Opinion of the Economic and Social Committee on the "Annual Report of the Cohesion Fund (1999)"

(2001/C 260/09)

On 11 January 2001 the Commission decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the "Annual Report of the Cohesion Fund (1999)".

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 June 2001. The rapporteur was Mr Pezzini.

At its 383rd plenary session on 11 and 12 July 2001 (meeting of 11 July), the Economic and Social Committee adopted the following opinion by 110 votes to two, with no abstentions.

1. Introduction

1.1. In accordance with Article 14 of the Cohesion Fund Regulation, the Economic and Social Committee has been asked, as it is every year, to issue an opinion on the Annual Report of the Cohesion Fund. As is well known, the Cohesion Fund is responsible for financing environment and transport infrastructure projects in Member States whose per capita GDP is under 90 % of the Community average, namely Greece, Ireland, Portugal and Spain (in 1992).

1.2. This report is especially significant as it concerns the last year of the 1993-1999 period (including the transitional financial instrument for cohesion), for which the Edinburgh European Council granted EUR 15150 million, and it comes at the end of the first year of operation of the new Fund regulation for the 2000-2006 programming period. The Commission has therefore been able to draw up a schematic overview of the Fund's entire life span.

2. General comments

2.1. In the light of the information contained in the report, the Committee welcomes the positive results of the activities under the Cohesion Fund, but also:

- reiterates its dissatisfaction, while already knowing the Commission's answer, at having to give its opinion on the year concerned at such a late stage, in an age of real-time communication;

- believes that this time the delay could have been justified, had the opportunity been taken to conduct a more in-depth review of the entire 1993-1999 period, which would have had the added benefit of enabling useful lessons to be learned for the new 2000-2006 programming period.

2.2. The Committee welcomes the fact that Cohesion Fund activites have contributed indirectly, in the four countries concerned, to meeting the targets for reducing budget deficits as set in the EMU convergence programmes. This is especially true of Greece which, having started the programming period with a deficit considered to be excessive, exceeded its objective in 1999 with a deficit of 1,6 % of GDP.

2.3. The Committee is also pleased to note that at the end of the programming period, the criteria for allocating resources among the countries and keeping a balance between the transport and environment sectors were largely met.

2.4. Inflation fell sharply during the 1990s, especially in Greece and Portugal, and the rate settled at around 2,5 %. During the second half of the 1990s, the GDP growth rate was higher than the Union average.

2.4.1. In the EU, disparities in per capita income between Member States, and even more so between regions, were still very high. Nevertheless, according to the Second Report on Economic and Social Cohesion, the differences have lessened over the years, owing not least to Structural Fund intervention. For instance, in Greece, Spain and Portugal, average per capita income rose from 68 % of the Union average in 1988 to 79 % in 1999. In the same period, there were clear improvements in the infrastructures of the less prosperous regions, paving the way for further development.

3. Specific comments

3.1. Coordination with the other Community policies

3.1.1. Coordination with the Structural Funds in countries that fall almost entirely under the various objectives and especially under Objective 1, is extremely important, both to avoid overlaps - none were recorded - and above all to generate synergy with separate but related projects. The environmental protection and transport infrastructure sectors lend themselves well to furthering regional development programmes. It would have been interesting if the report had included an assessment of the capacity of administrations to achieve such synergy.

3.1.1.1. Better coordination should be provided both by the strategic reference frameworks, which cover all the measures taken under the funds, and by the Commission's move to group funds by geographical unit.

3.1.2. The report states that the national authorities adhere exhaustively to Community requirements for the openness of public procurement, which are a precondition for the achievement of the Community environmental objectives, and very important in the transport infrastructure sector.

3.1.3. In the transport sector, special attention was given in 1999 to the implementation of projects of common interest in the sphere of the trans-European networks, coordinating activities with those of the EIB (which is concentrating its investment on rail transport), the ERDF and the TENs budget. The proportion of transport sector investment channelled into rail made a qualitative leap from 14,0 % in the 1993-1998 period to 25,8 % in 1999. This responds pleasingly to the recommendations made by the European Parliament and the Economic and Social Committee, although the figure is still too low. The emphasis was placed on improving communications between the peripheral regions and the major economic centres, and also on the high-priority projects approved by the Essen European Council.

