COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(92) 339 final 
Brussels, 31 July 1992 
COMMUNICATION FROM THE COMMISSION 
and 
Draft 
COUNCIL REGULATION (EC) 
establishing a Cohesion Fund 
(presented by the Commission) 
*••';*•$». 
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COMMUNICATION FROM THE COMMISSION 
Introduction 
The broad outline of the Commission's initial thinking on the Cohesion Fund 
has been set out in two previous communications, viz. "From the Single Act 
to Maastricht and beyond - the means to match our ambitions" (COM(92) 2000) 
and "Community structural policies - review and outlook" (COM(92) 84). 
To facilitate discussion and further progress, but recognizing that the 
Treaty has not yet been ratified, it is desirable that the Commission 
should provide an indication of its thinking on the nature of the Fund and 
how it will operate. 
The European Council at Lisbon decided that the Cohesion Fund should be put 
in place early in 1993. The Commission therefore needs to put forward 
proposals for the establishment and implementation of the Fund in time to 
set up the Fund as decided by the European Council. This Communication and 
the draft proposal for a regulation attached thereto are intended to 
facilitate the rapid adoption of a regulation establishing the Cohesion 
Fund. It will thus be possible to adopt the Regulation formally once the 
Maastricht Treaty has been ratified. It should be recalled that the formal 
procedure for adoption will require the assent of the European Parliament, 
the opinion of the Economic and Social Committee and the Committee of the 
Regions to be set up after ratification. 
1. Objectives 
Article 130d of the Treaty establishing the European Community states that 
the Council shall, before 31 December 1993, set up a Cohesion Fund 
providing a financial contribution to projects in the fields of environment 
and trans-European networks in the area of transport infrastructure. 
The protocol on economic and social cohesion annexed to the Treaty 
establishes the criteria of eligibility for this Fund, and reaffirms the 
role of the existing Structural Funds and the EIB in the field of cohesion. 
2. Characteristics 
Although different in concept from the existing Structural Funds, the 
Cohesion Fund is also structural in nature. This is evidenced both by the 
fact that the provision for its establishment is inserted in Article 130d 
of the Treaty, which governs the tasks, objectives and organization of the 
Structural Funds, and by the fields it covers. 
Like the existing Structural Funds, the Cohesion Fund is intended to reduce 
economic and social disparities in the Community. But whereas the former 
have a wide range of regional and social objectives, the Cohesion Fund has 
the more specific purpose of contributing to cohesion via financing of 
projects in the field of transport infrastructure and environmental 
programmes in Member states faced with structural weaknesses and a limited 
funding capacity. 
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By contributing to national governments' expenditure in the field of 
transport infrastructure and environment, the Cohesion Fund will reinforce 
the structure and improve the prospects of balanced growth of the economies 
concerned. 
The use of the Cohesion Fund will allow a recipient Member State to enhance 
its transport and environmental facilities more quickly without a 
corresponding increase in domestic public expenditure, since no 
additionality will be required for the Fund. 
The protocol makes an explicit link to the convergence programmes. These 
programmes constitute the framework for defining the overall macroeconomic 
effort which is needed for integration into the EMU. The Community will 
contribute to this effort through the Cohesion Fund. This contribution 
constitutes a commitment spread over several years. 
3. Geographical coverage 
The geographical coverage concerns Member States with a per capita 6NP of 
less than 90% of the Community average which have a programme leading to 
the fulfilment of the conditions of economic .convergence as set out in 
Article 104c of the Treaty. At present four Member States have a per 
capita GNP of less than 90% of the Community average, viz. Greece, Ireland, 
Portugal and Spain. 
4. Projects to be financed by the Cohesion Fund 
Projects to be considered for Cohesion Fund financing must contribute to 
the achievement of Community objectives for the environment and trans-
European transport networks. The selection of the projects or groups of 
related projects and more especially the distribution between environment 
and transport infrastructure are matters for the Member States concerned 
and the Commission. 
There should be no a priori breakdown between environment and transport 
infrastructure, but a reasonable balance should be ensured between the two 
fields of intervention. 
For the field of the environment, projects financed by the Fund should 
contribute to the realization of Community environmental objectives. 
Moreover, the Fund should permit adaptation to the requirements of 
legislation, including future legislation which involves investment costs 
deemed to be disproportionate for the public authorities of the Member 
States concerned. The implementation of the guidelines of the Fifth 
Programme of Environmental Action will be facilitated. 
