for Fisheries Guidance 
(FIFG) - Obj. 1 B2-101 135.400.000 45,91%
European Regional Development Fund 
(ERDF) - Obj. 1 B2-102 1.500.000.000 16,64%
European Social Fund (ESF) - Obj. 1 B2-103 -200.000.000 -5,19%European Social Fund (ESF) - Obj. 2 B2-111 -50.000.000 -16,53%Community initiative - Interreg III B2-1410 -370.000.000 -65,69%Community Initiative - Equal B2-142 -150.000.000 -38,15%
Cohesion Fund B2-300 -350.000.000 -13,21%
TOTAL 0
Other transfers %%
European Regional Development Fund 
(ERDF) - Obj. 1 B2-102 -15.420.000 -0,11To: Obj1/ESF 
+0,31%
European Social Fund (ESF) - Obj.2 B2-111 -699.500 -0,18To: Obj2/ERDF 
+0,02%
IM & TA (ESF) B2-1630 -1.422.265 -3,02To: IM & TA (Earlier 
progr)
European Social Fund (ESF) - Obj.2 B2-111 -631.968 -0,16To: Obj2/ERDF 
+0,02%
IM & TA (ERDF) B2-162 -34.435 -0,04To: IM & TA (Earlier 
progr)
IM & TA (ERDF) B2-164 -10.000.000 -15,7To: IM & TA (ERDF) 
+19,9%
IM & TA (ESF) B2-1630 -218.201 -0,46To: IM & TA (Earlier 
progr) 
IM & TA (ERDF) B2-164 -10.000.000 -24,1To: IM & TA/ERDF 
+19,9%
IM & TA (EAGGF) B2-160 -3.400.000 -68,7To: IM & TA (ERDF) 
+3,9%
European Social Fund (ESF) - Obj.1 B2-103 -16.499.378 -0,34To: Obj1/ERDF 
+0,12%
European Social Fund (ESF) - Obj2 B2-111 -14.927.919 -3,88To: Obj2/ERDF 
+0,46%
IM & TA (ERDF) B2-164 -102.900 -0,2To: IM & TA (ERDF) 
+0,2%
European Social Fund (ESF) - Obj.1 B2-103 89.000.000 2From: PEACE/ESF 
45.000.000
Earlier programmes Obj1 44.000.000
European Social Fund (ESF) - Obj.2 B2-111 -255.530 -0,07To: Obj2/ERDF 
+0,01%From Internal Policies 
(340 Meur) and from 
External Actions 
(175.4 Meur)
 
 
EN 28   EN The transfer from the Interreg Community Initiative accounts for 66% of its initial 
payments budget, which again illustrates its poor budget implementation in 2003. The 
transfer of payment appropria tions from the Equal Community Initiative was also quite 
significant (38% of its initial budget).  
The transfer to the Financial Instrument for Fisheries Guidance (FIFG) – Objective 1 
was almost 46% of its initial budget. ERDF Objective 1 received th e highest transfer 
amount, €1.5 billion representi ng 17% of its initia l budget. Part of this amount, €515.4 
million, was funded by transfers from outside the Structural Funds (Internal Policies and 
External Actions). However, most transfers were made between the different Structural 
Funds budget lines.  
The Commission also made some transfers w ithin Structural Funds budget chapters (see 
Table 8). These reflect inevitable but re latively minor budget ad justments during the 
year.  
2.1.4.  End-of-year concentration 
Structural Funds implementation is typically concentrated at the end of the budget year. 
As regards commitments, this concentration has virtually disappeared in the 2000-06 programming period. Indeed, under the Structur al Funds Regulation for the new period, 
commitments are made by 30 April each year, i. e. almost automatically after the annual 
instalments decided for each adopted progr amme. As regards payments, improvements 
are still needed. 
Chart 5 illustrates the point . It shows that the end- of-year concentration for 
commitments did disappear. However, it also shows that the concentration in payments 
has not changed much since 1996. From 2002 to  2003 there was even a slight increase 
in the clustering of payments in December.  
Chart 5: Concentration of commitment and pay ment appropriations in December (percentage 
implemented in December) 
0%10%20%30%40%50%60%70%
19941995 1996 199719981999 200020012002
2003Commitment
Payment
 
The monthly implementation pattern in Char t 6 offers a more comprehensive view. 
Again, that chart illustrates clearly that co mmitments are now made in the first four 
months of the year.  
As for payments, the chart shows the obvious concentration in the last months of the 
year – half of the payments are made afte r August and over one-quarter are made in 
 
EN 29   EN December. For the 2000-06 programmes, Memb er States are invited to group their 
payment applications in three batches over the year with the last application to be sent, 
in accordance with Article 32(3) of Re gulation (EC) No 1260/1999, by 31 October each 
year. The pattern of actual pa yments suggests that this pro cedure has been followed in a 
less than smooth way13. A more regular batching of paym ent claims is desirable in the 
interests of a more effi cient payments profile.  
Chart 6: Monthly implementation  pattern in 2003 (€ million) 
05.00010.00015.00020.00025.00030.00035.00040.000
janv-03 févr-03 mars-03 avr-03 mai-03 juin-03 juil-03 août-03 sept-03 oct-03 nov-03 déc-03Mio EURO
available commitments implementation commitments available payments implementation payments 
2.1.5.  Implementation by Member States 
Chart 7 shows the commitments and payments made in 2003 by Member State (all 
appropriations combined). 
Because of the cross-border nature of some operations for which there is often a single 
accounting commitment per programme (Interreg, Peace, Border regions), commitments and payments in these operations cannot be allocated to a specific Member State in the 
accounts, hence the existence of  the “other” column in the chart. Certain technical 
assistance operations are similarly not attributable to a Member State.  
For Spain and Portugal, and to a lesser ex tent, Austria and Sweden, the volume of 
payments in 2003 nearly exceeded the volume of commitments, with a corresponding absolute decrease in outstanding commitmen ts. For Finland, payments were equal to 
new commitments. It is interesting to note th at it was the first time, after the beginning 
of the 2000-06 programming period, that out standing commitments decreased for some 
                                                
 
13 Indeed, in many cases the Commission has received payment claims of quite significant amounts after 
October (which it has striven to pay as quickly as possible) 
 
EN 30   EN Member States, which confirms previous ob servations that implementation in 2003 
improved significantly over previous years.  
Chart 7: Commitments and payments in 2003 by Member State 
01.0002.0003.0004.0005.0006.0007.0008.000Mi o EURO
commit. 2003 6.924 4.569 4.707 3.898 2.939 2.464 2.408 495 815 321 344 492 267 326 126 15
paym. 2003 7.225 3.791 4.539 1.868 3.464 1.343 1.970 432 184 321 115 209 291 389 96 6ES D I GR P UK F IRL Other °) FIN B NL AUT SWE DK L
 
Chart 8, which shows total commitments and payments from the beginning of the 
2000-06 period, provides a more realistic pictur e of the current relative weight of the 
different Member States in the Structural Funds. 
 
EN 31   EN Chart 8: Commitments and payments fr om 2000 to 2003 by Member State 
(€ million)
02.0004.0006.0008.00010.00012.00014.00016.00018.00020.00022.00024.00026.00028.000Mio EURO
commit. 2000to2003 26.931 17.833 17.469 10.932 12.653 10.447 9.538 2.431 2.643 1.211 1.260 1.808 1.051 1.276 495 53
paym. 2000to2003 23.918 14.524 14.085 8.221 9.764 6.659 7.141 2.056 1.268 1.161 900 962 933 988 322 31ES D I GR P UK F IRL Other °) FIN B NL AUT SWE DK L
 
Looking at payments, Spain has by far the larg est share, accounting for one quarter of 
total payments. Spain, Germany, Italy, Portugal  and Greece, the five biggest shares in 
order of rank, absorb thr ee quarters of all payments. 
While this information is undoubtedly useful, it cannot be used to analyse the relative 
performances of individual Member States in the implementation of the Structural 
Funds programmes. The annual amount of commitments and payments for a given 
Member State depends directly on the share of that  Member State in the Structural Fund 
allocations or the outstanding commitments. Th e analysis of the relative performance in 
implementation should therefore be made by reference to the country’s allocation14 
(though the difference, in relative terms, between commitments and payments also suggests how effective Member  States have been in im plementing the programmes on 
the ground
15). 
                                                 
14 See the section of the report dedicated to the 2000-06 programming period for this analysis 
15 Note however that payments include all payments, including those for the programmes from previous 
periods, while most commitments are for the 2000-06 pr ogrammes. Thus the relative gap between 
commitments and payments is only a rough yardstick of effectiveness. 
 
EN 32   EN 2.2. Programme implementation  
The main areas of assistance and the cont ribution of the Structural Funds to the 
Lisbon and Gothenburg Strategy 
The European Council held in Lisbon on 23-24 March 2000 defined a new strategic 
objective for the European Union in the coming decade of becoming “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and be tter jobs and greater social cohesion”. In 
June 2001, the European Council adopted in  Gothenburg a sustainable development 
strategy for the EU. The sustainable developm ent strategy is a res ponse to the political 
commitments of the Lisbon strategy to achieve sustainable development.  
In the long term the Lisbon Strategy an d the Structural Funds have converging 
objectives. Growth and greater economic and soci al cohesion are in fact two sides of the 
same coin. The main link between the Structur al Funds as a financial instrument and the 
Lisbon Strategy is that the St ructural Funds provide joint financing of investments in 
areas which are priorities of the Lisbon St rategy. In addition, the Structural Funds 
provide a decentralised framework for deliver ing these policies. In this regard they 
stimulate the development of institutional and administrative capac ities at the regional 
and national level, which also contributes to the achievement of the Lisbon targets. This 
important contribution of the Structural Funds  to the Lisbon prioritie s will become more 
apparent after EU enlargement.  
Structural Funds assistance has been codified into identifiable sectors
16. These sectors 
are grouped into three major categories, each of which accounts for about a third of all 
Structural Funds programming. The breakdown below has been established on the basis 
of the programme complements: 
Basic Infrastructure 33.1% 
Productive Environment 32.6% 
Human Resources 31.5% to which must be added Technical assistance a nd innovative measures  (2.8%). 
In the chart below the share for each sector (a nd for all Objectives) is calculated on the 
basis of the funding allocated to all the programme complements.  
                                                
 
16 The assistance is codified at measure level. A m easure involving two different sectors will be given two 
different codes corresponding to those two sectors. Each  code is allocated a percentage corresponding to its 
share of the budget allocated to the measure. This co dification provides an initial indication of the relative 
importance of the various areas of Structural Funds assistance. It does not offer a complete view, however, since a measure classified under one s ector can also be beneficial to a nother. For example, the building of 
multi-modal transport infrastructure is classed under ‘transport infrastructure’ but also benefits the 
environment. 
 
