Opinion of the Committee of the Regions on 'The Northern Dimension of the European Union and Cross-Border Cooperation on the Border between the European Union and the Russian Federation and in the Barents Region` (96/C 337/02)

THE COMMITTEE OF THE REGIONS,

Having regard to its decision on 2 October 1995, in accordance with the fourth paragraph of Article 198c of the Treaty establishing the European Community, to issue an Opinion on 'The Northern Dimension of the European Union and Cross-border Cooperation on the Border between the European Union and the Russian Federation and in the Barents Region` and to direct Commission 1 - Regional Development, Economic Development and Local and Regional Finances - to draw up the relevant Opinion;

Having regard to the Draft Opinion (CdR 10/96 rev.) adopted by Commission 1 on 10 May 1996 (Rapporteurs: Mr Kauppinen and Mr Virtanen),

adopted the following Opinion at its 13th Plenary Session on 12 and 13 June 1996 (meeting of 12 June).

1. Introduction

1.1. The accession of Austria, Finland and Sweden to the European Union has had a significant impact on the EU's geopolitical position. The total area of the EU has increased by nearly 900 000 km² (37 %), with Finland and Sweden together accounting for some 800 000 km² of the increase. However, the EU's population has grown by only just under 22 million (6 %).

1.2. Important changes have also occurred in the EU's external borders. With Austria's entry, the EU now shares new borders with Slovenia, Hungary, Slovakia and the Czech Republic. Finland's membership means that the EU now has a common border region with the Russian Federation. Finland and Sweden have long borders with Norway, which remains outside the EU. Enlargement has brought the Baltic States and the Baltic Sea 'closer` to the EU.

1.3. The accession of Finland and Sweden has introduced a new northern dimension into the European Union. This area differs significantly from other EU regions in terms of both climate and economic geography. A further distinctive feature of the northern regions is their sparse population and long distances, which also give local and regional government in the Nordic countries a different character from the rest of Europe.

2. Observations and background

2.1. In terms of area, Sweden is the third largest country in the European Union and Finland the fifth largest. In terms of population, on the other hand, Finland is the third smallest Member State and Sweden the sixth smallest.

2.2. The average population density of the Member States is 115 inhabitants per square km. The corresponding figures for Finland and Sweden are 15 and 19, respectively. The northernmost parts of Finland and Sweden, the regions of Lapland and Norrbotten, each has a surface area of about 100 000 km². Hence, this area of some 200 000 km² is larger than the combined area of Luxembourg, Belgium, the Netherlands, Denmark and Ireland. The average population density in these five countries is 184 inhabitants per square km whereas the population density in the regions of Lapland and Norrbotten is only 2 inhabitants per square km.

2.3. The growing season at 60 degrees north is about 170 days, and in the northernmost parts of the Union only 130 days. This places special demands on agriculture and forestry in the Nordic countries. Before the new northern dimension, the shortest growing season in the EU was about 220 days. In northern conditions special solutions are also called for in the building industry. Similarly, climatic conditions must be taken into account in constructing technical maintenance networks. Heating costs and transport disadvantages in winter limit the potential activities of individuals and firms alike in northern regions.

2.4. Maritime transport in winter constitutes another special area. For example, the bulk of Finnish exports is transported by sea. An efficient icebreaker fleet is required to ensure regular shipments.

2.5. Different climatic conditions from the rest of Europe have, particularly in the northern parts of Finland and Sweden, led to the introduction of action models and techniques whose application could offer solutions for other regions experiencing difficult climatic conditions.

2.6. Because of their natural conditions, the regions of Lapland and Norrbotten are a good testing ground for developing special know-how and for finding solutions to problems specific to northern regions.

3. Specific comments

The role of local government in the EU's Northern operational policy

3.1. As pointed out above, Finland and Sweden in general and northern Sweden and northern and eastern Finland, in particular, are characterized by long distances and sparse population. This poses a number of special requirements as regards, for example, the provision of public services, for which local and regional authorities carry the main responsibility.

3.2. European models of local and regional government differ significantly from each other in many important respects. Local self-government has traditionally been strong in Finland and Sweden. Local authorities are responsible for the provision of almost all basic services in areas such as basic education, primary health care, specialist medical care, children's daycare, care of the elderly and technical services such as planning, roads, water supply and waste management.

3.3. Local authorities levy their own income tax and have their own political decision-making system. The model for local and regional government prevailing in the Nordic countries offers a functional system for the northern Member States and also one which is well suited to EU activities, particularly from the point of view of the subsidiarity principle. Consequently, local and regional government have an important role to play in defining the Union's overall northern operational policy.

Cooperation in the Baltic Sea region

3.4. The Baltic Sea region constitutes an important area of cooperation in the enlarged Economic Union in terms of the northern dimension and calls for separate and thorough analysis not only by the Committee of the Regions but by EU bodies in general. The COR has therefore decided to draw up a separate Opinion on the Baltic Sea region.