The Cohesion Fund will provide support for transport infrastructure 
projects consistent with guidelines where such guidelines exist. The 
absence of guidelines in any particular field of transport networks should 
not prevent the financing of projects in that field. However, in order to 
ensure that projects assisted are as consistent as possible with the 
objectives of Community policy on trans-European networks the ComK«issior 
will speed up the presentation of guidelines to the Council for aspects not 
yet covered. 
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5. Economic conditionality 
The protocol states that Member States benefiting from the Cohesion Fund 
must have a programme leading to the fulfilment of the conditions of 
economic convergence. This requirement must be translated into a practical 
form of economic conditionality which takes account of the nature of the 
Fund. 
Economic conditionality must be based on the economic convergence programme 
for the Member State concerned and on the examination by the Council of 
that programme and its implementation by the Member State. 
If it is established by the Council on the basis of a proposal from the 
Commission that in spite of recommendations a Member State is not making 
satisfactory progress towards the fulfilment of the conditions of economic 
convergence as set out in Article 104c of the Treaty, the Council may 
invite the Commission to make no commitments to new projects in that Member 
State. 
The European Parliament should be informed immediately about any decision 
concerning the suspension of the granting of assistance from the Fund. 
Once such a decision has been taken the Commission is in favour of 
convening, should the need arise, a consultation between the European 
Parliament, the council and the Commission in order to examine possible 
budgetary consequences which may arise pursuant to the suspension of Fund 
assistance. 
This suspension shall cease once the council finds that the Member State 
has resumed convergence. 
The Commission will have to manage the Fund in a manner which allows 
economic conditionality to be effectively applied. Mechanisms for ensuring 
appropriate conditionality are outlined in point 6 below. However, the 
precise arrangements for the procedure will be established at a later 
stage. 
since the Cohesion Fund should be concerned with large projects or groups 
of related projects, it is important that projects are actually carried 
out, i.e. not stopped mid-way through realization. Conditionality can 
therefore apply only to the possibility of not undertaking commitments for 
new projects before the Member State has resumed convergence as set out in 
Article 104c. 
6. Distribution and management 
Given the need for Member states to be able to plan the programming of 
projects, an indicative distribution for the whole period of the total 
resources between Member States will be made by the Commission in the light 
of economic, social and other relevant factors. 
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The commission will approve an initial set of projects such as to ensure a 
substantial flow of payments on the basis of the first three years' 
commitment appropriations. Further projects for the following years will be 
approved in good time. The approval of the latter projects may be suspended 
if it is established in the multilateral surveillance procedure that a 
Member State * s convergence programme is not proceeding in a broadly 
satisfactory manner. In managing the approval of projects the Commission 
will also ensure that it has the necessary flexibility to cater for the 
accompaniment of environmental legislation with financial assistance, which 
may be required in accordance with Article 130s(5). 
7. Rates of assistance 
Community assistance granted by the Cohesion Fund in respect of the various 
objectives listed will be set at 85% to 90% of public or similar 
expenditure. If assistance is given to a project which yields revenue, the 
cost basis for assistance from the Fund will be established by the 
Commission in agreement with the Member State concerned. 
The Fund may contribute 100% of the cost of preparatory studies and 
technical support measures. 
8. Volume and timing of Community financing 
The contribution proposed by the Commission in the financial perspectives 
1993-1997 rises from ECU 1.5 billion in 1993 to ECU 2.5 billion in 1997 
(1992 prices) in commitment appropriations. This amount should make the 
Cohesion Fund an adequate instrument, both in terms of the size of the 
projects to be financed and in relation to the need for financial transfers 
to the beneficiary Member States. 
There is a particular need for substantial transfers early in the period in 
order to achieve the objectives of the Fund. Therefore adequate commitment 
and payment appropriations must be available so that they can be deployed 
as soon as the Fund is set up, i.e. as early as possible in 1993. It will 
also be necessary to ensure that the Fund can make sufficient advance 
payments at an early stage towards projects already identified. This will 
make it possible to avoid a system of mere reimbursement of expenditure 
which would weaken the impact of Community assistance. The financial 
figures included in the draft regulation take account of these 
considerations. 
9. Complementarity and consultation 
Projects to be financed will be established in agreement between the 
Commission and the Member state concerned. 