EN 33   EN  
The chart shows that the Structural Funds mo stly assist transport infrastructure and 
SMEs, these two sectors being the only ones to exceed 10% of the funding allocated to 
all the programme complements. Next come  seven sectors whose allocations range 
between 5% and 10% of the total: rural deve lopment, planning and rehabilitation, all of 
the ‘human resources’ sectors (with the ex ception of positive actions for women on the 
labour market) and environmental infrastructure.  
An analysis of certified expenditure on 31 December 2003 (excluding Objective 3) 
showed appreciable differences in the p ace of implementation between the various 
sectors of assistance. For all the Structural Funds (not counting Objective 3), certified 
expenditure on 31 December 2003 accounted on average for 23% of the amounts 
programmed for 2000-06. The implementation ra te was 27% for Basic Infrastructure, 
24% for Productive Environment and 16% for Human Resources.  
By assistance sector, implementation rates ra nged from 2% for fisheries to 34% for 
transport infrastructure. Two sectors achieved implementation rates above 30%: 
transport infrastructure (34%) and assistan ce to large businesses (31%). None of the 
Human Resources sectors had reached  the 20% mark. Telecommunications 
infrastructure and the inform ation society was the only sect or under Basic Infrastructure 
to fail to reach the 20% mark. Structural Funds – breakdown of assistance by sector
3%6%5%1%3%15% 2%7%8%5%9%5%3%11%2%1%6%1%4%
0% 5% 10% 15% 20%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  
 
EN 34   EN These different rates of implementation obvi ously have an impact on the relative share 
of each sector: rapid implementation sectors, i.e. those above the average for the Funds, are able to improve their relati ve standing in the total, while the others see their relative 
share decline. The above chart shows the gap between the relati ve shares at the 
programming stage (all programme compleme nts other than Objective 3) and the 
relative shares of certified expenditure on 31 December 2003 (excluding Objective 3).  
The relative shares enjoying the biggest in creases are transport infrastructure and 
assistance to SMEs. Transport infrastructu re has increased by almost 8 percentage 
points and, with 25% of cer tified expenditure, occupies pole position in terms of 
Structural Funds spending. Assistance to SMEs and the craft sector has also 
strengthened its hold on second place, with a relative share rising from 12.5% to 14.5%. 
Matters are more complicated in the case of th e sectors that can be directly linked to the 
Lisbon and Gothenburg objectives: while RDT and environmental infrastructure have 
both improved their relative standings, the sa me cannot be said for telecommunications 
or the information society. Structural Funds (excluding Objective 3) – Implementation rate by sector  
29% 20%25% 20%13%34% 13%13%19%15%15%26% 23%28% 31% 2%20%27% 16%27% 16%24% 
0% 5% 10% 15% 20% 25% 30% 35% 40%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  3. Basic Infrastructure  2. Human Resources  1. Productive Environment  
 
EN 35   EN -8-6-4-202468P
e
r
cen
t
age
 
po
i
n
t
s
1. Productive Environment
2. Human Resources
3. Basic Infrastructure
11. Agriculture
12. Forestry
13. Rural development
14. Fisheries
15. Assisting large business org.
16. Assisting SMEs & craft sector
17. Tourism
18. RTD and innovation
21. Labour market policy
22. Social inclusion
23. Educational & vocational training 
24. Workforce flexibility
25. Positive actions for women
31. Transport infrastructure
32. Telecom.& information society
33. Energy infrastructures 
34. Environmental infrastructure 
35. Planning and rehabilitation
36. Social infrastructure and public healthStructural Funds (excluding Objective 3)  - Evolution of relative shares by sector
 
In the August 2003 guidelines for the mid-term review of the Structural Funds 
programmes, the Commission asked Member St ates to pay special attention to the 
Lisbon and Gothenburg priorities in the fort hcoming mid-term review of Structural 
Funds assistance. The re-programming of the Structural Funds is a potential opportunity 
to consolidate the Community contribution to this strate gic objective, particularly 
through the joint financing of investment s aimed at improving employment, economic 
and social cohesion and the competitiveness of the Union’s various regions. This aim 
could be pursued by adapting the programming  documents so as to put more emphasis 
on competitiveness factors such as accessi bility, the knowledge society, innovation, 
research and development, the environmen t, employment, social integration and 
life-long education and training, especia lly in a context of economic and social 
restructuring resulting from technological ch anges and a process of economic catch-up 
in the Union.  
2.2.1.  Objective 1 
Programming 
Objective 1 is less well balanced by category than the Structural Funds as a whole. The 
Basic Infrastructure category predom inates, accounting for 41%, while Human 
Resources accounts for 23% of the entire Objective.  
Transport infrastructure alone accounts for 20% of Objective 1. The second sector is 
assistance to SMEs (10% of the total). Next  come four (4) sectors whose relative share 
is around 7%: training, active labour ma rket policies, rural development and 
environmental infrastructure. Th e sectors with the smallest b udgets are fisheries, with a 
relative share below 1% of the entire Obje ctive, positive actions  in favour of women 
and energy infrastructure, each with a relative share of just above 1%.  
 
EN 36   EN The chart “Objective 1 – Programming: brea kdown by sector” compares the share of 
each category and sector rela tive to all the programme complements for Objective 1. 
 
Implementation 
In terms of the pace of pr ogramme implementation (the am ount of expenditure certified 
as against the amount indicated  in the programme complements), Objective 1’s rate of 
24% places it slightly above the Structural Funds average (23%). 
 Structural Funds Objective 1 
Productive environment 24% 25% 
Human resources 16% 17% 
Basic infrastructure 27% 28% 
The main Objective 1 category, i.e. Basic Infr astructure (41% of the entire Objective) 
also enjoys the fastest implementation rate (28%). This is mainly because transport 
infrastructure alone accounts for 20% of Obj ective 1 and has an implementation rate of 
almost 35%.  
Apart from transport infrastructure, two ot her sectors had implementation rates above 
30%: “aid to small firms” and “aid to large firms” (31%).  Objective 1 - Programming: breakdown by sector 
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  3. Basic Infrastructure  2. Human Resources  1. Productive Environment  
 
EN 37   EN Two sectors in the Basic Infrastructure cate gory enjoy implementa tion rates of between 
25% and 30% (social infrastructure a nd public health: 29 %; environmental 
infrastructure: 25%), as do two sectors in  the Productive Environment category (RTD 
and innovation: 28%; forestry: 26%). At n early 20%, the leading sector under Human 
Resources is “education and vocational training”. 
 
These differences in implementation rates obviously have an impact on the relative 
shares of the categories in Objective 1 as a whole. Thus, Human Resources, which 
accounted for 23% of all programming under this Objective, accounts for no more than 16% of the expenditure actually incurred and the relative shares of all the sectors in this 
category have fallen. In contra st, the relative share of the Basic Infrastructure category 
has risen from 41% to 47%. 
This increase in the standing of Basic Infr astructure is due exclusively to transport 
infrastructure, whose share in terms of im plementation is 43% higher than programmed. 
Of the four other sectors in this category, the increase in the two growth sectors (social 
infrastructure and environmental infrastructure) is not enough to offset the fall of the two in decline.  
The situation is more balan ced in the other growth cate gory (Productive Environment). 
Two sectors stand out in this category: assistance to SMEs, whose relative share 
increases from 9.5% in the programming to 1 2.1% in implementation,  and agriculture, 
whose share falls back from 5% in the pr ogramming to 3.3% in actual implementation. Objective 1 – Implementation rate by sector
0% 5% 10% 15% 20% 25% 30% 35%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  3. Basic Infrastructure  2. Human Resources  1. Productive Environment  
 
EN 38   EN -8-6-4-20246810P
e
r
c
en
t
a
g
e
 
po
i
n
t
s
36. Social infrastructure and public health35. Planning and rehabilitation34. Environmental infrastructure 33. Energy infrastructures 32. Telecom.& information society31. Transport infrastructure25. Positive actions for women24. Workforce flexibility23. Educational & vocational training 22. Social inclusion21. Labour market policy18. RTD and innovation17. Tourism16. Assisting SMEs & craft sector15. Assisting large business org.14. Fisheries13. Rural development12. Forestry11. Agriculture3. Basic Infrastructure2. Human Resources1. Productive EnvironmentObjective 1 - Development of relative shares
 
ERDF 
Activity in 2003 was built around three prioritie s: programme monitoring, the mid-term 
evaluation and allocation of the performance reserve, a nd application of the N+2 
(automatic decommitment) rule  
As all the programming work has been completed, programme management has now 
reached cruising speed. As a result, except in a few minor cases, it has been possible to 
avoid automatic decommitments under Article 31 of Regulation (EC) No 1260/1999.  
In some cases programming had to be adjusted  to take account eith er of special items 
linked to programme implementation (e.g. in frastructure programmes associated with 
the preparations for the Olympic Games in Athens in 2004) or exceptional events such as the floods in Germany or the fires in Portugal. 
Debates on future cohesion policy also took place in many cases in the Monitoring 
Committees or at the annual meetings.  
ESF 
ESF activities in Objective 1 regions continued satisfactorily in 2003, focussing 
principally on supporting measures to prom ote human capital de velopment in these 
regions in line with the Eu ropean Employment Strategy. 
 
EN 39   EN FIFG 
2003 was the first year of implementation of the reformed CFP, as adopted in December 
2002. Some programmes were amended as a resu lt, to take account of the CFP reform. 
The Commission has committed the fourth tranche for the 37 programmes of the 
Objective 1 regions, amounting to EUR 391.7 million. Payments were especially significant in 2003, reaching EUR 401.2 million. Of  particular note is the Spanish 
programme’s very high level of spending, give n the use of FIFG funding to counter the 
effects of the Prestige  disaster.  
2.2.2.  Objective 2 
Programming 
Objective 2 has a somewhat different progra mming profile from that of Objective 1. 
The leading category is no longer Basic Infras tructure but the Productive Environment, 
which alone accounts for over half th e financial resources programmed. 
 Objective 1 Objective 2 
Productive environment 24% 57% 
Human resources 23% 11% 
Basic infrastructure 41% 28% 
There is a clear concentration of resources at sector level. Two-thirds  of the financing is 
concentrated in four sectors: assisti ng SMEs, planning and rehabilitation, RTD and 
innovation and tourism. The sector “assisti ng SMEs and craft sector” alone accounted 
for one-third of the programming. 
 
EN 40   EN Implementation 
Since the programming of Objective 2 bega n later than that of Objective 1, its 
implementation rate might be expected to be slower. This is far from being the case. In 
terms of the pace of programme implementati on (the amount of expenditure certified as 
against the amount indicated in the program me complements), Objective 2’s rate of 
24% places it squarely on the same level as Objective 1. There is some slippage between the categories however, although th e discrepancies are less marked overall: 
 Objective 1 Objective 2 
Productive environment 25% 26% 
Human resources 17% 21% 
Basic infrastructure 28% 25% 
In terms of sectors, “social infrastructure  and public health” has the highest rate of 
implementation (36%) but accounts for only a small percentage (1%) of the Objective 
as a whole. By contrast, the second se ctor, “assistance to SMEs”, with an Objective 2 – Breakdown of Structural Funds assistance, by sector  
0% 5% 10% 15% 20% 25% 30% 35%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  
 
EN 41   EN implementation rate of 32%, is much more significant because it accounts for one-third 
of the Objective.  
Two other sectors have significantly above-a verage (28%) implementation rates. These 
are RTD and innovation (10% of Objective 2)  and environmental infrastructure. The 
implementation rate for transport infrastructure is the slowest (15%). 
 