Cooperation in the Barents Euro-Arctic region

3.5. The Finnish region of Lapland, the Swedish region of Norrbotten, the Norwegian regions of Nordland, Tromssa and Finnmark and the Russian regions of Murmansk and Archangel have commercial and cultural ties going back more than a thousand years. There was a hiatus in these relations for the seventy odd years that the Soviet Union was in existence. Thus, historically, the North Calotte, i.e. the Arctic areas of the Norway, Sweden, Finland and the Kola Peninsula in Russia, have nearly always been a bridge between Russia and northern Europe.

3.6. After the changes that have taken place in Russia, cooperation in the Barents region is quickly being re-established. The Barents cooperation area was established in January 1993 by Sweden, Finland, Norway, Russia, Denmark, Iceland and the European Union. In addition to the traditional North Calotte areas, the region includes the Karelian Republic, which geographically and functionally is, however, more closely allied to the Leningrad Oblast and the Baltic Sea region. The Lapps (Sami), a minority people, enjoy equal status with the regions in this cooperation.

3.7. The following objectives have been set for cooperation in the Barents region:

1) to ensure peaceful and balanced development in the region;

2) to reinforce and further develop cultural relations between the region's populations;

3) to encourage the establishment and extension of new bilateral and multilateral relations;

4) to lay the foundations for sustainable economic and social development in the area by paying particular attention to the expedient exploitation of natural resources;

5) to promote development which respects the interests of the indigenous population and gives them the opportunity to play an active part in cooperation.

3.8. A major difference between cooperation in the Barents region and the Baltic Sea region is the former's distance from the centres of the States concerned and from large population centres; it is after all situated in the extreme north of Europe.

The new external border with Russia is part of the northern dimension

3.9. The long border region of some 1 340 km between the EU and Russia is important not only for the Nordic Member States but for the European Union as a whole.

3.10. Bearing in mind the European Union's geopolitical position, this common border with its attendant challenges, risks and opportunities marks a significant change in relation to the past. The border equals the distance between Berlin and Florence or between Frankfurt and Madrid. This length and the challenges and problems that it poses for the European Union are very great. Differences in living standards on the two sides of the border are also among the most pronounced in the world. Russia's hitherto relatively unstable economic and political conditions and above all its future development have implications for the entire European Continent. Therefore the European Union's relations with Russia are an issue that concerns and interests all Member States.

Population

3.11. The territories of the Russian Federation bordering on the European Union include the city of St. Petersburg (4,8 million inhabitants), the surrounding Leningrad Oblast (1,7 million inhabitants), the Karelian Republic (750 000 inhabitants) and the Murmansk Oblast (1,1 million inhabitants). The area also includes the Archangel region (1,6 million inhabitants) bordering on Murmansk. Altogether, these northwestern border areas of Russia have a population of about 10 million inhabitants, representing 6,7 % of the total population of the Russian Federation. Russia also possesses the enclave of Kaliningrad (913 000 inhabitants), located on the Baltic coast between Lithuania and Poland.

Natural resources

3.12. The regions of the Russian Federation bordering on the European Union are rich in natural resources such as oil, gas, extensive forests, mineral deposits and hydroelectric power, which, if exploited on the basis of sustainable development, could be of major economic significance for the whole of Europe. Russia's western harbours, including Murmansk, Russia's most important military base, are situated in this area. Thus the northwestern region is also of military importance for Russia.

3.13. St. Petersburg, traditionally Russia's window on the West, is now also her window on the European Union. In he same way, Finland can, at least in terms of its physical location, be regarded as the European Union's gateway to Russia.

Environmental threats

3.14. The changes that have taken place in Russia have already led to a significant increase in cross-border relations in a very wide range of activities.

3.15. More open and direct contacts have also revealed extensive and serious environmental problems in the immediate vicinity of the border with Finland. In particular, industrial pollution poses a serious threat to the northern environment and to the Baltic Sea. In some areas close to the frontier the health of the Russian population has deteriorated, partly because of harmful emissions and the poor quality of drinking water. The outdated and defective environmental technology systems of metal and wood industry plants result in emissions affecting northern Finland, Norway and Sweden and, further south, particularly Finland and the Baltic States.

3.16. Problems related to nuclear safety in Russia and in areas close to the European Union's external border constitute a major area of their own. The deterioration of the road and railway network has caused major problems for cross-border goods and passenger transport, which has increased significantly.

3.17. The waste management system of St. Petersburg alone is in need of a major and fundamental overhaul. Plans exist to secure the supply of clean water to St. Petersburg and its surroundings but their implementation requires international cooperation.