For Cohesion Fund operations, the Community's partners are the national 
rather than the regional authorities; consultation arrangements have thus 
to be made with the Member States; these arrangements have tc be kept as 
simple as possible but they must ensure coherence with the Structural Fund 
operations in which regional authorities are fully involved. The principle 
of concentration will be complied with by the financing of a limited number 
of projects or groups of related projects; it should be applied in c. 
flexible way taking into account the general objective of contributing tc 
cohesion. 
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10. Coordination between the Cohesion Fund, the Structural Funds, the EIB 
and the other financial instruments 
The Structural Funds, given their general role of supporting development, 
operate essentially on the basis of programmes agreed between regional, 
national and Community partners. The Cohesion Fund will be based on 
projects. Although the criteria for intervention are different, the fields 
in which they operate overlap at least partly, and it is therefore 
necessary to ensure practical coordination between their operations. 
For any given period, projects assisted by the Cohesion Fund may contribute 
to the implementation of programmes financed by the Structural Funds, but 
an individual project may not benefit simultaneously from the Fund and from 
one of the existing structural Funds or EAGGF Guarantee section. 
coordination at Community level and within the Member states between the 
activities of the Structural Funds, the Cohesion Fund, the EIB, the ECSC 
and other financial contributions to support Community policies in the 
fields of the environment (Life, Habitat, agri-environmental measures) and 
transport infrastructure (budget support for European networks) should be 
carried out in particular through the assessment of coherence between 
operations financed under the different instruments. 
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Draft 
Council Regulation (EC) 
establishing a Cohesion Fund 
The COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Community, in 
particular the second paragraph of Article 130d thereof, 
Having regard to the proposal from the Commission, 
Having obtained the assent of the European Parliament, 
Having regard to the opinion of the Economic and Social Committee, 
Having regard to the opinion of the Committee of Regions, 
Whereas Article 2 of the Treaty includes the task of promoting economic and 
social cohesion and solidarity between Member States; whereas the 
strengthening of economic and social cohesion is mentioned under point j of 
Article 3 as one of the activities of the Community for the purposes set 
out in Article 2; 
Whereas Article 130a of the Treaty provides for the Community to develop 
and pursue its actions leading to the strengthening of its economic and 
social cohesion and in particular for it to aim at reducing disparities 
between the levels of development of the various regions and the 
backwardness of the least-favoured regions, including rural areas; whereas 
Community action through the Cohesion Fund should support the achievement 
of the objectives set out in Article 130a; 
Whereas the Protocol on economic and social cohesion annexed to the Treaty 
reaffirms the Community's task of promoting economic and social cohesion 
and solidarity between Member States and specifies that a Cohesion Fund to 
be set up before 31 December 1993 will provide a financial contribution to 
projects in the fields of environment and trans-European networks in the 
Member States with a per capita GNP of less than 90% of the Community 
average which have a programme leading to the fulfilment of the conditions 
of economic convergence as set out in Article 104c of the Treaty; 
Whereas the special situation of the Member States concerned calls for a 
determined effort to help them meet the convergence criteria which are a 
precondition for moving to the third stage of Economic and Monetary Union; 
Whereas the second paragraph of Article 130d of the Treaty states that the 
Council shall set up a Cohesion Fund to provide a financial contribution to 
projects in the fields of the environment and trans-European networks in 
the area of transport infrastructure; 
Whereas Article 129c(1) of the Treaty provides that the Community may 
contribute through the Cohesion Fund to the financing of specific projects 
in the Member States in the area of transport infrastructure taking into 
account the potential economic viability of the projects; 
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Whereas by virtue of Article 130s of the Treaty the Cohesion Fund may 
provide financial support for action by Member States in pursuit of the 
objectives of Community policy on the environment; whereas the Cohesion 
Fund is to contribute to the financing of new measures if the Council 
decides that they involve costs deemed disproportionate for the public 
authorities of a Member State; 
Whereas the operational rules of the cohesion Fund should be in keeping 
with the principle of subsidiarity as set out in Article 3b of the Treaty; 
Whereas in accordance with Article 198e of the Treaty the EIB is to 
facilitate the financing of investments in conjunction with assistance from 
the structural Funds and other Community financial instruments; 
whereas it is necessary to coordinate action in the field of the 
environment and trans-European networks in the area of transport 
infrastructure taken through the cohesion Fund, the Structural Funds, the 
EIB and the other financial instruments in order to enhance the 
effectiveness of the Community operations; 
Whereas, with a view to helping Member States in the preparation of 
projects, the Commission should be in a position to supply the necessary 
technical support; 
Whereas the operations of the Cohesion Fund must be consistent with 
Community policies, inter alia as regards environmental protection, 
transport, competition and the award of public contracts; 
Whereas an indicative allocation of commitment appropriations between the 
Member states should be provided for in order to facilitate the programming 
of projects; 
Whereas it is necessary given the requirements of economic and social 
cohesion to provide a high rate of assistance; 
Whereas it is necessary to ensure effective methods of monitoring, 
assessing and carrying out checks in respect of Community operations; 
Whereas provision should be made to give adequate publicity to Community 
assistance provided by the Cohesion Fund, 
HAS ADOPTED THIS REGULATION: 
Article 1 
Definition and Objective 
1. A Cohesion Fund (hereinafter referred to as "the Fund") is hereby 
established. 