Like Objective 1, the different implementation rates affect the relative share of the 
sectors and categories within the Objectiv e as a whole. Movements up and down are 
limited, however, since the differences in implementation rates are less marked here than in Objective 1.  
The share allocated to the Human Resources category has fallen relative to the other 
two, the Productive Environment in particul ar. Unlike Objective 1, the category making 
most headway in relative terms is the Produc tive Environment, not Basic Infrastructure. 
All of the Human Resources sectors have seen a fall in their relative shares, whereas the 
Productive Environment sectors have all maintained or improved their positions. Objective 2 – Implementation rate by sector
0% 5% 10% 15% 20% 25% 30% 35% 40%36. Social infrastructure and public health  35. Planning and rehabilitation  34. Environmental infrastructure  33. Energy infrastructures  32. Telecom.& information society  31. Transport infrastructure  25. Positive actions for woman  24. Workforce flexibility  23. Educational & vocational training  22. Social inclusion  21. Labour market policy  18. RTD and innovation  17. Tourism  16. Assisting SMEs & craft sector  15. Assisting large business org.  14. Fisheries  13. Rural development  12. Forestry  11. Agriculture  3. Basic Infrastructure  2. Human Resources  1. Productive Environment  Average  
 
EN 42   EN -2,0-1,5-1,0-0,50,00,51,01,52,02,53,0percentage points
1. Productive Environment
2. Human Resources
3. Basic Infrastructure
11. Agriculture
12. Forestry
13. Rural development
14. Fisheries
15. Assisting large business org.
16. Assisting SMEs & craft sector
17. Tourism
18. RTD and innovation
21. Labour market policy
22. Social inclusion
23. Educational & vocational training 
24. Workforce flexibility
25. Positive actions for women
31. Transport infrastructure
32. Telecom.& information society
33. Energy infrastructures 
34. Environmental infrastructure 
35. Planning and rehabilitation
36. Social infrastructure and public healthObjective 2 - Evolution  of relative shares by sector
 
ERDF 
In general, the programming of Objective 2 be gan later than that of Objective 1, with 
the result that programmes were late in getting under way. In some cases, as in 
Luxembourg, the first projects could not be  selected until 2003. De spite these initial 
delays, all the programmes were able to avoid automatic decommitments under the N+2 
rule. 
Although they started late, most programmes were amended in the course of 2003. 
While the bulk of amendments were of a technical  nature, such as a change in the list of 
State aid schemes or an adjustment to take account of changes in national legislation, some affected the programme content. Su ch amendments involved a transfer of 
resources between measures, or between pr iorities, resulting in some cases in a 
reduction in ESF assistance and an increase in ERDF assistance. 
During the meetings of the Monitoring Comm ittees or the annual meetings, reference 
was made on several occasions to the diffi culties encountered in implementing the 
programmes, as a result of eith er the budgetary constraints of the Member States or the 
slowdown in economic activity. Th e effect of those difficulties was either an inadequate 
number of project proposals from the private sector or too little part-financing from the 
national governments.  
ESF 
ESF assistance under Objective 2 was generally satisfactory during the year although in 
some Member States there were some transf ers of resources from ESF to ERDF due to 
implementation problems for some operational programmes. In the context of the mid-
 
EN 43   EN term review, it was noted that in some cases, better coordination between ESF and 
ERDF activities should be sought.  
2.2.3.  Objective 3 
ESF activities during 2003 focused on the conc lusions of the mid-term evaluation and 
the preparation of the mid-term review. To th is end a series of national seminars were 
held in each Member State during the autumn, with the aim of bringing together all ESF 
stakeholders in order to take stock of the ma in achievements to date, assess the priorities 
for the second half of the programming peri od, and identify the challenges for future 
ESF assistance in the framework of the Lisbon agenda and th e revised European 
Employment Strategy (EES). The ESF na tional seminars highlighted a general 
agreement on the fact that the added valu e of ESF assistance stems mainly from its 
distinctive feature:  it is the only Community Fund which, on the one hand, provides 
direct support to individuals  with a view to their integra tion in the labour market and, on 
the other hand, underpins the Eu ropean Employment Strategy  by supporting policies 
aimed at achieving full employment, increas ing quality and productivity at work, and 
promoting social cohesion. 
The ESF has played a significant role in  supporting and implementing the European 
Employment Strategy (EES) in the Member St ates. The seminars and evaluation reports 
underlined the links and coherence between ESF assistance and the EES: the new policy 
framework provided by the EES - and transl ated into the National Action Plans for 
employment (NAPs) - has improved the strategic dimension of the ESF.  
These links have become increasingly im portant during the implementation of ESF 
programming: across the EU, the ESF supports key policy initiatives presented in the 
NAPs and the Member States' efforts to implement the Employment Recommendations,  
with a catalyst effect for initiating national policies. As a result of this, the Employment 
Recommendations and the ESF are perceived in  some Member States as the main policy 
driver and financial incentive for undertak ing changes to and reforms of national and 
regional employment and la bour market policies.  
At the beginning of the programming pe riod, ESF assistance focused on supporting 
employability, and in particular on the in troduction of a preventive approach to 
unemployment, on the strengthening of activ e measures, and on the modernisation and 
improvement of public employment services . More recently, there has been a trend 
towards more balanced support across  the different employment guidelines , in line with 
the emerging priorities of the renewed EES  and the Employment Recommendations.  
In those Member States where the ESF provi des a substantial percentage of overall 
public expenditure on employment  policies, the Fund has played  a significant role in the 
implementation of the EES and the National Action Plans, through active labour market 
policies (ALMPs) at both national and region al level. In some Member States, ESF 
funding currently represents more than half of the overall public investment in areas 
such as vocational training, a nd has been an essential fact or in the modernisation of 
public employment services and education systems.  
In those Member States where the ESF represents a smaller percentage of overall 
expenditure on ALMPs, it has provided ad ded value by complementing national 
programmes, particularly by targeting and e nhancing support in areas or groups which 
 
EN 44   EN experience a higher level of labour mark et disadvantage (e.g. unemployed single 
parents, the very long-term unemployed or ethnic minorities), and by supporting activities not covered – or not significantl y funded - by national programmes. The ESF 
has also helped promote innovative approaches  to traditional labour market measures, 
mapping out alternative methods to promote employment and support social inclusion.  
In Member States where regions are endow ed with genuine power, ESF programming 
has helped make national and regional prior ities more consistent through part-financing 
arrangements and the setting-up of a common policy framework.  
Overall, the ESF has played an essential role in implementing labour market and 
employment policies, and in the fight agai nst social exclusion at regional and local 
level.  
The national seminars also generally highlighted  the fact that the ESF has contributed to 
enhancing good governance and promoting awareness of the EES,  through its 
decentralised approach towards carrying out the programmes, its emphasis on bottom-
up comprehensive partnerships and its contri bution to the overall development of the 
institutions and networks involved in implementing employment policy.  
The increased synergies between the EES , the NAPs and ESF programming have 
resulted in greater attenti on to performance and results,  notably through a clearer 
definition of indicators, and in better monitoring of assistance granted under the Fund. However, while the quality of ESF assistance has generally been enhanced through well-formulated strategies and policy prioriti es, in some cases there is still too much 
emphasis on absorption and financial implementation,  at the expense of a more policy-
driven approach.  
The complexities of the Structural Funds and ESF legal framework and delivery system , 
and the need for clearer and simpler implem enting rules, have been strongly underlined 
across the national seminars. Many final benefi ciaries have criticised the administrative 
burden involved in obtaining ESF subsid ies, which discourages promoters from 
applying for such support. In  this context, the present division of responsibilities 
between the Commission and the Member Stat es is often mentioned as a source of 
difficulties in the delivery of the ESF.  
By enhancing the responsibil ity of all actors in the implementation and programming of 
part-financed assistance, the ESF has had a positive effect in the development and forging of partnerships, mostly at local level. Partnership ha s been widely recognised as 
a fundamental contribution of the ESF  and of the Funds as a whole, and as a key 
condition for the success of interventions. 
The contribution of the ESF to the disse mination of a programming and evaluation 
culture, notably at regional and local level,  has been acknowledged particularly in the 
Member States benefiting from Objective 1 funding.  
The overall strategy and ESF po licy priorities for 2000-06 were  adopted in a context of 
greater economic expansion than present conditi ons allow; however, the general view is 
that they remain valid and fully res ponsive to the current  economic downturn. 
Therefore, adjustments rather than radical ch anges in the policy priorities and specific 
measures selected for the implementati on of the strategy are being proposed.  
 
EN 45   EN Seven broad policy areas have emerged  as those which shoul d receive increased 
emphasis between 2004 and 2006 across the EU, to better support the EES and the objectives of the Lisbon agenda:  
Throughout the Union, ESF support for ski lls development and in-house training
 should 
be intensified and consolidated, taking great er account of the need s of undertakings and 
the development of adequate human capital st rategies within companies, in order to 
raise skills levels and productivity, and in crease competitiveness. Using the ESF to 
support schemes which enable enterprises to prepare for and manage change was also 
stressed. 
– Greater attention will be given to the development of life-long learning policies  
and strategies , for instance by modernising and developing systems of education 
and vocational training, by promoting better links between the educational system and the productive sector and by improving upper secondary education. 
– Increased emphasis on the fight against discrimination and on providing greater 
support to the socially excluded an d those facing greatest difficultie s, including 
migrants. Social entrepreneurship could be an effective form of support for the 
most vulnerable groups. 
– Further efforts - notably in the least- developed areas - to ensure efficient 
functioning of labour market  institutions and improve the skills of unemployed 
persons , through stronger focus on individualised measures targeted at the needs 
of each beneficiary. 
– In line with the Employment Recommendations , particular attention will be paid 
to attracting more people into the labour  market, by supporting the integration of 
the economically inactive  into work and by preventing early retirement through 
active ageing policies. 
– Enhancing the participation of women in  the labour market by facilitating access  
to child-care.  
– Fostering entrepreneurship  by strengthening entrepre neurial skills and the 
conditions for entrepreneurship. In those Member States where the ESF 
significantly supports research activities, there will be emphasis on placing 
researchers in enterprises  rather than awarding them traditional post-graduate 
grants, wth a view to encouraging the dissemination of innova tion and research 
within companies. 
2.2.4.  FIFG outside Objective 1 regions 
The Commission committed appropriations  totalling €171.9 million for the fourth 
tranche of the eleven programmes for regions outside Objective 1. The rate of financial 
execution remains low. The mid-term evaluation highlighted certain problems which lie at the root of this under-use. The mid-term review must enable th is shortcoming to be 
remedied in part and allow more  efficient use of FIFG funds. 
 
EN 46   EN 2.2.5.  Community Initiatives and innovative actions 
Leader 
Leader+ is aimed at encouraging and supporti ng integrated pilot st rategies for local 
rural development. 
At the end of 2003, the procedure for selecting local action groups (LAGs) was still 
being finalised in some Member States. Of the 915 LAGs provided for under Leader+, 
845 had already been chosen. The selection of  LAGs had been completed in all Member 
States except Italy . 
The first finding which may be made is that th ere has been some degree of continuity in 
the territorial implementation of the Leader  Community Initiative,  s i n c e  m o s t  o f  t h e  
LAGs currently selected were already selected  under Leader I and/or Leader II. It may 
also be noted that 36 % of LAGs are entirely or partia lly on Objective 1 territory. The 
majority of LAGs (61%) have the legal status of a non-profitmaking association. 
The LAGs selected cover an area of 1 399 293 hectares and have a population of 
45 792 316.  
"Making the best use of natu ral and cultural reso urces" is the most popular theme, alone 
accounting for almost a third of LAG prioritie s, followed by "quality of life" (25%), 
then "adding value to local products" (20%) and "new technologies" (11%).  
The national networks are all in place ex cept in Ireland, Luxembourg and Belgium. 
Two meetings of the Leader + Steering Committee were held in 2003. This Committee, 
which was chaired by the Commission, brought  together the representatives of the 
national authorities and networ ks. It examined the progress achieved in implementing 
the Community Initiative, particul arly as regards cooperation.  
At the end of 2003, several Member States submitted their mid-term evaluations. The total Community assistance for Leader+ in 2000-06 is €2 105.1 million. For 2003, 
an amount of €346 million was committed. 
Interreg 
The last of the 72 programmes originally provided for were approved in 2003, namely 
the Archimed transnational cooperation pr ogramme involving Greece and Italy, and the 
two cross-border cooperation programmes i nvolving Greece and It aly, and Greece and 
Turkey respectively.  
During 2003, negotiations began with a view to approving nine new programmes for the 
new internal and external frontiers, a nd amending twenty-three programmes (to 
integrate the ten new Member States). They will be adopted during 2004. 
 