3.1.3.1. Savings in journey times, achieved by projects co-financed by the Structural Funds and the Cohesion Fund, ranged from 20 % in Spain, through the modernisation of the motorway network, to 70 % in Portugal for rail freight(1).

3.1.4. In the environment sector, the ex-post evaluations carried out on a representative sample were satisfactory in general, with the exception of problems relating to water resource management. In the cohesion countries (and others) there are significant disparities with regard to drinking water supply and sewage treatment systems, which have a major impact on the quality of life of the local populations and on the development of the agriculture and tourism sectors. It should however be noted that the investments made enable a less intense use of existing resources and thus limit the damage caused by drought.

3.2. Budget implementation

3.2.1. The Committee welcomes the fact that the budget objectives were met. At the end of 1999, all appropriations for the 1993-1999 period had been committed and 91,6 % of payments made; and the guidelines for distribution among the countries and between sectors were applied.

3.3. Irregularities

3.3.1. The few irregularities recorded concerned the rules on public procurement and ineligible expenditure and can be considered to be totally normal. There was no need for OLAF to launch any investigations. It should be added that the report does not offer very much information on this matter. The next report should provide more details about the checks conducted, bearing in mind that the new regulations give Member States more responsibility for financial control.

3.4. Evaluations

3.4.1. The report reveals Commission dissatisfaction with the quality of prior appraisals, especially in the area of the environment, where they are more difficult. In view of their importance, the Committee shares the Commission's hopes that economic analysis techniques will improve. Member States should step up their investment in this area.

3.4.1.1. The national authorities often fail to appreciate the real role played by a proper prior appraisal methodology. Not only should it help to clarify and quantify objectives, but it should also mean higher quality planning and sounder strategies.

3.4.1.2. In 1995 the Commission began financing research and training activities designed to sharpen up evaluations of economic and social cohesion policy. This work, which continued until the end of 1998, was included in the Means programme (Méthodes d'Évaluation des Actions de Nature Structurelle). The aim of this programme - which is particularly well suited to the transport and environmental impact sector - is to boost the effectiveness of evaluation methods when devising or assessing funding-related activities.

3.4.2. An ex-post evaluation for the whole period is not yet available, but the Commission's evaluation of the 45 projects assessed in 1999 is very positive in both sectors - environment and transport:

- the effectiveness of the projects was in line with the initial objectives;

- the environmental impact was satisfactory;

- the projects generated positive economic spin-off;

- the accessibility of vast areas improved, as did cross-border communications;

- road congestion decreased in the large metropolitan areas.

A total of 120 projects will be assessed by the end of 2001.

3.5. Interinstitutional dialogue

3.5.1. The Committee is pleased to note the detail in which the Commission responded to the comments it made in its 1998(2) opinion and the fact that it shared some of its concerns.

4. The new 2000-2006 programming period

4.1. The new regulation was approved in 1999. For the period 2000-2006, the Berlin Council allocated EUR 18 billion (at 1999 prices). It also decided to review each country's eligibility at mid-term in 2003, on the basis of per capita GDP at that time.

4.2. The new regulation strengthens the link between the granting of aid, respect for the stability and growth pact and the need for sound management of the public deficit.

4.3. Transport infrastructure projects must be consistent with Community guidelines on the development of the trans-European transport network.

4.4. Member States now take primary responsibility for the financial control of projects, and verify that management and control arrangements have been set up and are implemented in such a way as to ensure that Community funds are being used efficiently and correctly.

4.5. The new regulation includes provision for reducing the rate of assistance in tandem with greater use of private sources of funding. The rate can also be adjusted as a result of application of the polluter-pays principle.

5. Conclusions

5.1. The Committee trusts that the Cohesion Fund will continue to help the four target countries to achieve its intended aim, namely full respect for the stability and growth pact and avoidance of an excessive public deficit.

5.2. The success achieved hitherto justifies the fact that the new regulation has made only a few alterations and has in effect retained the existing legal machinery.

5.3. The projects funded have made it possible to raise the application thresholds of the environment directives and to improve access to the trans-European networks. Much remains to be done, especially as regards rail transport.

5.4. The Committee recommends that in future the Fund should revert to its initial purpose, i.e. the financing of major projects, so that assistance does not become too fragmented.

Brussels, 11 July 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) Second Report on Economic and Social Cohesion, COM(2001) 24 final, p. 19.

(2) OJ C 140, 18.5.2000, p. 14.