2. The Fund shall contribute to the strengthening of the economic and 
social cohesion of the Community and shall operate according to the 
provisions set out in this Regulation. 
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Article 2 
Scope 
The Fund shall provide financial contributions to projects in the fields of 
environment and trans-European networks in the area of transport 
infrastructure in Member States with a per capita GNP of less than 90% of 
the Community average which have a programme leading to the fulfilment of 
the conditions of economic convergence as set out in Article 104c of the 
Treaty. 
Article 3 
Eligible projects 
The Fund may provide support for: 
environmental projects contributing to the achievement of the 
objectives of Article 130r of the Treaty, including projects resulting 
from measures adopted pursuant to Article 130s of the Treaty; 
transport infrastructure projects which contribute to the achievement 
of the objectives of Article 129b of the Treaty, including projects 
resulting from the guidelines adopted pursuant to Article 129c of the 
Treaty; 
preparatory studies and technical support measures related to eligible 
projects. 
Article 4 
Financial resources 
1. For the period 1993-1997 the total commitment appropriations deemed 
necessary for the Fund shall be ECU 10 000 million at 1992 prices. 
2. in accordance with paragraph 1, the commitment appropriations for 1993 
shall amount to ECU 1 500 million and for each subsequent year from 
1994 an annual increase of ECU 250 million in commitment appropriations 
shall be added, resulting in 1997 in a figure of ECU 2 500 million at 
1992 prices. 
Article 5 
Indicative allocation 
In order to facilitate the planning of assistance in the Member States 
concerned the Commission shall establish on the basis of an indicative 
allocation of the total resources of the Fund the commitment appropriations 
for each Member State. The indicative allocation shall take account of 
social, economic and other relevant factors such as population, GNP per 
head and surface area. 
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Article 6 
Conditional assistance 
1. If the Council, acting by a qualified majority on a proposal from the 
Commission, establishes that a Member State is not acting consistently 
with the Council recommendation which would allow it to make 
satisfactory progress towards the fulfilment of the conditions of 
economic convergence as set out in Article 104c of the Treaty, the 
Council, acting by a qualified majority, may request the Commission to 
suspend the granting of assistance from the Fund for further projects 
in that Member State. 
2. A decision to suspend the granting of assistance shall not be taken 
before the third year of the implementation of this Regulation. It 
shall take effect from the end of the calendar year in which it is 
taken. 
3. The suspension shall cease when the Council decides that the situation 
described in paragraph 1 has been corrected. 
Article 7 
Rate of assistance 
1. The rate of assistance granted by the Fund shall be 85% to 90% of 
public or similar expenditure as defined for the purposes of the 
Structural Funds. 
2. Preparatory studies and technical support measures necessary for the 
implementation of eligible projects may be financed at 100%. 
Article 8 
Coordination and compatibility with 
Community policies 
1. Projects financed by the Fund shall be in keeping with the provisions 
of the Treaties, with the instruments adopted pursuant thereto and with 
Community policies, including those concerning environmental 
protection, transport, competition and the award of public contracts. 
2. The commission shall ensure coordination and coherence between projects 
undertaken in the framework of this Regulation and measures undertaken 
with contributions from the Community budget, the EIB and the other 
Community financial instruments. 
Article 9 
Combination and overlapping 
1. A project may not benefit simultaneously from the Fund and from the 
European Agricultural Guidance and Guarantee Fund, the European Social 
Fund or the European Regional Development Fund. 
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2. Where a project benefits from other Community assistance, the 
combined grant assistance from the Community shall not exceed 90% 
of public or similar expenditure. 