EN 47   EN In addition, the approval of the Commi ssion Communication on paving the way for a 
New Neighbourhood Instrument17 allowed a swift improvement in coordination 
between Interreg and external policy instruments (even for the period 2004-06). The Commission embarked on an in-depth di scussion on future arrangements for 
cooperation at external frontiers. 
The practical implementation of the seve nty-two programmes adopted continued and 
intensified on the ground. The Commission took part in several monitoring and steering 
committee meetings, as provided for in the Fund regulations. It also monitored the 
mid-term evaluation exercise carried out under each of the programmes, as provided for 
in Article 42 of Regulation (EC) No 1260/1999. Most of the reports were submitted to the Commission by the managing authorities be fore the end of 2003. This exercise will 
form the basis of the mid-term review of  programmes, which will take place during 
2004. 
In 2003, the Commission continued to close the pilot projects for the period 1994-99 
within the context of Recite (47 projects) a nd Terra (15 projects). All the projects have 
been closed apart from two Terra and two R ecite projects, which will be closed in the 
course of 2004.  
Urban 
Implementation of the Urban II programmes gathered pace and all 70 met their N+2 
spending targets for December 2003. In f act, 100% of the 2003 appropriations were 
already committed and 92% of the 2003 paym ents budget implemented by the end of 
the year. 
In addition, the Urbact programme for exchange  of experience between European cities 
started this year. Thirteen thematic networks were launched and another three were proposed. They cover topics as diverse as local economic development, citizen 
participation, inclusion of immigrants, in clusion of young people, crime prevention and 
reduction of urban insecurity. 
Finally, a new round of the Urban Audit was launched in cooperation with Eurostat and 
national statistical offices. A comprehensiv e set of social and economic indicators 
covering all aspects of urban life is be ing collected for 258 cities in the EU27. 
Equal 
In 2003, the Community Initiative Equal focussed on the continued execution of 
Development Partnership (DP)  projects on the ground, and id entified and capitalised on 
the initial results of the Initiative.  
In both its objectives and its ar chitecture, the Equal Initiati ve gives pride of place to 
capitalising on the innovative elements and their dissemination in employment and 
training policies. 
In the context of this mainstreaming
18, the European Thematic Groups (ETGs), in 
partnership with the national thematic netw orks, pursued their ta sk of evaluating the 
                                                 
17 Communication COM(2003) 393 " Paving the way for a New Neighbourhood Instrument". 
18 Mainstreaming = Dissemination and integration into policy-making. 
 
EN 48   EN most promising practices and findings, a nd integrating them into policy-making. The 
ETGs met according to their own schedules on numerous occasions and all held concurrent meetings in October 2003 in Br ussels, when several hundred key players 
from the grassroots, administrations  and world of politics took part. 
From the start of the new session, the Commission, in partnership with the Member 
States, got down to the task  of defining the second call fo r proposals for Equal (2004) 
on the basis of the lessons learned from the national and European evaluations. This exercise yielded a ne w Communication on Equal (COM(2003) 840 of 30 December 
2003
19). The Communication reviews some of the early results of E qual, pointing to 
promising practices which can already contri bute new ways of tackling discrimination 
and inequality on the labour market.  
It also sets the scene for the second round of Equal, confirming the principles and 
architecture, whilst simplifying the administrative implementation in order to enhance its effectiveness. Member States are gran ted more flexibility, while the need to 
capitalise on and disseminate the be nefits and results is reinforced. 
Preparations for including the new Member States in the Equal programme were made 
throughout 2003. The programming documents (Community Initiative Programmes – 
CIPs) will be adopted during the first half of 2004. The twenty-five Member States
20 
will participate in the programme within  the context of an enlarged Europe. 
Lastly, in 2003, the Commission closed the Community Initiative Programmes for the 
period 1994-99. 
Innovative actions FIFG 
Two calls for proposals were published on 15 May 2003 with a deadline of 11 July 
2003. Fifty-nine proposals were received, five of which we re ineligible. The 54 other 
proposals were assessed and 19 were c hosen for Community funding totalling 
€1 824 807. 
In addition to innovative aspects connected w ith socio-economic diversification in areas 
dependent on fishing, enhancement of the value of fishery and aquaculture products, 
and improvement of the image of the industry, a special e ffort was made in 2004 to 
reinforce the role of women in the fishin g industry. Consequently, seven of the 19 
proposals selected were specifically aimed at  increasing the standing of women in the 
industry.  
                                                
 
19 Guidelines for the s econd round (2004-06): Communication from the Commission establishing the 
guidelines for the second round of the Equal Community Initiative concerning transnational cooperation to 
promote new means of combating all forms of discrimination and inequalities in connection with the labour market – "Free movement of good ideas". 
20 But twenty-seven CIPs: Belgium a nd the United Kingdom each have two CIPs (Flemish-speaking Belgium, 
and French- and German-speaking Belgium;  Northern Ireland and Great Britain). 
 
EN 49   EN ERDF 
During 2003, a further 13 new ERDF part-fin anced regional programmes of innovative 
actions were approved, bringing the total num ber of programmes to date to 139 (out of 
156 eligible regions). The total ERDF c ontribution to those 139 programmes is €346 
million and their total value is over €1 billion. Regional authorities were encouraged to 
adopt a more strategic approach to promoti ng innovation at regional level in partnership 
with all the relevant regional actors including the private sector and social partners. The 
objective of the programmes is to boost regi onal competitiveness by experimenting with 
pilot projects under one or more of the following three strategi c themes: regional 
economies based on knowledge  and technological innova tion, e-EuropeRegio: the 
information society at the service of regiona l development, and regional identity and 
sustainable development. Over two-thirds of the regions opted for measures under one 
or both of the first two themes, while just over one-th ird opted for the third theme. 
3. PROGRAMMING IN THE NEW MEMBER STATES  
3.1. Background and main milestones  
The accession negotiations resulted in a financial allocation for the new Member States 
of €24.5 billion for Structural Funds a nd Cohesion Fund in the period 2004-06. 
Two-thirds of this amount is earmarked for Structural Funds, which corresponds to 
almost €16 billion. The acceding countries and the European Commission agreed during 
the accession negotiations that most of  the necessary preparations for the 
implementation of the Structural Funds woul d be carried out befo re the end of 2003 in 
order to allow expenditure unde r the Structural Funds and C ohesion Fund to be eligible 
from 1 January 2004, as provided for in th e Act of Accession, once all conditions are 
met. 
An important element was the timely agreement on funding programmes, namely the 
Community support framework and the relate d operational programme s, and the single 
programming documents. In this connection, the Commission agreed with the acceding 
countries on a time-schedule which would lead  to a preliminary agreement on the main 
programming documents before the end of 2003. It is, however, important to note that the formal approval of the documents can take place only when the acceding countries 
become Member States.  
The main milestones agreed were: 
(1) spring 2003: submission of the draft programming documents to the 
Commission, 
(2) summer 2003: opening of the cons ultations on the programmes, 
(3) end of 2003: confirmation of the mutual preliminary agreement on the content 
and structure of the programming do cuments by an exchange of letters. 
At the same time as the programming, the admi nistrative and instit utional preparations 
had to be conducted by the new Member States  on the basis of the agreements reached 
during the accession negotiations. The Co mmission monitored very closely the 
 
EN 50   EN implementation of these negotiation co mmitments. On 16 July 2004, a special 
Monitoring Report was communicated (COM(2 003) 433), which assessed the progress 
in implementing the negotiation commitments and the status of preparations for the 
management of the Structural and Cohesi on Funds. In this connection, the report 
highlighted the progress made by the acced ing countries, as well  as the outstanding 
issues still to be tackled. In addition, advi ce was provided on the necessary steps to be 
taken to ensure that each country would be able to establish a system for the sound and 
efficient implementation of the Funds. On  6 October 2003, a high-level meeting was 
held in Brussels between the Commissione r responsible for Regional Policy and the 
relevant Ministers in order to discuss the ma in points of the report, i.e. enhancement of 
administrative capacity, finalisation of progra mmes, preparation of projects in good 
time and preparations for sound financial management.  
3.2. State of play of programme negotiations 
Of the 41 NUTS II regions in the acceding coun tries, 38 qualify for Objective 1 support; 
only the regions of Bratislava an d Prague, as well as the sout hern part of the island of 
Cyprus have Objective 2 status. All Object ive 2 areas and five of the Objective 1 
countries have drafted single programming documents, while each of the other four 
countries with Objective 1 regions has dr awn up a National Development Plan with 
corresponding draft operational programmes.  
The Commission received a total of 37 programming docu ments, all of which – 
following the redrafting of two - were decl ared admissible for c onsultations. Although 
all programmes are established at central go vernment level, larger countries also 
submitted an integrated regional programme, to be managed at national level but drawn up in close collaboration with the relevant regional authorities, which will help the regional bodies to become increasingly fam iliar with Structural Fund assistance. The 
objectives of promoting or maintaining high economic growth and creating new 
employment – in line with the Lisbon and Göteborg objectives – are common to all the programmes submitted. 
Consultations on the documents graduall y got under way with all the countries 
concerned between June and September 2003. Key criteria in the negotiating mandates 
were that each document should be comple tely consistent, other Community policies 
should be taken into consideration and comp lied with, any potential overlap should be 
eradicated and there should be  a clear focus on a limited number of priorities. In view of 
the short time available for implementing th e programmes (2004-06 instead of 7 years), 
the Commission placed a great deal of emphasis during the consultations on the aspects 
of the programmes concerned with implementa tion. In particular, it encouraged the new 
Member States to rely as far as possible on existing structures for implementation and to 
limit the scope of assistance where the administ rative capacity to carry  it out had still to 
be established. All acceding countries agreed th at they would submit the first drafts of 
the programme complements during the programme consultations. The availability of these first drafts of the programme compleme nts contributed to the timely discussion of 
crucial aspects of implementation. 
As envisaged, the main programming documen ts were agreed upon before the end of 
2003. In December 2003, the European Commission confirmed the preliminary conclusion on all Community support framew orks and on all Objective 1 single 
programming documents. Further, almost all ERDF operational programmes and 
 
EN 51   EN Objective 2 single programming documents we re concluded in 2003. Only five ERDF 
programmes and six ESF programmes are to be closed at the beginning of 2004. Four 
EAGGF programmes - for the Czech Republic , Hungary, Slovakia a nd Poland - are to 
be concluded in the first quarter of 2004, while the pre-accession instrument SAPARD 
provides for EAGGF-type structural suppor t until accession. There is also an FIFG 
programme for Cyprus. 
4. CONSISTENCY AND COORDINATION  
4.1. Consistency with other Community policies 
Competition 
Monitoring of State aid is a competition policy instrument which may, to the extent that 
the Commission pays special attention to the potentially beneficial effects of aid aimed 
at facilitating the economic development of the least-favoured regions, make an 
effective contribution towards achieving cohe sion policy objectives. Since a large part 
of the assistance from the Structural Funds di rectly benefits indivi dual businesses, it is 
essential to ensure that the Community's regional policy is conducted in full compliance 
with the rules on competition. 
In this connection, Regulation (EC) No 1260/ 1999 states in paraticular that assistance 
approved by the Commission must include  all the elements required for the ex-ante  
assessment of the compatibility of state aid with the common market. Accordingly, 
during 2003 the Commission paid particular attention to assessing  the compatibility 
with the Treaty of the measures in th e operational programmes and single programming 
documents involving Fund assistance in the new Member States for the period 2004-06, 
and to appraising certain major projects eligible under Articles 25 and 26 of that 
Regulation. 
In addition, the Commission carried out a thorough examination of the guidelines for 
state aid for regional purposes, which must be revised in time to allow the Member 
States to prepare for the period after 2006. Su ch a revision must clearly take account of 
the developments in Community cohesion policy, as well as national and regional policies aimed at attaining the objectiv es laid down by the Lisbon and Göteborg 
European Councils. Consequently, one of the es sential objectives of this revision will be 
to scale down state aid in terms of both number and size,  but to target it more 
effectively.  
Finally, the Commission departments continue d their discussions on the potential for 
taking greater account of the real economic imp act of certain types of aid (significant 
impact test).  
Environment  
The European Union undertook to guarantee su stainable development and to maintain 
the protection and improvement of the e nvironment at a high level. This dual 
requirement is taken into account in the esta blishment and executi on of the Structural 
Funds both through direct investment aimed at improving the environmental 
infrastructure and through the integration of an environmental dimension into the 
 
