Proposal for a Council Regulation (EC) amending Regulation (EC) No 1164/94 establishing a Cohesion Fund (98/C 159/05) COM(1998) 130 final - 98/0104(AVC)

(Submitted by the Commission on 19 March 1998)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular the second paragraph of Article 130d thereof,

Having regard to the proposal from the Commission,

Having regard to 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 the Regions,

1. Whereas pursuant to Article 16(1) of Council Regulation (EC) No 1164/94 (1), the Council is to re-examine that Regulation before 31 December 1999;

2. Whereas the basic principles of the Cohesion Fund laid down in 1994 should continue to govern the Fund's activities until 2006 although experience has shown the need for improvements;

3. Whereas, while the single currency, the euro, will affect the macroeconomic situation of the Community, it will not remove the need for the eligibility of the beneficiary countries to be based on gross national product;

4. Whereas all the Member States participating in the euro are to submit to the Council a stability programme setting out in particular their medium-term objective for achieving a budget that is nearly in balance or is in surplus;

5. Whereas by Decision No 1692/96/EC (2), the European Parliament and the Council adopted Community guidelines for the development of the trans-European transport network;

6. Whereas, during the transitional period (1 January 1999 to 31 December 2001), all references to the euro should normally also be read as references to the euro as a monetary unit, as provided for in the second sentence of Article 2 of Council Regulation No . . ./98;

7. Whereas, however, changes concerning macroeconomic conditionality should be made;

8. Whereas the procedures for the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies were set out in Council Regulation (EC) No 1466/97 (3);

9. Whereas the preliminary and final figures for the public-sector borrowing requirement, gross domestic product and gross national product must be compiled in accordance with the rules of the European System of Integrated Economic Accounts established by Council Regulation (EC) No 2223/96 (4), as amended by Regulation (EC) No 448/98 (5);

10. Whereas the Resolution (6) on the Stability and Growth Pact adopted by the Amsterdam European Council on 17 June 1997 sets out the roles of the Member States, the Commission and the Council;

11. Whereas macroeconomic conditionality as it applies to all Member States participating in the euro should be assessed by reference to the early-warning system introduced by the Stability and Growth Pact and in the light of individual Member States' responsibilities with regard to the stability of the euro;

12. Whereas, while the principle of a high level of assistance is retained, the search for other sources of finance should be promoted; whereas the rates of assistance should be varied to improve the leverage of Fund resources and to take better account of the rate of return on projects; whereas application of the polluter-pays principle laid down in Article 130r of the Treaty must be complied with in operations financed by the Fund;

13. Whereas the responsibility of the Member State for financial control work should be clearly laid down;

14. Whereas there should be provision to ensure continuity of finance for operations in progress and their adjustment to the new regulatory requirements;

15. Whereas Regulation (EC) No 1164/94 should be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1164/94 is amended as follows:

1. The following paragraph 4 is added to Article 2:

'4. To be eligible under the Fund from 1 January 2000, the beneficiary Member States must have introduced a programme as provided for in Articles 3 and 7 of Council Regulation (EC) No 1466/97 (*).

The four Member States meeting the GNP criterion referred to in paragraph 1 are Greece, Spain, Ireland and Portugal.

A mid-term review as provided for in paragraph 3 shall be carried out before the end of 2003 based on per capita GNP as shown by Community data for the period 2000 to 2002.

(*) OJ L 209, 2.8.1997, p. 1.`

2. Article 3 is amended as follows:

(a) Paragraph 1 is amended as follows:

(i) In the first indent, the word 'Fifth` is deleted.

(ii) The second indent is replaced by:

'- transport infrastructure projects of common interest, financed by Member States, which are identified within the framework of the guidelines adopted by Decision No 1692/96/EC of the European Parliament and the Council of 23 July 1996 on the development of the trans-European transport network (*).

(*) OJ L 228, 9.9.1996, p. 1.`

(b) In paragraph 2, the second indent is amended as follows:

(i) The introductory phrase is replaced by the following:

'technical support measures, including publicity and information campaigns, particularly:`

(ii) In point (b), the word 'supervision` is inserted after 'monitoring`.

3. In Article 4, the following third and fourth subparagraphs are added:

'From 1 January 2000, total resources available for commitment in the period 2000 to 2006 shall be EUR 21 billion at 1999 prices.

Commitment appropriations for each year of that period shall be EUR 3 billion at 1999 prices.`

4. Article 6 is amended as follows:

(a) Former paragraph 4 becomes paragraph 2.

(b) Paragraph 3 is replaced by the following:

'3. Paragraphs 2 and 3 shall apply from 1 January 2000 to the Member States participating in the euro.