3.18. Thus immense problems exist in the Russian border areas. Outsiders cannot solve these problems, nor can that be the intention. However, the European Union and its Member States can help the Russian authorities to solve their problems and thereby increase citizens' welfare and promote stability and the democratic process in Russia.

International cooperation to support the development of Russia

3.19. The achievement of effective economic cooperation and the furtherance of the democratic process are crucial issues for Russia. Naturally, the best geographical conditions for promoting such development are to be found in the common border regions of the European Union and Russia.

3.20. Finland has signed an arrangement with Russia for action concerning, inter alia, the border areas. The so-called neighbouring regions agreement is unique among the international agreements concluded by Russia: it provides a legal basis for direct relations with Finnish authorities at local, regional and national level. It also allows for direct action in the regions concerned. The agreement covers in very comprehensive terms ongoing and planned cooperation involving the economy, R& D activities and cultural relations. The focal points of cooperation so far have included development of communications, improvement of nuclear safety and environmental protection.

3.21. In particular development measures to be undertaken in the border areas to improve the state of the environment and nuclear safety and to promote commercial and economic cooperation require extensive international cooperation. This also applies to cooperation in agriculture and forestry, education and training, exchanges of experts, cultural exchanges and improvement of communications. The European Union has an important catalytic role to play in this cooperation.

3.22. Development in the border regions requires cooperation at many different levels. Besides the European Union, all the relevant States have an important role to play in financing projects and development plans. However, the role of the border regions themselves in the implementation of border-region activities needs to be especially underlined.

3.23. Experience of cooperation in border regions in different parts of Europe shows that successful cooperation cannot be decreed by central government, but must instead evolve in the border regions themselves. Cooperation in the border regions should be as independent as possible, albeit with the approval of central government.

3.24. Successful implementation of border-region cooperation, including that between the EU and Russia, presupposes that practical responsibility, especially in taking decisions on the content of activities and measures, lies with local and regional authorities.

Cross-border instrument

3.25. Of the external borders of the European Union, the Finnish-Russian border was the only EU frontier region during the first year of Finland's membership for which an EU cross-border instrument was not available. The Committee of the Regions considers that the recent amendment to the Tacis Regulation is important in this respect.

3.26. From the practical point of view, it is important to ensure that the new Tacis-Interreg instrument is developed into a flexible and efficient cross-border instrument for cooperation between the EU and Russia. It is important that it provides operators from different Member States with opportunities to exploit the potential offered by the common border region.

Development of local government in a key position

3.27. An important issue in Russia's transition to democracy and a market economy is how well she will succeed in her efforts to establish an effective system of local government. In this regard, Member States separately and the EU as a whole should focus attention on supporting the development of a system of local and regional government in Russia. In the difficult conditions in which practical development work takes place the role of local and regional government is crucial.

Development of the Tacis system

3.28. The establishment of social stability and economic development in Russia is important for our whole continent. The European Union has therefore endeavoured to reinforce favourable development in Russia, in part through the Tacis programme.

3.29. Launched in 1991, Tacis provides technical assistance in the form of training, consultancy services, feasibility studies and advice. The aim of the programme has been to create the frameworks and structures necessary for a functioning market economy and to enhance the preconditions for investment.

3.30. As far as these objectives are concerned, the Tacis programme has worked well. Training has been provided, comprehensive consultancy reports and plans have been drawn up and priorities for future development have been defined. The Committee of the Regions notes that the future of the Tacis programme is very closely connected with progress towards democracy in Russia.

3.31. From now on in its programmes for Russia, the European Union should focus on how to proceed with the implementation of plans. Continually drafting new plans will not generate significant added value, the transition to a market economy and democracy will not advance and economic activity will not recover if plans are not implemented in one way or another.

3.32. It should be ascertained whether Tacis can be developed in the medium term into a more diversified programme along the lines of the MEDA programme which is to be applied in the Mediterranean region.

3.33. As for the immediate future, consideration should be given to shifting the emphasis in Tacis activities away from drawing up consultancy reports and provision of other - albeit important - technical back-up for project implementation. The new Tacis Regulation provides for the allocation of up to 10 % of total assistance to project implementation. The Committee of the Regions believes that there is a case for progressively increasing this share to at least .

3.34. In the period 1991-1995, the Tacis programme amounted to over ECU 2 billion. About one-third of this amount went to Russia, but only marginal sums to the northwestern regions of Russia.

3.35. The northwestern area of Russia bordering on the European Union was adopted as a new priority region for the Tacis programme in September 1995. The three-year programme amounts to ECU 28 million, which represents only about 1,5 % of total Tacis funding.

3.36. Given the scale of development needs in northwestern Russia and the requirements of the common border region, the European Union should allocate a significantly larger proportion of Tacis funding to Russia's northwestern regions.