Article 10 
Approval of projects 
1. The projects to be financed under the Fund shall be decided upon by 
the Commission in agreement with the Member State concerned. 
2. The Member States concerned and the Commission shall ensure an 
appropriate balance between projects in the field of environment and 
of transport infrastructure. This balance shall take account of 
Article 130s(5) of the Treaty. To that end, the Commission may take 
appropriate financial measures for each Member State concerned. 
3. Applications for assistance in accordance with Article 3 shall be 
submitted by the Member State concerned. Projects, including groups 
of related projects, shall be of a sufficient scale to have a 
significant impact in the fields of environmental protection or the 
improvement of trans-European transport infrastructure networks. 
4. Applications shall contain the following information: the body 
responsible for implementation, the nature of the investment, its 
location and costs, the implementation schedule, the financing plan 
and the total financing the Member State is seeking from the Fund and 
any other Community source. They shall also contain any information 
necessary to establish that projects are in accordance with this 
Regulation. 
5. Subject to Article 6 and to the availability of commitment 
appropriations, the Commission shall decide on assistance from the 
Fund generally within three months of receipt of the applications 
from the Member State. Commission decisions approving projects or 
groups of related projects shall determine the amount of financial 
support, a financing plan as well as all the provisions and 
conditions necessary for the realization of the projects. 
6. The Commission decisions shall be published in the Official Journal 
of the European Communities. 
Article 11 
Financial provisions 
1. Budgetary commitments shall be made in ECUs on the basis of the 
Commission decisions approving assistance referred to in Article 10. 
Commitments shall be made in annual instalments for each project. 
2. Payments shall be made in ECUs and shall be subject to the specific 
arrangements laid down in the implementing provisions pursuant to 
Article 15. 
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Article 12 
Financial control 
In order to guarantee successful completion of the projects financed by the 
Fund, Member States shall take the necessary measures: 
to verify on a regular basis that operations financed by the Communuity 
have been properly carried out; 
to prevent and to take action against irregularities; 
to recover any amounts lost as a result of an irregularity or 
negligence. Except where the Member State and/or the implementing 
authority provide proof that they were not responsible for the 
irregularity or negligence, the Member state shall be liable in the 
alternative for reimbursement of any sums unduly paid. 
Member States shall inform the Commission of the measures taken for those 
purposes and, in particular, of the progress of administrative and judicial 
proceedings. In this context the Member States and the Commission shall 
take the necessary measures to ensure that the information exchanged will 
remain confidential. 
When submitting requests for payment, Member States shall make available to 
the Commission any appropriate national control reports on the projects 
concerned. 
Without prejudice to checks carried out by Member States in accordance with 
national laws, regulations and administrative provisions, and without 
prejudice to the provisions of Article 188b of the Treaty or to any 
inspection arranged on the basis of Article 209(c) of the Treaty, the 
Commission may carry out on-the-spot checks, including sample checks, in 
respect of projects financed by the Fund and examine the systems and 
measures of control established by the national authorities who shall 
inform the Commission of measures taken to this effect. 
Further arrangements for the implementation of financial control shall be 
established in accordance with Article 15. 
Article 13 
Monitoring and assessment 
1. The Member states and the Commission shall ensure that the 
implementation of Community projects under this Regulation is 
effectively monitored and assessed. 
2. The arrangements for monitoring and assessing of Community projects 
shall be established by the provisions referred to in Article 15. 
Article 14 
Information and publicity 
1. The commission shall present an annual report on the activities of the 
Fund to the Council, the European Parliament, the Economic and Social 
Committee and the Committee of the Regions. 
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2. Member States shall ensure that adequate publicity is given to the 
operations of the fund with a view to making the general public aware 
of the role played by the Community in relation to projects. They shall 
consult the Commission on, and inform it about, the initiatives taken 
for this purpose. 
Article 15 
Implementation 
The Commission shall establish detailed rules for the application of this 
Regulation. 
Article 16 
Review 
On a proposal from the Commission, the Council shall re-examine this 
Regulation four years after its entry into force. It shall act on the 
proposal in accordance with the procedure laid down in Article 130d of the 
Treaty. 
Article 17 
Entry into force 
This Regulation shall enter into force on the day following its publication 
in the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in 
all Member States. 
Done at Brussels, For the Council 
The President 

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ISSN 0254-1475 
COM(92) 339 final 
DOCUMENTS 
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Catalogue number : CB-CO-92-390-EN-C 
ISBN 92-77-47318-5 
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