EN 52   EN different assistance granted. The promotion of  a top quality environment forms part of 
the development strategy of many regions, wh ich have for example decided to enhance 
or rehabilitate their territory in orde r to attract and develop new activities. 
Direct and indirect invest ment in the environment  
In their programming for 2000-06, the region al and national authorities earmarked an 
overall amount of approximately €25 billion for measures for the environment in the broadest sense. This is 13% of the €196 bill ion in the programme complements. It will 
be used, for example, to finance infrastr ucture in the field of water supply and 
treatment, purification of waste water, dis posing of and recycling waste, and protecting 
the soil and natural sites, but also measur es aimed at disseminating environmentally-
friendly technologies or sustai nable transport infrastructu re. The following graph gives 
a breakdown of the €25 billion among the diffe rent types of environmental measures. 
Most of those investments are provided for in  Objective 1 regions. It is interesting to 
note that the rate of implementation of e nvironmental measures is higher than the 
general average for the Funds (20%). This is particularly true of expenditure on strictly 
environmental infrastructure (25%). 
Environmental measures
4%
12%
6%
2%
41%36%Environmental measures in
agriculture and forestry  4%
Protection of the naturalenvironment  12%
Environmentally-friendlytechnologies  6%
Renew able energy  2%
Environmental infrastructure 41%
Sustainable transportinfrastructure  36%
 
Compliance with environmental legislation and policy  
Operations part-financed by the Funds must  comply with Commun ity legislation in 
force, including environmental legislation. On  account of this fact, the part-financing 
and start-up of certain measures was delaye d or blocked in some Member States on 
account of the absence of an environmental legal framework complying with the legislation in force. In 2003, this situ ation continued, alth ough some improvements 
were registered in, for example,  the area of solid waste, but it is still unsatisfactory in 
other sectors such as the treatment of ur ban waste water and implementation of the 
nitrates Directive.  
 
EN 53   EN For the treatment of urban waste water, specific guidelines were proposed to the 
Member States regarding applications fo r financial assistance in the context of 
infringement proceedings. They concern part-f inancing applications for facilities which 
are considered to be useful but to fall shor t of the requirements of the Directive, and 
have been challenged by the Commission.  
In some instances, a failure to comply with Directive 85/337/EEC, as amended, on 
evaluation of the environmental impact slowed  down the examination of plans for major 
projects because the impact studies had not  been carried out or were incomplete. 
However, the obligation to comply with th e procedure for evaluating the environmental 
impact meant that heavy infrastructure which was potentially harmful to the environment could go ahead, but with assurances  that strict environmental requirements 
would be met, the competent environmenta l authorities would be  consulted and the 
general public would be involved.  
Participation of the environmental authorities
 
Some Member States have us ed technical assistance to put in place a network of 
environmental experts who assume a role alongside the management authorities as 
environmental authorities and participate to  a varying extent in the management of 
programmes and selection of projects. These ne tworks and task forces paraticipate in 
the management of funds and ensure, at the most appropriate level,  that environmental 
considerations are taken in to account in the implem entation of programmes.  
Mid-term evaluation  
Despite wide variations between regions, th e mid-term evaluation revealed that the 
implementation of environmental measures had been affected by start-up difficulties 
generated by difficult economic circumstan ces. Accordingly, some more innovative 
measures involving, for example, the deve lopment of renewable energy or nature 
protection were the subject of commitments which fell fa r short of the original 
provisions.  
Structural Fund assistance is helping to attain the objectives set in Göteborg – despite 
the fact that they were scheduled prior to the Göteborg European Council – but much 
remains to be done if those objectives are to  be achieved by 2010, particularly in view 
of the slowdown in world economic growth.  
Internal market  
Article 12 of the General Regulation on the Structural Funds (Council Regulation (EC) 
No 1260/1999) stipulates that operations  receiving Community funding must "be in 
conformity with the provisions of the Tr eaty, with instruments adopted under it and with 
Community policies and actions, including the rules on [...] the award of public 
contracts" . Greater decentralisation has been introduced into the management of the 
Structural Funds, increasing the responsibility of the Member States and, in particular, 
of the managing authorities, for the awar d of contracts financed by the Community 
Funds.  
To ensure that these procedures comply  with Community rules, the Commission 
encourages the national authorities to adopt various preventive measures such as 
 
EN 54   EN appropriate training for staff involved in awarding contra cts and issuing guide and vade-
mecums on contracting procedures.  
As part of its general tasks, the Commission also ensures that proc edures for awarding 
contracts are in keeping with Community law by checking on the transposition of the relevant Community Directives and by maki ng use of its powers to intervene when 
Community law is breached. In this context,  the Commission examined more than 430 
cases in 2003 of inadequate transposition or  potential misapplication of the relevant 
Community provisions. 
Compliance is also guaranteed through m onitoring by the Commi ssion departments, 
either at the programming stage or during sp ot checks. Such checks may be carried out 
either as a result of complaints or at the Commission's initiative, particularly following 
the audits carried out regularly as part of  the inspection of part-financed projects. 
Information Society 
Expenditure directly connected  with the Information Society accounts for 3% of the 
Structural Funds (programme complements) and 2% of expenditure certified at 31 
December 2003. Over half of the resources are earmarked for services and applications 
for citizens (35%) and information and communication technologies (26%).  
Overall, measures relating to the Informati on Society display a rate of execution (13%) 
substantially below the average for the Structural Funds (20%). The rates of execution range between 11% for "Services and applications for citizens (health, public administration, education)" and 16% for basic infrastructure. 
Telecommunication infrastructure & information society
1 9%  Services &  applications 
for SMEs
35%  Services &  applications 
for citizens20%  Basic  infrastructure
26%  I nformation &  
communicatio n techno log y
 
 
EN 55   EN Transport  
The following graph shows that, on the basi s of the programme complements, 82% of 
the funds earmarked for transport infrastruc ture are intended for roads (57%) and rail 
25%).  
Transport infrastructure
Intelligent systems 0%Multimodal transport 
4%
Urban transport 6%
Ports 6%
Airports 2%
Roads 57%Inland waterway 
transport 0%Rail 25%
 
The overall rate of implementation for transport infrastructure measures (34%) is well 
above the average for the Structural Funds (23%). Only inland waterway transport and intelligent transport systems show a rate of execution below this average. 
Transport infrastructure  execution rate  
Road  41% 
Urban transport  36% 
Multimodal transport  24% 
Ports  22% 
Rail 22% 
Airports  20% 
Inland waterway transport  16% 
Intelligent transportsystems  6% 
 
 
 
EN 56   EN Trans-European Networks  
Coordination of the budget for the trans- European transport and energy networks 
(TENs) with the Structural F unds, in particular the ERDF fo r Objective 1 and 2 regions, 
and with the Cohesion Fund is important because these Community financial instruments take into account the need to link those region s suffering from a structural 
handicap or from their status as islands, la ndlocked areas or periph eral regions of the 
Community. 
The TENs Financial Regulation
21 does not allow the same pha se of a single project to 
be financed by both the TENs budget and othe r Community financial instruments but, 
in some cases, feasibility st udies financed through the TENs budget may be followed by 
support from the ERDF, Cohesion Fund and the EIB, mainly for construction work under the same project. Frequently, in the ar ea of transport, the ERDF finances works 
designed to give access to th e trans-European transport network whereas the actual 
TEN-T network is financed under the TEN  budget line and/or the Cohesion Fund. 
While both transport and energy TEN projects of  common interest are financed from the 
TEN budget line, the Cohesion Fund provides assistance especially for transport 
infrastructure and the ERDF for both tran sport and energy. Article 2 of the ERDF 
Regulation (EC) No 1783/1999) pr ovides, inter alia, that the ERDF is to contribute to 
financing investment in infrastructure  contributing to the establishment and 
development of trans-European networks in  regions covered by Objective 1. In this 
connection, the Community also encourages  public-private part nerships (PPPs) by, inter 
alia, providing a higher rate of assistance wher e its aid takes a form other than a cash 
grant. The endorsement of PPPs is also se t out in the Commission Communication of 23 
April 2003 (COM(2003) 132). This examines the s ituation of infrastructure in the trans-
European network and its financing, and show s the need to implement, without delay, a 
set of complementary measures focussed on more effective use of the funding 
earmarked for trans-European infrastructure. These measures rest on two major pillars: 
– better coordination of public and private fi nancing of the trans- European transport 
network, 
– an effective European electronic toll service. 
Furthermore , during 2003, the process of amending  the TENs Financial Regulation was 
pursued
22 in order to allow the part-financing ceil ing to be raised from 10% to 20% for 
certain aspects of transport pr ojects of European interest, with the aim of eliminating 
bottlenecks and/or filling in missing sections, provided that those sections extend across 
borders or natural barriers and contribute to the integration of  the internal market in an 
enlarged Europe, promote safe ty, ensure the interoperabil ity of the national networks 
and/or substantially help reduce imbalances between modes of transport in such a way 
as to favour the most environmentally-frie ndly modes. The ceiling was likewise raised 
                                                 
21 Council Regulation (EC) No 2236/95 
22 This process resulted in the adoption of Regulation (EC) No 807/2004 of the European Parliament and of 
the Council of 21 April 2004 amending Council Regula tion (EC) No 2236/95 laying down general rules for 
the granting of Community financial aid in the field of trans-European networks, OJ L 143, 30.4.2004, p. 
46. 
 
EN 57   EN for priority projects in the energy sector in order to exer t a leverage effect and, in 
particular, attract private investors . 
During the 2003 exercise, the Commission took 117 decisions on the financing of TEN-
T projects totalling €626.6 million (€18 millio n of which was allocated to the Risk 
Capital Facility) and 13 TEN-E  projects totalling €18.64 million. 
The revision of the Guidelines for the development of the trans-European transport 
network23 continued during 2003. A high-level Group consisting of current and future 
Member State representatives and the EIB made its recommendations to the Commission concerning new priority projects in  the enlarged EU.  
Based on the recommendations of the high-le vel Group and on the results of the public 
consultation on the report, the Co mmission brought forward a new proposal
24 on 1 
October 2003 complementing the proposal made in 2001. New projects are added to the list of priority projects, bringing up to thirty the total number of projects on major transport axes. Member States should give priority to these projects when requesting 
funding from EU financing instruments. 
In addition to the new list of priority proj ects, the proposal puts forward improved tools 
for coordinating  projects between Member States, pa rticularly cross-border projects, by 
means of the following two mechanisms: 
– A European Coordinator , appointed by the Commission, will promote joint 
methods of evaluation, report on the progress of projects and consult operators on 
financing possibilities. The Coordinator will cover in part icular cross-border 
sections of the thirty pr iority projects and, where n ecessary, may also cover the 
entire major axis. 
– Declaration of European interest  allows the coordinated or even joint evaluation 
of projects. If a project suffers serious delays without adequa te justification, the 
Commission may take appropriate m easures to tackle the problems. 
The concept of the “Motorways of the se a”, which was launched in the 2001 White 
Paper, is another new element of the proposal. It  aims at concentrating freight flows on 
a limited number of sea connections to ensure their financial viability and to reduce road 
traffic. The proposal includes the possibility  of providing start-up aid for new shipping 
services. 
Consistency and complementarity : The Structural Funds and transport and 
energy policy 
In September 2001, the Commission adopted it s White Paper "The European Transport 
Policy in 2010: time to decide" (COM(2001) 370). In the light of  rising congestion and 
                                                
 
23 Decision No 1692/96/EC 
24 COM(2003) 564 final: Proposal for a Decision of the European Parliament and of the Council amending 
the amended proposal for a Decision of the European Parliament and of the Council amending Decision No 
1692/96/EC on Community guidelines for the developmen t of the trans-European transport network. This 
proposal resulted in the adoption of Decision 884/2004 of the European Parliament and of the Council of 9 
April 2004 amending Decision No 1692/96/EC on Community guidelines for the development of the trans-
European transport network, OJ L 167, 30.4.2004, p. 1. 
 
EN 58   EN external transport costs, the Commission advoc ates a change in the orientation of the 
Common Transport Policy based on re-balanci ng the different transport modes away 
from the growing predominance of road transport. 
The White Paper proposed a programme of about 60 measures, by now well advanced, 
most of which can be grouped along the following lines: 
– introduction of competition in the railw ays through regulated opening-up of the 
market, based on different legislative packages, the first of which is already in force; 
– improvement and better enforcement of  legislation in the road sector; 
– promotion of intermodality, notably through the Marco Polo programme; 
– carrying out investments in the TENs for ra ilways and other alternatives to road 
infrastructure, as developed in the revision of the TEN Guidelines proposed in October 2003; 
– the development of the Galileo satellite radio-navigation programme is being led 
by a joint undertaking and has already gained widespread international 
acceptance; 
– creation of a Single European Sky
25; 
– introduction of a fair system of charging for the use of infrastructure, which has 
given rise to a proposal for the revision of the Eurovignette, the proceeds being 
used to fund projects; 
– the adoption of a number of proposals to  improve safety and security in the 
different modes of transport, fixing th e objective of a 50% reduction in road 
fatalities by 2010, and including the creation of two agencies for maritime and air 
transport. 
The measures set out in the White Paper will allow a gradual decoupling between 
transport growth and GDP growth as recomm ended by the Sustainabi lity Strategy of the 
Union, which was adopted by the Göteborg European Council in June 2001. 
To achieve these objectives the Commission will be relying, among other instruments, 
on the funding available under the TEN-T budget line, the Cohesion Fund and the 
ERDF, and on ISPA for the future Member Stat es. In particular the White Paper stated 
that in the new context of sustainable de velopment, Community part-financing should 
be redirected to give priority to rail, sea and inland waterway transport, as confirmed by 
the recent Initiative for Growth, which pr oposes accelerating investments in TENs and 
gives priority to railways and other alternatives to road transport. 
                                                 
25 The Single European Sky is an initiative aimed at reforming the architecture of European air traffic control 
in order to tackle growing traffic congestion, which is at the root of air transport delays. Under existing air traffic control arrangements, which were set in place in  the 1960s, each country regulates its own airspace 
without taking account of  transfrontier traffic flows. Those arra ngements can no longer cope with the 
spectacular increase in air transport. 
 
EN 59   EN In the Green Paper "Towards a European strategy for the security of energy supply"26, 
the Commission set out an approach to energy policy which is relevant to the geopolitical context, the openi ng-up and integration of en ergy markets in Europe, and 
environmental and climate goals. Enlargement and the wider Europe policy imply a strengthening and extension of the agenda. The Structural Funds have an important role 
to play, alongside action on ne tworks, effective functioning of markets, and pursuit of 
environmental goals. 
4.2. Coordination of instruments 
4.2.1.  The Structural Funds and the Cohesion Fund 
Assistance granted under the Cohesion Fu nd allows the financing of transport 
infrastructure projects contributing to the implementation of trans-European networks, 
and of environment projects enabling the c ountries concerned to achieve progress in 
attaining EU environment policy goals. The Cohesion Fund enables the four eligible 
Member States (Spain, Portugal, Greece and Ireland) to sustain a major public 
investment effort in these two fields of co mmon interest, while respecting the targets for 
reducing budget deficits as set out in th e convergence programmes drawn up in the 
context of economic and monetary union. 
The main instrument for coordinating as sistance from the Cohesion Fund and the 
Structural Funds is the strategic reference framework (SRF). Member States present the 
Commission with an SRF as the logical consequence of the new legal provision 
governing Cohesion Fund operations. Article 1(2) of Regulation (EC) No 1265/1999 
stipulates that "Member States shall also provide the results of the environmental 
impact assessment in co nformity with the Community le gislation, and th eir consistency 
with a general environmental or transport st rategy at administra tive unit or sector 
level". 
The four Member States qualifying for the Cohesion Fund presented their SRFs for the 
environment and transport sectors at the e nd of 2000. Since then, decisions to finance 
projects under the Cohesion Fund have been  checked in order to prevent duplicated 
funding with programmes adopted under the Structural Funds. Moreover, the SRFs 
promote greater complementarity between the two instruments. 
Thus, in certain cases, these reference fram eworks form an integral part of the 
programmes approved under the Structural F unds for 2000-06, reinforcing coordination 
between the Cohesion Fund and Structural Fund assistance. 
In 2003 the candidate countries, which will all be eligible under the Cohesion Fund 
from the time of their accession on 1 May 2004, began preparing their SRFs alongside their programmes under the Structural Funds. Th e SRFs will be fina lised during the first 
quarter of 2004.  
Moreover, it should be noted  that Ireland, which has received assistance under the 
Cohesion Fund since this instrument was set up, ceased to be eligible on 1 January 2004 
                                                
 
26 COM(2002) 321 final of 26 June 2002. 
 
EN 60   EN since its level of per capit a GNP is now well above the threshold of 90% of the 
Community average. 
Finally, two information meetings took place with the Member States (including the 
candidate countries) du ring 2003 to coincide with meetings  of the CDCR (the Structural 
Funds committee), making it possible to further strengthen the consistency between these financial instruments. 
4.2.2.  The Structural Funds and the EIB/EIF 
Under the terms of the Cooperation Agreement  between the Commission and the EIB 
covering Community structural operations in 2000-06, a contact interface was set up 
between the two bodies. In addition to th e appraisal and part -financing of major 
projects, an ex-ante  consultation procedure has been  installed regarding important 
strategic and policy papers, e.g. "programme lending". 
Regional Programme lending  and its institutionalisation had been achieved by the 
parties concerned. The expansion of Regiona l Programme lending is a demonstration of 
increased cooperation and closer coopera tion with the EIB. Regional Programme 
lending refers to a specific type of fram ework facility for supporting multi-annual 
investment programmes managed by public authorities and part-financed by the 
Structural Funds. This issue will be of great  importance to the new Member States and 
remote developing regions.  
Intensive contacts were held in connection w ith the appraisal of projects. Progress was 
achieved in mutual understanding and, to a certain extent, harmonisation of appraisal 
methodology. 
A joint DG REGIO/EIB Working Group inve stigated ways in which the Bank’s 
financing can support and complement the work  of the Structural Funds more directly. 
The DG REGIO/EIB Work ing Group contributed to the prep aration of future legislation 
on structural assistance. Further new bilate ral meetings were held with individual  
countries, namely Italy and Germany. The main con cerns of the Italian desk related to 
the transport sector and the possibility of th e EIB assisting the Italian authorities in the 
field of the public-private partnership. 
The principal Commission initiative this year was the growth initiative  and the quick 
start projects, which in conj unction with the 2010 innovation initiative and research and 
development were of common interest a nd the subject of cooperation meetings. 
In 2003, the European Investment Bank lent  a total of €42.3 billion (€39.6 billion in 
2002) for projects furthering the European Unio n’s political objective s. Financing in the 
Member States reached €34.2 billion, while €8. 1 billion was made available in non-EU 
countries. Lending in the ten Member States which subsequently joined the Union in 
2004 ran to a record €4.6 billi on, and in the Med iterranean Partner Countries (including 
Turkey) to €2.1 billion. 
Within the EU-15 countries, €16.3 billion was made available for projects in eligible 
regions in the form of indi vidual loans and an estimate d €6.5 billion in the form of 
credit lines ("global loans") to partner banks (for the financing of SME ventures and 
smaller-scale public investment). Includi ng the future Member States, regional 
 
EN 61   EN development projects attracted €27.3 billion in loans, corres ponding to 70% of total EIB 
lending in EU-15 and the futu re Member States in 2003. 
Within the EIB group, the European Investment Fund (EIF) is now exclusively in 
charge of all venture capital and guarant ee operations for small businesses and for 
venture capital (Community re sources and EIB/EIF resources) . It focussed its activity 
on early-stage financing, the high-tech sect or and the knowledge-based society. The EIF 
took stakes worth €135 million in venture capital funds and provided a total of €2.2 
billion in guarantees for SME financing. 
5. EVALUATION  
5.1. Mid-term evaluation 
Mid-term evaluation is defined by Article 42 of Regulation (EC) No  1260/1999: it is to 
examine, in the light of the ex-ante evaluation, the initial results of the assistance, its 
relevance and the extent to which the targets ha ve been attained. It is also to assess the 
use made of financial resources and the operation of monitoring and implementation. 
This evaluation is to be carried out under the responsibility of the managing authority, 
in cooperation with the Commission and the Memb er State. Article 42(2) stipulates that 
the results of the evaluation, carried out by an independent assessor, must be sent to the 
Commission no later than 31 December 2003. 
5.1.1.  The evaluation process 
The Commission made known its general guide lines on mid-term evaluation from the 
end of 2000 onwards and worked together w ith all the managing authorities in 2001 and 
2002. Work was stepped up in 2003: the Commission was represented on most of the 
monitoring committees set up specifical ly to work on mid-term evaluation. 
Article 42(3) of Regulation (EC) No 1260/ 1999 stipulates that the Commission must 
examine the relevance and quality of mid- term evaluation. Throughout the second half 
of 2003 the Commission accordingly assessed th e quality of all the drafts submitted by 
the managing authorities; the aim was to examine any weaknesses in those interim 
reports and to assist the assessors  in drawing up the final reports. 
More specifically, the Commissi on endeavoured to check whet her the evaluation reports 
included: 
– analysis and field work not based solely  on the opinion of those responsible for 
implementing the programme, 
– a clear analysis of the financial data a nd of the stage reached in the programme 
and, for any mid-term targets not achieve d, the reasons why and recommendations 
on remedial measures to be taken, 
– substantiated conclusions and specific r ecommendations on what must be done to 
improve programme performance. 
All the final reports were sent to the Commission by the 31 December 2003 deadline. 
Most of them complied with the three cr iteria above and provided the basis for 
 
EN 62   EN allocating the performance reserve; they  will likewise form the basis for any 
reorientation of programmes. 
The 2004 annual report on the implementation of  the Structural Funds will examine the 
results of these mid-term evaluations more fully. 
5.1.2.  Performance reserve 
Governed by Article 44 of Regulation (EC) No 1260/1999, allocation of the 
performance reserve comprised two main stages: 
– evaluation by each Member State, be fore 31 December 2003 and in close 
consultation with the Commission, of each programme’s performance based on a limited number of monitoring indicators (a nd their target values), which must 
reflect the effectiveness, management a nd financial implementation of assistance, 
– allocation of the reserve by the Commission, before 31 March 2004, to the most 
successful programmes or pr iorities, based on proposals from the Member States. 
The Commission presented a paper, which it  discussed with Member States at the 
meeting of the CDCR on 28 October 2003, on guiding principles for decisions on the 
allocation of the performance reserve. Nine guiding principles were outlined, the main 
ones requiring decisions on th e allocation of the reserv e to be characterised by 
transparency, accountability and equity. 
The workload relating to carrying out ev aluations and alloca ting the performance 
reserve was concentrated in just a few m onths (late 2003 to early 2004). However, the 
preparatory work - defining the indicators a nd their target values, establishing a method 
for assessing the success or otherwise of a programme, and setting possible amounts for each operation – began in 2000 with the dr awing-up of operational programmes and 
SPDs. 
Right up until Member States presented th eir final proposals, the Commission helped 
them to devise transparent allocation methods – at both national and regional level – 
and to ensure that the indicators and ta rget values chosen were relevant. The 
Commission also took into account the sp ecific institutional f eatures of certain 
Member States. 
In the 16
th report on the implementation of the St ructural Funds (2004), the Commission 
will provide detailed information on the allocation of the performance reserve finally decided, with a breakdown by country and Ob jective. In addition, a detailed report on 
mid-term evaluation and allocation of th e performance reserve was drawn up in 
March 2004, for the attention of the Committee on the Development and Conversion of the Regions. 
 
EN 63   EN 5.2. Other evaluations 
– Ex-post evaluation of Objective 1 (1994-99)  
Launched in November 2001, this study showed that the Structural Funds had a positive 
impact on the GDP of European regions whose development is  lagging behind. For 
some regions, the impact of Objective 1 programmes were quantified by econometric 
models. The most significant results were observed in Germany – the GDP of the new Länder is estimated to have increased by around 4% – and in Portugal, where GDP in 1999 was around 4.5% higher than it would have  been without Community assistance. 
The added value of EU assistance under Objec tive 1 is also significant: developing a 
partnership with the Member States a nd their regions, introducing a culture of 
monitoring and evaluation. However, according to the study, research and development 
activity must be supported more, planning a nd management of major projects improved, 
and programme evaluation indicators (and their target values) defined realistically. As 
regards the 2007-13 programming period, the evaluation highlighted the need to 
strengthen institutional capacity in the new Member States. 
– Ex-post evaluation of Objective 2 (1994-99)
 
This evaluation was launched in December 2001 and confirmed the relevance of the 
strategies adopted in the va rious programmes. However, it highlighted the need to 
promote measures directly li nked to the Lisbon Strategy. It  turns out that the regions 
which centred their programmes on resear ch, development, innova tion and technology 
transfer are those which have created j obs. Also, according to  the assessors, the 
Objective 2 management proced ures need to be simplified. As for Objective 1, the study 
recommends strengthening institutional capac ity in the new Member States, including 
by introducing multi-annual programming and promoting partnership. 
– Ex-post evaluation of the Interr eg II Initiative (1994-99)  
This evaluation proved that the strategies  implemented via the various programmes 
were appropriate and addressed the spec ific problems of border regions. The 
programmes’ effectiveness was judged to be  satisfactory overall, particularly in the 
sphere of transport and energy networks. Their implementation and management were 
not entirely satisfactory, how ever: the Commission would have liked them to have been 
drawn up and managed on a genuinely cross-bo rder basis and in a more integrated 
manner – particularly on a financial level.  The overall impact of Interreg II was 
nevertheless considered positive. The various programmes implemented improved the accessibility of border regions and promoted  improved mobility through the investment 
made in transport. Interreg II also had a beneficial impact on the production sector: 
improved services for SMEs, joint resear ch and development projects, better 
cross-border professional mobility. In their conclusions, the assessors highlighted the 
need to strengthen the means of cross-bor der cooperation (which will increase with 
enlargement) and to improve regulation of  its implementation and management. They 
also stressed the need for these cooperation programmes to complement the other forms 
of Community regional assistance. 
 
EN 64   EN – Ex-post evaluation of the Urban I Initiative (1994-99)  
The evaluation covered the 118 programmes launched during the period and examined 
the reasons for their effectiv eness: complementarity with assistance under Objectives 1 
and 2, synergy between projects under the same programme and active partnership 
(particularly on questions of management and implementation). Two weaknesses were 
highlighted: very limited private-sector participation and poor  understanding of 
Commission documents by those involved in th e programmes. In terms of impact, the 
programmes enabled the urban areas rece iving assistance to be renovated and 
modernised, and they also helped to improve  living conditions there. In some cases, 
they helped the local author ities to devise an urban st rategy. In their recommendations, 
however, the assessors recognised the need to improve the monitoring and evaluation 
mechanisms; they also advocat ed setting up a transnationa l network among all the cities 
receiving assistance under Urban. 
– Study on the effectiveness of the system s for implementing the Structural Funds  
The assessors based their work on case st udies. In their vi ew, the problems of 
ineffectiveness and complexity arising in the implementation of the Structural Funds 
stem from the Member States and their in terpretation of the rules. Programming, the 
management mechanisms, ex-ante and mid-term evaluations , and the allocation of 
resources on the basis of payments rather than commitments seemed to be satisfactory 
practices. By contrast, the authors of the st udy considered that the lengthy process for 
approving programming documents, the qual ity and use of information on monitoring 
programmes, the complexity of financial fl ows and the dual accounti ng applied in some 
regions could impair the effectiveness of  Community assistance.  The Commission took 
the study’s findings and recommendations into  account when drawing up the 3rd report 
on economic and social cohesion. 
– Ex-post evaluation of the European Social Fund under Objectives 3, 4 and 1, and 
of the Employment and Adapt Community Initiatives (1994-99)  
This evaluation was launched in September 2002 and is currently being finalised. It is 
based on reading national evaluation reports , national closure repo rts, and qualitative 
field work. The interim provisi onal findings have been sent  to the Partnership for ESF 
evaluation and to the ESF Committee. The fi nal reports will be available in 2004. The 
draft final report’s main findings are: 
(i) the ESF has supported mainly training  initiatives and combined measures 
(ii) the impact of the measures has vari ed according to context, but "pathway" 
measures and those focused on the needs of individuals seem to be the most 
fruitful 
(iii) the ESF has also supported improveme nts in the national systems relating to 
training and the job market. Overall, it can be concluded that  the ESF has also 
contributed towards consolidating a number of political priorities, such as promoting equal opportunities helping the la bour force to adapt. Partnership-based 
programming and management at various le vels has encouraged a long-term view 
of the job market and made it possibl e to involve the social partners. 
 
EN 65   EN – Evaluation of innovative measures (Artic le 6 of the ESF Regulation) "Local 
employment strategies and innovation"  
This evaluation covers an Article 6 i nnovative measure aimed at developing local 
employment strategies. Having started work at the beginnin g of 2003, the assessors will 
have to examine the achievements of the pr ojects and the programme, draw lessons for 
similar measures in future, and make r ecommendations to the Commission. The final 
report will be available in 2006. 
5.3. Other evaluation work 
5.3.1.  Cost-benefit analysis 
Article 26 of Regulation (EC) No 1260/1999 re quires Member States to notify major 
projects to the Commission and to provide in formation on cost-benefit analysis and the 
projects’ impact on employment and the environment. 
In 2003 the DG for Regional Policy examined and gave an opinion on 161 major 
projects submitted to it, most of which related to the environment and transport. The European Investment Bank (EIB) provided an expert technical appr aisal of 45 projects. 
5.3.2.  Methodological guides and tools 
Throughout 2003 DG REGIO put into effect a num ber of projects which will enable it 
to provide assistance with ev aluation. For example, the MEANS package – regarded as 
a real instruction manual fo r evaluating socio-economic pr ogrammes – was updated; the 
complete guide will be available on DG REGI O’s website in the first half of 2004. This 
work is being undertaken in close cooperati on with the other Di rectorates-General 
responsible for the Structural Funds. 
5.3.3.  Conference on evaluation
 
In cooperation with the other Directorates-General responsib le for the Structural Funds, 
DG REGIO held a major conference on Structur al Funds evaluation in  Budapest on 26 
and 27 June 2003. The main subject discussed was the challenges of evaluation in an 
enlarged Europe. A total of 474 evaluation prof essionals took part in  the conference and 
29 working papers were presented. 
Over the two days, speakers highlighted: – the increase in evaluation work and expertise in the Member States, 
– the importance of evaluation as an aid to decision-making, 
– the need, when evaluating the Structur al Funds, to take into account the 
increasingly complex nature of the polic ies being implemented and to help the 
various parties involved to lear n and to take responsibility, 
– the time it takes to develop an evaluati on culture within regional aid programmes 
(the aim being to improve the quality of  the programmes themselves rather than 
just produce quali ty evaluations), 
 
EN 66   EN – the need, when evaluating a programme, to include both quantitative and 
qualitative data, 
– the complementary nature of evaluati ng and monitoring Community assistance 
programmes. 
5.3.4.  Mid-term verification of the additionality principle 
Among the general principles of the Structur al Funds’ operation, additionality makes it 
possible to prevent the Community Funds fr om replacing appropria te national public 
expenditure in the same spheres of assi stance. Article 11(3) of Regulation (EC) 
No 1260/1999 requires the Commission to ca rry out a mid-term verification of 
compliance with the additionality principl e in respect of the 2000-06 programmes. 
On completion of that verification, the Co mmission and the Member States may agree 
to revise the level of structural expenditure to be attained if th e economic situation has 
resulted in developments in public reve nue or employment in the Member State 
concerned significantly different from those expected at the time of the ex-ante 
verification. 
This work was undertaken between August 2003 and February 2004 in close 
cooperation with DG ECFIN. The main c onclusions which can be drawn are: 
– Based on the information avai lable, it appears that the additionality principle was 
complied with in eight Member States (Belgium, Spain, Finland, Greece, the Netherlands, Portugal, Austria and Sw eden), enabling a high level of public 
investment to be maintained – in some cases higher than initially forecast. 
– Three countries did not comply with the additionality principl e during the period 
2000-02: Germany, Italy and Ireland. 
– As this assessment will be followed up by an ex-post  verification in 2005, there is 
still time for public spending in the latter  three countries to increase to a level 
ensuring compliance with the additionali ty principle over the programming period 
as a whole. 
– For the Member States not complying with the additionality prin ciple – and after a 
case-by-case examination – the Commission nevertheless deemed it necessary to lower the expenditure ta rget for the remainder of the programming period. 
– Neither France nor the United Kingdom had supplied acceptable additionality 
assessments by the 31 December 2003 deadline. 
 
EN 67   EN 6. CONTROLS  
The Anti-Fraud Office In the course of investigations carried out during 2003, the Anti-Fraud Office undertook 
13 operational missions in the Member States regarding structural measures. For six of 
those missions, the Anti-Fraud Office took as  its legal basis Regul ation (Euratom, EC) 
No 2185/96
27 concerning on-the-spot checks a nd inspections carried out by the 
Commission in order to protect the European  Communities’ financial interests against 
fraud and other irregularities. The other seven mi ssions were to assist either the national 
administrative authorities or the judicial authorities. 
It should be pointed out that, as well as carrying out operationa l investigations and 
coordinating them at Community level, th e Anti-Fraud Office provides all forms of 
assistance in order to facilitate coordina tion of investigations launched by national 
administrative or judicial authorities. 
Eight missions related to the ESF, of which four covered cases opened in 2003 and four 
concerned investigations launched in prev ious years. Three missions concerned the 
ERDF and related to cases opened in  2000, 2002 and 2003. One mission concerning the 
EAGGF Guidance Section and one the FIFG  related to cases opened in 2003. 
The investigations revealed false invoices a nd false declarations linked to an absence of 
supporting documents. 
Also during 2003 the Anti-Fraud Office comple ted a joint audit, launched with the 
Directorates-General responsible for th e Structural Funds, on Member States’ 
implementation of Commission Regulation (EC)  No 1681/94 as rega rds the systems and 
procedures for notifying and following up irregul arities, as well as on the application of 
Article 8 of Regulation (EC) No 438/2001. Th e audit’s conclusions were sent to the 
Member States and a summary report was sent to the Council, the European Parliament 
and the Court of Auditors. 
In addition, for 2003 the Member States notified to the Commission under Regulation 
(EC) No 1681/1994 2 439 cases of irregul arities involving a total of €340 173 487. 
Compared to 2002, both the number of cases of  irregularities notif ied and the amounts 
involved are lower – representing about  half the previous year’s figures28. This may be 
explained by the fact that control work pr ior to closure of th e 1994-99 programmes had 
been completed in relation to the previous year, which was the last year of controls 
concerning the same period. 
It must also be pointed out that Article s 3 and 12 of Regulation (EC) No 1681/94 
require Member States to report to the Comm ission all cases of i rregularities involving 
                                                 
27 Regulation (Euratom, EC) No 2185/96 of 11 November 1996 - OJ L 292, 15.11.1996, p. 2. 
28 14th annual report on the Structural Funds (2002), point 3.2: 4 652 cases involving a total of €604 466 000. 
 