No new project or, in the case of major projects, no new project stage shall be financed by the Fund where:

(a) either the Commission adopts a recommendation with regard to the Member State concerned which it addresses to the Council under Article 6(3) of Regulation (EC) No 1466/97 with a view to preventing an excessive public deficit,

(b) or the Commission adopts a recommendation pursuant to Article 3(2) of Regulation (EC) No 1467/97 in respect of the Member State concerned which it addresses to the Council (*).

The suspension of financing shall cease once the Commission finds that the Member State has taken effective steps to correct the situation referred to in the recommendation made under (a) or (b) of the second subparagraph, or:

(i) in the case referred to in (a), if the Council does not adopt the recommendation referred to in Article 6(3) of Regulation (EC) No 1466/97 within three months from the date on which the Commission addressed that recommendation to it;

(ii) in the case referred to in (b), if the Council does not decide by the deadline laid down in Article 3(3) of Regulation (EC) No 1467/97 that an excessive public deficit exists.

(*) OJ L 209, 2.8.1997, p. 6.`

(c) The following paragraph 4 is added:

'4. Where checks on the target deficit figures contained in the recommendation referred to in paragraph 1 or paragraph 5 reveal an appreciable and unjustified difference for a reference year between the data first sent by the Member State and the statistics validated by the Commission, the latter may, after considering the explanations of the Member State concerned, take steps to suppress all or part of the assistance granted since the previous check.`

(d) Former paragraph 2 becomes paragraph 5.

5. Article 7 is amended as follows:

(a) Paragraph 1 is amended as follows:

(i) The second subparagraph is replaced by the following:

'However, from 1 January 2000 this rate may be reduced to take account of the project's capacity to generate revenue and, where appropriate, of any application of the polluter-pays principle.`

(ii) The following third subparagraph is added:

'To achieve this, the Commission shall maximize the leverage of Fund resources by encouraging greater use of private sources of funding.`

(b) In paragraph 2, the words 'the expenditure on which the calculation of` and 'is based` are deleted.

6. Article 10 is amended as follows:

(a) In paragraph 3, 'ECU` is replaced by 'EURO`.

(b) In paragraph 4, in the eighth line, the word 'possible` before 'impact` is deleted.

(c) In the third indent of paragraph 5, the words 'including the polluter-pays principle,` are inserted after the words 'on the environment`.

7. Article 12 is amended as follows:

(a) Paragraphs 1 and 2 are replaced by the following:

'1. The Member States shall have primary responsibility for the financial control of projects.

In order to guarantee successful completion of the projects financed by the Fund, Member States shall:

- verify on a regular basis that operations financed by the Community have been properly carried out;

- prevent irregularities and take administrative and legal action against them;

- recover any amounts lost as a result of 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 remain liable for reimbursement of any sums unduly paid.

2. Member States shall cooperate with the Commission to ensure that assistance from the Fund is used in accordance with the principles of sound financial management.

Member States shall inform the Commission of the measures taken for those purposes and, in particular, shall notify the Commission of the description of the management and control systems established and previously verified by them to ensure the efficient implementation of operations. They shall regularly inform the Commission of the progress of administrative and judicial proceedings. In that context, the Member States and the Commission shall take the necessary steps to ensure that the information exchanged remains confidential.`

(b) Paragraph 4 is replaced by the following:

'4. The Commission shall ensure that Member States have smoothly functioning management and control systems which guarantee that Community funds are effectively and correctly used.

Without prejudice to checks carried out by Member States in accordance with national laws, regulations and administrative provisions and without prejudice to Article 188a of the Treaty or to any inspection arranged on the basis of Article 209(c) of the Treaty, the Commission may, through its officials or agents, carry out on-the-spot checks, including sample checks, in respect of projects financed by the Fund, and may examine the control arrangements and measures established by the national authorities, which shall inform the Commission of measures taken to that end.`

8. In article 16(1), the words 'before the end of 1999` are replaced by 'by 31 December 2006 at the latest`.

Article 2

Applications submitted before the entry into force of this Regulation shall remain valid provided that, where necessary, they are supplemented to comply with the requirements of this Regulation within two months of its entry into force.

Article 3

This Regulation shall enter into force on the third day following the date of 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.

(1) OJ L 130, 25.5.1994, p. 1.

(2) OJ L 228, 9.9.1996, p. 1.

(3) OJ L 209, 2.8.1997, p. 1.

(4) OJ L 310, 30.11.1996, p. 1.

(5) OJ L 58, 27.2.1998, p. 1.

(6) OJ C 236, 2.8.1997, p. 1.