3.37. The new Tacis programme Regulation has recently entered into force, as proposed earlier by Commission 1 in connection with the drawing up of this Opinion. Three new areas have been included in the Regulation: 1) the environment; 2) cross-border cooperation; and 3) coordination of the Tacis and Interreg programmes as an instrument for cross-border cooperation.

Establishment of a free economic zone

3.38. Owing to their geographical position, South Karelia and the Saimaa Canal area have a potentially key role to play in the development of cross-border commercial and economic cooperation with Russia.

3.39. Approximately 7 million people live in the immediate vicinity of the Finnish border in St. Petersburg and the surrounding Leningrad Oblast. The market potential offered by this population, two road crossing points, the Saimaa Canal, which links the region with the Baltic Sea, and a cross-border railway link have increased the attractiveness of the canal area and the city of Lappeenranta as a junction for cross-border traffic and as a site for industrial production and commercial operations. The issue of establishing a free economic zone has been raised on both sides of the border, in the Vyborg district in Russia and in South Karelia in Finland.

3.40. The establishment of a free economic zone, either on the Finnish side of the border or in a frontier zone on both sides of the border, would be an important step forward in the development of commercial, economic and cultural relations. It would create new opportunities for setting up cooperation networks in the Baltic Sea region, in particular, and for solving the region's difficult environmental problems.

3.41. However, the establishment of a free economic zone in the border region between Finland and Russia would, in all cases, require a thorough investigation of, for example, necessary changes in tax and labour laws.

4. Recommendations

4.1. The Committee of the Regions proposes that the Commission immediately begin drawing up a platform and action programme dealing with the European's northern dimension.

4.2. The COR believes that the programme should:

a) outline the objectives for regional and structural policy in the northern regions of the EU in Finland and Sweden;

b) define the environmental policy objectives arising from the special conditions prevailing in the North and the instruments needed to implement them;

c) define the general principles for determining how the special features of the northern dimension - peripheral location, large surface area, sparse population and exceptional climatic conditions - should be taken into account in EU activities so as to ensure equal operating conditions for regions and municipalities;

d) make proposals for promoting the relations of peripheral regions and municipalities with other areas in the EU;

e) devise a programme for promoting the wider exploitation of technologies and action models developed for northern conditions in other sparsely populated areas experiencing difficult climatic conditions;

f) identify the measures which could be used to further commercial, economic, political and cultural cooperation between the Member States of the European Union and the Russian Federation in the common border region;

g) address the lines of action that could be used to develop ongoing cooperation in the Barents region and promote the implementation of projects under the Barents programmes.

4.3. The Committee of the Regions further proposes that the Commission take into account as quickly as possible the following recommendations concerning crossborder cooperation with Russia:

a) the new Tacis programme Regulation has recently come into force. It extends the scope of the programme to cover environmental issues and cross-border cooperation and provides for the coordination of the Tacis and Interreg programmes for use as a cross-border instrument in the northern frontier regions. To enable Tacis-Interreg to function as successfully as Phare-Interreg does in regard to the countries of central and eastern Europe, it should be ensured that the regions close to the border participate at the practical level in the planning and implementation of measures concerning cross-border cooperation;

b) in applying the Tacis programme, it should also be possible to use funds for investments, especially those close to the border. Priorities for investment are border crossing points and associated infrastructure and services;

c) a significantly larger proportion of the funding available under the Tacis programme should be used for financing measures and implementing plans. The Committee of the Regions calls for the share of total assistance earmarked for project implementation to be progressively raised to two-thirds.

d) support for the development of democratic local government and promotion of cooperation between local government authorities should be adopted as a priority area in the EU's programmes directed at Russia;

e) the provisions governing implementation of these programmes and contracts and procurement should be revised so as to enable small-scale cooperation projects involving local authorities to be implemented without a public tendering procedure;

f) the regions of northwestern Russia and St. Petersburg should be included as long-term priority areas in the Tacis programme. Steps should be taken to ensure that local authorities participate in drawing up programmes and monitoring their implementation;

g) since the establishment of a business network in northwestern Russia is vital for economic development and development in general in the region and since no venture capital is available in practice for the development of SMEs owing to the substantial risks which Russia attracts, an annual sum of ECU 50 million should be earmarked either through the EBRD or Tacis for investment and development in SMEs in the region;

h) the Committee of the Regions believes that the establishment of a free economic zone (near the Finnish-Russian border) in the region comprising the Saimaa Canal and Lappeenranta could make a significant contribution to cultural, economic and environmental cooperation in the border region between the EU and Russia. In the view of the Committee of the Regions, the European Union should promote and participate in an investigation into the possibility of establishing a free economic zone.

4.4. In approving this Opinion, the Committee of the Regions urges the Chairman of the Committee and the Bureau to initiate discussions on the implementation and further preparation of the proposals contained in the Opinion with the Commission officials responsible for the European Union's regional policy and border region cooperation.

Done at Brussels, 12 June 1996.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA