[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 6.11.2007

SEC(2007) 1456

COMMISSION STAFF WORKING DOCUMENT

Annex to the REPORT FROM THE COMMISSION 18th Annual Report on Implementation of the Structural Funds (2006) {COM(2007) 676 final}

TABLE OF CONTENTS

Part 1: General analysis of activities 4

1. Introduction 4

2. Analysis of Implementation 9

3. Consistency and Coordination 15

4. Evaluations 19

5. Controls 21

6. Committees Assisting the Commission 26

Part 2: Analysis per Member State 28

7. Belgium 28

8. Cyprus 33

9. Czech Republic 35

10. Germany 39

11. Denmark 45

12. Greece 49

13. Spain 53

14. Estonia 61

15. France 64

16. Italy 68

17. Ireland 75

18. Latvia 80

19. Lithuania 83

20. Luxembourg 86

21. Hungary 88

22. Malta 91

23. Netherlands 94

24. Austria 97

25. Poland 101

26. Portugal 104

27. Slovakia 108

28. Slovenia 111

29. Finland 114

30. Sweden 119

31. United Kingdom 124

Part 3: List of Major Projects 130

Part 4: Financial Figures 165

Part 5: Use of Structural Funds in the 2000-2006 period by Objective and Field of Intervention 202

Part 6: Operational programmes in the 2000–2006 programming period 240

Part 7: Information on financial corrections and recoveries in the Structural Funds 258

Part 1: General analysis of activities

Introduction

In 2006 the legislative framework for the Structural Funds and the Cohesion Fund for the 2007–2013 programming period was finalised. After the new financial perspectives were agreed on 17 December 2005, the new cohesion policy package was adopted by the Council on 11 July 2006, followed by adoption of the Community strategic guidelines on 6 October 2006 and, finally, of the Commission implementing regulation on 8 December 2006.

The financial agreement setting the EU-27’s financial perspectives for the new programming period included an allocation to the Cohesion and Structural Funds of EUR 308.041 billion (2004 prices) in commitment appropriations, of which EUR 251.162 billion (81.5%) is for the “Convergence” objective (least developed regions, including those for which aid is being phased out), EUR 49.127 billion (16%) for “Regional competitiveness and employment” and EUR 7.75 billion (2.5%) for “Territorial cooperation”.

The Rural Development policy (financed by the EAFRD[1]) and the fisheries policies (financed by the EFF[2]) are henceforth organised independently of the Structural Funds on the basis of the European Agricultural Fund for Rural Development (aligning the rules of management and control with those of the first pillar of the Common Agricultural Policy) and the European Fisheries Fund. This requires an effective complementarity between the co-financed actions by all the financial instruments concerned (Cohesion, Rural Development and Fisheries policies).

The legal framework for the new generation of cohesion policy programmes includes:

- the general regulation[3] laying down the common rules on the strategic approach, programming, evaluation, financing, management, monitoring and control of programmes;

- four regulations laying down specific rules on the European Regional Development Fund (ERDF)[4], the European Social Fund (ESF)[5], the Cohesion Fund (CF)[6] and the European Grouping of Territorial Cooperation (EGTC)[7] plus the Commission regulation setting out rules for implementing them;

- the Community strategic guidelines on cohesion[8], which contain the principles and priorities of cohesion policy for the next seven years and suggest how European regions can use the cohesion budget to address regional issues, whilst also taking account of wider EU priorities. In line with the renewed Lisbon strategy, cohesion policy should focus to a greater extent on knowledge, research and innovation and human capital, pursue the objective of sustainable development, boost synergies between the economic, social and environmental dimensions, pursue the objective of equality between men and women and prevent any discrimination on grounds of gender, race or ethnic origin, religion or belief, disability, age or sexual orientation at all stages of preparation and implementation of programmes and projects. Operational programmes co-financed under the cohesion policy should seek to target resources on the following three main priorities:

- improving the attractiveness of Member States, regions and cities by improving accessibility, ensuring adequate quality and level of services and preserving their environmental potential;

- encouraging innovation, entrepreneurship and the growth of the knowledge economy by research and innovation capacities, including new information and communication technologies; and

- creating more and better jobs by attracting more people into employment or entrepreneurial activity, improving adaptability of workers and enterprises and increasing investment in human capital.

A series of reforms relating to management of the operational programmes have been introduced for 2007-2013. In terms of the delivery system, legislation has been streamlined and rules simplified for managing cohesion policy. In particular there is:

- One set of management rules

There is now a single Commission implementing regulation for the 2007-2013 programming period, which replaces 10 existing regulations for the 2000-2006 programming period. The rules for management of programmes financed by the Cohesion Fund have been aligned with those of the Structural Funds. The fact that there will now be only one set of rules will make management of the Funds easier and less costly for Member States.

- One set of eligibility rules for expenditure

Member States will be able to use national eligibility rules rather than European eligibility rules in addition to national eligibility rules, thus greatly simplifying project management for Member States.

- Simplification of financial management

The financial plans, the setting of the intervention rate and EU reimbursements will now be made at a higher level (at programme or priority axis level, instead of at measure level, as before). This will simplify management of the programmes by Member States and the Commission, and limit the cases where financial plans need to be modified, thus giving a wider autonomy to the national authorities in charge of the management of operational programmes.

- Increased proportionality and simplification for control systems

For smaller programmes (total eligible public expenditure under 750 million EUR and Community co-financing under 40 % of total public expenditure), certain requirements on control arrangements can be carried out by national bodies established according to national rules, thus reducing the need to comply with certain Community audit requirements.

- Clearer rules on information and communication

Citizens and potential beneficiaries of the Funds in all Member States will automatically have the same access to information on funding opportunities and awards from the Community budget for Cohesion Policy, thus reducing the time and effort they have to spend in finding such information.

- Electronic government in practice

Data exchange between the Member States and the Commission will be done only electronically. This marks the beginning of a new era in terms of electronic data exchange and e-Governance. With this new system now in place, 40 % of the EU budget will be electronically managed from A to Z, without paper. It will save much time in running programmes and will reduce the risk of disagreement between the Commission and Member States on the amount and type of information to be provided.

Greater importance has also been attached to the urban dimension of the cohesion policy. After several informal Council meetings and the March 2005 European Council recognised the contribution of cities and urban areas to regional development, on 13 July 2006 the European Commission released a Communication entitled “Cohesion Policy and cities : the urban contribution to growth and jobs in the regions”[9]. The Communication stresses the urban dimension in the context of the areas of activity defined by the Community Strategic Guidelines. These activities are of particular importance for developing new policy responses and innovative solutions as well as establishing common policy initiatives.

The Urban Community initiatives as well as Interreg and Equal and the innovative action will now be mainstreamed into the Structural Funds’ programmes.

In addition, for the implementation phase, and in order to bring in new sources of support and expertise, the Commission and the international financial institutions have prepared three joint initiatives: Jaspers (Joint Assistance to Support Projects in European Regions) to assist the twelve beneficiary countries with preparing major projects, Jeremie (Joint European Resources for Micro to Medium Enterprises) to improve access to finance for SMEs and develop micro-credit for the next programming period, known by the acronym and Jessica (Joint European Support for Sustainable Investment in City Areas) to support sustainable and recyclable urban investment and development in cities in the EU from the Structural Funds. JEREMIE and JESSICA represent a cultural shift for cohesion policy, seeking to move away from an exclusive dependence on grants towards greater use of repayable forms of assistance.

As an additional feature, a significant level of support in the new programming period will be directed towards strengthening public administrations and public services in Convergence Regions and Cohesion countries. This new priority will support the modernisation, the development of the public administrations and public services to better meet the expectations of citizens and business and also to strengthen its role as an important factor of social and economic development.

On 9 February 2006 Ministers responsible for the reform of public administration, management of Structural Funds, employment and education and senior officials from EU-27 met to discuss the challenges facing public administrations in modern society and the knowledge-based economy and the possibilities offered by the European Social Fund (ESF) to support the necessary reforms towards modernisation of public administrations.

On 8 November the European Commission adopted proposals for a new initiative to promote excellence in European regional development by supporting new advanced networks for mutual learning and exchange[10]. The new “Regions for economic change” initiative is being implemented by the interregional cooperation and urban development strand of the Territorial Cooperation Objective for 2007–13. Under the new initiative, interregional cooperation and the urban development network programme will continue to operate as at present. However, a new element for 2007–2013 is that the Commission itself offers the networks a number of themes focused on economic modernisation and the renewed Lisbon agenda. Member States, regions or cities which choose to pursue these themes have the possibility of working more closely with the Commission.

Another novelty is a “fast track” option, whereby the Commission establishes and steers volunteer networks around selected priority themes in order to provide a rapid testing ground for policy ideas. Two other new aspects include the introduction of an annual “Regions for economic change” conference and an annual award for the best projects in different categories of economic modernisation.

The first event, entitled “Innovating through EU regional policy”, took place already on 12-13 June 2006 in Brussels. The aim of the conference was to give interested parties, particularly authorities managing Structural Funds, an insight into successful strategies and practices for “improving knowledge and innovation for growth”, as recommended by the Community strategic guidelines on cohesion for 2007–2013.

The European Commission set up a Restructuring Forum to promote dialogue on economic change and restructuring. The 2nd Restructuring Forum, held on 18 July 2006, focused on the sectoral dimension of restructuring and looked at how best to optimise existing EU policies, dialogue and funding for manufacturing industry. On 4-5 December 2006, a Restructuring Forum was organised on “How dynamic regions face restructuring – The role of the European Social Fund and of the other Structural Funds”.

The 2006 European Week of Regions and Cities, open days which took place in Brussels between 9 and 12 October 2006, focused on “Investing in Europe’s regions and cities: Public and private partners for growth and jobs”. It was the biggest-ever annual event on EU regional policy attracting almost 4 000 participants. A further 1 500 people also took part in 70 decentralised events in regions and cities across Europe.

In October a European Social Fund and Disability Conference was organised by the European Commission to inform participants of the possibilities offered by the Structural Funds, and particularly the ESF, for the next programming period (2007-2013). It also highlighted what is new and what is changing in the Structural Funds regulations in relation to disability. A further aim of the conference was to present the EU toolkit for evaluating the accessibility of ESF projects to people with disabilities, in order both to inform participants and to request their feedback on this important toolkit which will be published in 2007.

An ESF Conference took place in Saariselkä (Lapland) on 16-17 November 2006 with the theme “ Visions for the Future – ESF innovations” . The objective of this event was to take stock of the best experience from the past and to build on it for the next programming round.

The fourth annual progress report on economic and social cohesion in the EU was also presented in 2006. The report showed that economic and social disparities in the EU are narrowing, with rapid and sustained growth in the least prosperous Member States. However, at regional level there is still enormous untapped potential, with the 10% of the population living in the poorest regions in the EU accounting for a mere 1.5% of gross domestic product (GDP). The report identified severe regional disparities in modern infrastructure and innovative capacity as a key contributory factor and a major challenge for EU regional policy. For example:

- in 47 out of 254 regions, expenditure on research and development is below 0.5% of GDP, compared with an EU-wide target of 3%;

- in regions where GDP is below 75% of the EU average, fewer than 15% of households have broadband internet access, compared with around 30% of households in other regions.

- On 1 August 2006 the Commission adopted the decision[11] laying down rules regarding closure of assistance from the Structural Funds (2000–2006).

Analysis of Implementation

Budget Implementation

This (2006) was the first year when the “n+2 rule” was applicable to EU-10 Member States.

ERDF

The implementation of the budget in 2006 was very satisfactory and for Objectives 1 and 2 and the Community initiatives, 100 % of the resources available were committed.