EN 68   EN €4 000 or above. It should be noted that  Regulation (EC) No 1681/94 does not 
distinguish between fraud29 and other irregularities. 
The Anti-Fraud Office’s involvement in th e closure of 1994-99 programmes, still in 
progress, also permitted financial monitoring and application of Article 5 of Regulation 
(EC) No 1681/94 with respect to a signifi cant number of cases. Article 5 requires 
Member States to inform the Commission, on a case-by-case basis, of the procedures 
instituted following irregularities notified a nd of important changes to those procedures. 
Since closure has not been completed, however , it is considered too soon to give data. 
The Commission was not informed of the acti on taken on some cases notified. This 
mainly concerns programmes from the firs t programming period, although a number of 
them have been closed for some time. Nevert heless, since legal proceedings are still in 
progress at national level for irregularities, final clearance of the amounts relating to 
those irregularities must be suspended until the proceedings have been completed.  
ERDF 
As regards auditing ERDF expenditure, DG REGIO’s control work for 2003 had two 
priorities: 
The first priority was to examine the vali dity statements drawn up on the basis of 
Article 8 of Regulation (EC) No 2064/1997 when ERDF programmes are closed. In 
those statements, an independent body summar ises the conclusions  of the controls 
carried out in previous years and gives its opinion as to the validity  of the request for 
final payment as well as the legality and regularity of th e operations underlying the final 
declaration of expenditure. This examinati on covered 744 validity statements at the end 
of 2003, involving practically a ll the programmes in questi on. A total of 229 of those 
statements were not accepted on examinati on, either because additional checks were 
required or because further information proved necessary. 
The second priority was to audit the expe nditure declared by Member States for the 
1994-99 programmes. The aim was to audit a sample of programmes selected in the 
Member States and check the declared expenditure’s compliance and eligibility by examining a representative number of proj ects. To that end, 17 programmes in 12 
Member States were the subject of 36 audit missions. 
The remainder of DG REGIO’s ERDF audit effort focused on: – examining the management and control sy stems set up by Member States for the 
2000-06 programming period. The follow-up to  that investigati on, begun in 2002, 
comprised seven audit missions in seven different Member St ates. Those seven 
audits aimed to record the improvements introduced in response to the comments 
and recommendations made during previous audits; 
– examining the application of Regulati on (EC) No 1681/94. Four audits were 
carried out. 
                                                
 
29 For a definition of “fraud”, see Article 1(1) of  the Convention on the protection of the European 
Communities’ financial interests. 
 
EN 69   EN In all, DG REGIO carried out 48 audit missions to Member States in 2003. 
EAGGF 
The first priority was to examine the vali dity statements drawn up on the basis of 
Article 8 of Regulation (EC) No 2064/97 when EAGGF programmes are closed. The 
examination covered 360 of the 381 validity statements at the end of 2003, involving 
practically all of the programmes in ques tion. On examination, 226 of those statements 
were accepted. The others were not accepted at that stage, either because additional checks were required or because further information proved necessary. 
The second priority was to examine the ma nagement and control systems set up by 
Member States for the 2000-06 programmi ng period. At the end of 2003, the systems 
for 100 programmes – out of a total of 144 – had been exam ined. An on-the-spot audit 
was carried out on 33 programmes ou t of those 100 examinations. 
ESF 
It must first be pointed out that, beside s continuing ESF audit work, 2003 was marked 
by the modernisation of ESF audit procedures  (inter alia: introduction of a multi-annual 
ESF audit strategy based on quantified risk analysis; introduction of the ESF audit 
manual as part of the revised manual for all the Structural Funds) and the start of work 
relating to enlargement (launch of technical fact-finding missions to  find out about the 
systems set up in the 10 new Member Stat es). The purpose of those missions was to 
obtain a brief on-the-spot overview of the systems prior to receiving the written 
descriptions which the Member States wi ll send in accordance with Article 5 of 
Regulation (EC) No 438/2001. By the end of 2003, four missions covering five 
countries had been carried out. 
ESF audit work related to evaluating the systems for the 2000- 06 programming period 
as part of the 2003-06 ESF audit strategy, wh ich should make it possible – by the end of 
2004 – to be reasonably sure about the reliability of the management and control 
systems set up in the Member States. The strategy is based on an integrated audit 
concept and on progressively mutual audi ting between the Member States and the 
Commission. 
In 2003, a total of 34 audit missions were carried out for the 2000-06 programming 
period; they can be broken down as follows: 
– 16 audits of Objective 1 systems 
– 1 audit of an Objective 2 system 
– 11 audits of Objective 3 systems 
– 6 audits of Equal systems. 
The audits carried out made it possible to c ontinue practical on-the-spot evaluation of 
the system descriptions submitted by the Memb er States (Article 5 of Regulation (EC) 
No 438/2001). 
Three audits relating to closure of the 1994-99 period were also carried out. 
 
EN 70   EN FISHERIES 
The ex-post  control department accorded prio rity to auditing systems for the 
management and control of FIFG programme s in the 2000-06 period and to the closure 
of 1994-99 programmes. 
A total of 14 audit missions were carried out in 2003. Eight audit missions related only to closure of 1994-99 programmes in seven 
Member States; three related only to veri fication of management and control systems 
for 2000-06 programmes in two Member States ; and three related to  both closure and 
systems verification in two Member States. The programmes audited in respect of closure involved €1 114 million, and those audited for management and control system verification €814 million. In total, 58 st ructural projects undertaken in both 
programming periods were audited in 2003, involving €18.2 million. Community aid of 
€1 million was found to be non-eligible, and an amount to be determined will be 
deducted when closing the programmes of  the two Member States concerned. 
In accordance with Regulation (EC) No 438/2001, DG FISH has completed the desk 
check of the management and control syst ems set up by Member States for all the 
programmes for which it is the lead department, and by 31 March 2004 it will have completed on-the-spot checks on those system s in the 13 Member States concerned. 
Bilateral discussions are in progress with ni ne Member States to clarify a number of 
aspects following the desk and/or on-the-spot  checks. Examination of the management 
and control systems in four Member States has been completed. 
7. O
PINIONS OF THE COMMITTEES  
7.1. Committee on the Development and Conversion of the Regions 
The CDCR acts as a management comm ittee when discussing the rules for 
implementing Regulation (EC) No 1260/1999, and as an advisory committee when 
discussing any other matter. It  also provides a forum for in formation and debate on any 
specific aspect of implementing the Structur al Funds, and particul arly the European 
Regional Development Fund. In total, some 70 cases were discussed at the 11 meetings 
of the CDCR and the five meetings of its  specialist working gr oup on territorial and 
urban development matters. 
The CDCR’s management committee work in 2 003 featured, in particular, examination 
of the proposal for amendi ng Regulation (EC) No 1685/200030. The CDCR’s most 
important discussions also included examining questions referred to it on the interpretation of the automatic decommitme nt rule, and particularly the exceptions 
provided for in Article 31 of Regulation (EC) No 1260/1999. 
                                                
 
30 Commission Regulation (EC) No 1685/2000 of 28 July 2000 laying down detailed rules for the 
implementation of Council Regulation (EC) No 1260/1999 as regards eligibility of expenditure of 
operations co-financed by the Structural Funds – OJ L 193, 29.7.2000, p. 39. 
 
EN 71   EN 7.2. ESF Committee 
The ESF Committee met four times in 2003, a nd its technical working group six times. 
It delivered two written opinions. The fi rst was on the amendment of Commission 
Regulation (EC) No 1685/2000, wi th particular reference to Rules 1, 3 and 7. Four 
countries voted against the change to Rule  1, and two voted against the changes to 
Rules 3 and 7. Other countries vot ed in favour or did not respond. 
At its meeting on 18 June 2003, the Committ ee adopted an opinion on the Commission 
communication 'The Structural Funds and th eir coordination with the Cohesion Fund – 
Revised Indicative Guidelines'. The opinion  stressed the need to strengthen aspects 
relating to human resources development and employment as an across-the-board 
priority. It emphasised that partnership is an integral component in the implementation 
of programmes and that the involvement and contribution of the so cial partners should 
be recognised and strengthened. The Committ ee also requested that the text of the 
guidelines should be updated in order to ta ke account of the recent revision of the 
European Employment Strategy. 
At its regular meetings, the Committee di scussed the revised European Employment 
Strategy’s implications for ESF implementation,  as well as reports on evaluation and the 
implementation of Article 6 and Equal. 
7.3. Committee on Agricultural Stru ctures and Rural Development 
The STAR Committee (agriculture and rural development)  met nine times in 2003 and 
acted as a management committee under the pr ocedure provided for in  Article 47(3) of 
Regulation (EC) No 1260/ 1999 on the following issues: 
– Amendment of Commission Regulation (EC) No 2759/1999 regarding SAPARD. 
The Committee gave a favourable opinion. 
– Commission Regulation (EC) No 9 63/2003 amending Commission Regulation 
(EC) No 445/2002 laying down detailed ru les for the application of Council 
Regulation (EC) No 1257/1999 on support for rural development from the 
EAGGF. The Committee gave  a favourable opinion. 
– Commission notice amending the notice to  Member States of 14 April 2000 
laying down guidelines for the Community initiative for rural development. The 
Committee gave a favourable opinion. 
– Ad hoc Regulation (EC) No 141/2004 on implementing rules for specific rural 
development measures for new Member St ates. The Committee gave a favourable 
opinion. 
The Committee gave favourable opinions on 38 rural devel opment plans under 
Article 44(2) of Regulation (EC) No 1257/1999 and on 14 amendments to rural development plans under Article 4 of Regulation (EC) No 1268/1999. 
 
EN 72   EN The Committee was also consulted on: 
– Evaluation of the systems established by the Member States for the management 
and control of Rural Development Programmes for 2000-06 financed under the Guidance Fund. 
– Revised Indicative Guidelines for the St ructural Funds and their Coordination 
with the Cohesion Fund. 
7.4. Advisory Committee on Fi sheries and Aquaculture 
The Committee was consulted on five o ccasions in 2003 on the following subjects: 
– 17 February 2003: Second revision of Regulation (EC) No 1685/2000 governing 
the eligibility rules under the Structur al Funds. The consultation took place by 
written procedure and resu lted in a positive opinion. 
– 10 April 2003: Information on the accompanying measures and financial 
resources required by aff ected Member States to address the socio-economic 
impact of recovery plan s, on the 2003 programme fo r innovative actions, and the 
2003 programme for technical assistance. 
– 24 June 2003: Information on the future of cohesion policy, information on the 
impact of the CFP reform on aid to the fl eet, consultation on the revised indicative 
guidelines for the Structural Funds in fu ture Member States (favourable opinion). 
– 29 August 2003: Revision of the list of Objective 2 eligibility zones. The 
consultation took place by written procedur e and resulted in a positive opinion. 
– 19 November 2003: Information on the re sults of the call for proposals for 
innovative actions in 2003 and the impleme ntation of previous projects under the 
similar call for proposals in 2002.