Concerning payment appropriations, 99.92 % of the resources available were used (99.65 % in 2005). The projected level of payment appropriations for 2006 ERDF was reduced by 2.8 billion EUR in the course of the year in order to take account of the temporary suspension of payment claims by Spain and the United Kingdom (amounting to 2.3 billion EUR) pending the implementation of action plans to improve aspects of management and control systems, and due to forecasting errors made by EU-10.

Commitments from previous years on which payments were still to be made[12] totalled EUR 45.8 billion at the end of 2006 (compared with EUR 39.1 billion in 2005).

It should be stressed that since the cohesion policy supports investments in major projects, it is normal for resources to be committed well in advance of payments, which reflect progress on the ground.

Concerning application of the n+2 rule, at the end of 2006 to the 2000, 2001, 2002, 2003 and 2004 commitments, 19 programmes were involved for which a total of EUR 129.31 million was proposed from the ESF (1.1 % from the corresponding amount committed in 2004). For those programmes the Commission opened negotiations ('the contradictory procedure') with the Member States. Only at the end of this procedure can the amounts to be decommitted be known.

ESF

Implementation of the budget in 2006 was also very satisfactory: 99.97 % of commitment appropriations were implemented in 2006 (against 99.93 % in 2005). Concerning payments, 99.87 % of the appropriations were executed (99.86 % in 2005). The total outstanding payments on commitments at the end of 2006 stood at EUR 22.96 billion (outstanding payments compared with EUR 20.74 billion in 2005), out of which EUR 22.76 billion were for the current ESF programming period (EUR 20.44 billion in 2005). The outstanding payments from earlier ESF programming periods decreased significantly from EUR 304.7 million at the end of 2005 to EUR 204.6 million at the end of 2006 (-32.8 %).

Concerning application of the n+2 rule, at the end of 2006 to the 2000, 2001, 2002, 2003 and 2004 commitments, 19 programmes were involved for which a total of EUR 129.31 million was proposed from the ESF (1.1 % from the corresponding amount committed in 2004). For those programmes the Commission opened negotiations ('the contradictory procedure') with the Member States. Only at the end of this procedure can the amounts to be decommitted be known.

EAGGF

The 2006 budget was fully used in terms of both the commitment and payment appropriations (respectively 99.3 % and 108.5 % of the budget initially voted). The figure for payments was achieved due to the fact that the payment appropriations budget was topped-up by EUR 360 million in December 2006.

Compared with 2005, an extra EUR 207 million was committed and an extra EUR 2 million paid.

The payments added up to EUR 3 589 million, of which EUR 3 562.1 million was for the 2000-2006 programmes (Objective 1: EUR 3 193.0 million; Leader+: EUR 361.1 million; Peace: EUR 8.1 million) and EUR 26.9 million for the closure of 45 programmes from the 1994-1999 programming period.

Outstanding EAGGF commitments at the end of 2006 totalled EUR 7 636 million (compared with EUR 7 085 million in 2005), of which EUR 7 288 million corresponded to 2000-2006 programmes.

Implementation of the n+2 rule for the 2003 commitments resulted in EUR 9.3 million being decommitted. 15 Leader programmes and four Objective 1 programmes were affected, mainly in France, Spain and Greece. Initial estimates of the impact of this rule on 2004 commitments, based on financial implementation per programme at the end of 2006, show a potential decommitment of EUR 53 million.

FIFG

In all, 99.58 % of commitment appropriations and 84.16 % of payment appropriations were implemented. The payment rate was 86.23 % in Objective 1 regions and 79.06 % in regions outside Objective 1. The total outstanding payments on commitments for the FIFG for the 2000-2006 programming period totalled EUR 1 336 million in 2006 (compared with EUR 1 111 million in 2005).

Concerning the application of the n+2 rule, at the end of 2006 and in relation to the 2000, 2001, 2002, 2003 and 2004 commitments, 9 programmes were involved for which a total of EUR 22 million was at risk. For these programmes the Commission opened the contradictory procedure with the Member States. Only by the end of this procedure the amounts to be decommitted will be definitively known.

Programme Implementation

Objective 1

Expenditure on the Objective 1 programmes followed the same path as in 2005. The Objective 1 programmes focused investment on basic infrastructure projects (41.6 %), with over half (54.4 %) of all investment in this category spent on transport infrastructure. More than one-third (33.5 %) of the Objective 1 resources were invested in productive environment, where the priority continues to be on assisting SMEs and the craft sector (30 %). Projects targeted at human resources took 23.2 % of resources in Objective 1 regions. The main fields of activity were, almost equally, labour market policies (31.6 %) and education and vocational training (31 %).

Objective 2

In Objective 2 regions, the main focus of the programmes continued to be on productive environment, with over half of all financial resources (56.3 %) allocated to this category. Within this field, assistance to SMEs and the craft sector predominated (56.5 %). The second most important field of activity was basic infrastructure, with 29.1 % of all Objective 2 resources. Unlike the Objective 1 programmes, the most important area in financial terms was planning and rehabilitation of industrial zones (44.6 %). In the human resources category (10.2 % of all investment in Objective 2 regions), workforce flexibility, entrepreneurial activity, innovation, information and communication technologies were the main fields of investment (31.6 %).

Objective 3

The main emphasis of the ESF programme in 2006 continued to be on support for the European Employment Strategy, particularly measures aimed at improving employability on the labour market (31 % of expenditure), lifelong learning (27 %) and equal opportunities (6 %), while measures to promote entrepreneurship remained stable (19 %) but below the level suggested by the programming documents (21 %). Furthermore, there was still a marked difference in financial implementation of programmes between EU-15, where long-established programmes continued to be implemented, and EU-10, where some Member States are experiencing considerable difficulties in getting some projects and measures underway.

Fisheries outside Objective 1

Take-up for structural improvements in the fisheries sector progressed in 2006. This was reflected in the financial implementation of the FIFG operational programmes, which contributed to achieving the objectives of the common fisheries policy.

Community initiatives

Interreg

The implementation of the 81 Interreg III/Neighbourhood programmes progressed well in 2006 in pursuit of their objective of reducing the negative economic impact of borders and promoting cooperation.

Over the period from 2000 to 2006, the 81 Interreg III/Neighbourhood programmes selected some 13 000 projects and networks. For some programmes, changes were necessary due to enlargement and/or the integration of the Union's new Neighbourhood programme concept. N+2 decommitments and updates of the mid-term evaluations contributed to further changes to the programme in the two following years.

The “n+2 rule” resulted in close to EUR 29 million being lost under Interreg, which is slightly more than the previous year.

Equal

In 2006, good progress continued to be made with implementation of the 27 programmes and more than 3 300 projects under Equal.

Almost 50 meetings of Equal monitoring committees were held during 2006. They focused on strategies and action to mainstream good practice that has been developed and validated. One of the most important administrative tasks for those meetings was to decide the final changes to the contents of the programmes and to the financial distribution between the priorities: nine Member States requested a duly justified final modification from the Commission in time (before the end of 2006). Three coordination meetings of the Equal managing authorities took place in Brussels during 2006.

As regards financial implementation, after bilateral discussions between the Commission and the national managing authorities to assess the situation and establish action plans to increase spending, six Member States were not able to use part (between 3% and 18%) of their 2004 budgetary commitment (“n+2 rule”).

In order to make maximum use of the results of the Equal programmes and projects by informing policy and practice, including the shape of the national and regional ESF programmes for the next programming period, the Commission and the Member States worked in partnership during 2006. This work covered relevant policy issues such as asylum seekers, diversity, youth employment, ex-offenders, social economy, inclusive business creation, media and discrimination, together with management principles (partnership, transnational cooperation, innovation and gender mainstreaming). This “mainstreaming” work concentrated on gathering and validating good practice on new methods of delivery, on supporting European events for mainstreaming the lessons learnt and on disseminating information about the achievements of Equal through the Equal website, Equal newsletter and a European database on Equal end-products.

Member States took the initiative of sharing the lessons learnt when drafting the plans for the new ESF programming period. Ad hoc groups of Member States drafted discussion papers on integration of the Equal management principles. Following two workshops with participants from all Member States, these papers were presented as guidance material for the forthcoming programming period to the members of the ESF Committee at their meeting in June 2006.

Seven workshops related to Equal were organised during the European Week of Regions and Cities (“Open Days”) in October 2006. A training seminar on “Preparing the Closure of Equal” was held in Brussels in September, with participants from all Member States, plus DG EMPL and OLAF.

Urban

In 2006, the twenty thematic networks and six working groups created within the framework of Urban continued their efforts to promote best practices and exchange information. Thirteen networks completed this work and a final conference was organised to present their results and recommendations. A report on the “role of the cities in the development of disadvantaged districts”, based on the experience of the cities, was produced under the auspices of the German Presidency.

The process of capitalisation (combining analyses and activities of the networks and groups of work, summarisation and regrouping on major questions) and the process of distribution have developed considerably: six thematic folders were created on the website and are regularly updated on the following topics: young people, local economic development, and participation of the inhabitants, safety, urban regeneration and immigrants.

Leader

73 Leader+ programmes have been approved for the period 2000-2006. Of the 938 Local Action Groups (LAGs) proposed, 892 have been finally selected.

The Community’s Leader+ initiative consists of three actions: implementation of local development strategies by public/private partnerships, cooperation between rural territories and networking.

Local development strategies

In some programmes most of the LAGs have committed the budget available for their projects. Indicators for some programmes already clearly show that the programmes have been a success, for example Ireland with 930 new enterprises assisted, 1935 new jobs created and 32 162 individuals trained, Finland with 2 191 new jobs created and Northern Ireland with 100 new enterprises created and 1 060 new jobs created.

Cooperation

In Ireland, which is among the best performers for cooperation, 100% of the funding was committed by the end of 2006 with 86 transnational projects and 124 interterritorial projects by 22 Local Action Groups. In many Member States, almost all the LAGs are participating in cooperation projects, which is a more meaningful indicator than the number of projects per programme. This is the case in Belgium (Flanders and Wallonia), Denmark and the UK. In Italy 87% of the LAGs are involved in cooperation and in France 75%. In some cases transnational cooperation is mainly neighbourhood cooperation, for example between Northern Ireland and the Republic of Ireland or between Italy and other Mediterranean countries.

Networking

Dissemination and transfer of know-how is a core element of most National Network Unit programmes. National Network Units are working on learning from Leader+, accumulating and carrying over knowledge from Leader+ bearing in mind the need to learn lessons and gather recommendations for the next programming period. The UK drafted a document considering achievements under Leader in terms of the new rural development regulation and demonstrating how Local Action Groups are already contributing to the three priorities by means of case studies at both project and LAG level.

The national networks have developed case studies and established data bases of good practices. They are also running more training schemes on the conceptual and methodological aspects, e.g. on the nature of pilot strategies, for instance on how to involve the local population and young people in local development, etc.

In 2006 the European Leader+ Observatory organised three decentralised seminars: “Adding value to local products” in Grosseto (Tuscany) in February, “Making best use of natural and cultural resources” in Schruns (Austria) in April and “Leader in the New Member States” in Tihany in Hungary in November, which focused on topics suggested by the new Member States beforehand, such as institution-building, capacity-building at LAG level, networking and good practice. The evaluation shows that these were a complete success.

Innovative action

ERDF

Some 181 regional programmes for innovative actions were approved for the period 2000-2006. By the end of 2006 fifty-nine programmes had been brought to a conclusion. This resulted in 40 projects being identified as best practice examples for dissemination to other regions (for example, through the Inforegio website). It should be recalled that the programmes are organised around the following themes: knowledge and technological innovation, information society and sustainable development.

ESF

During the year 37 projects relating to Local Employment Strategies were finalised. In 2006, 19 projects were selected under the third round of the call for proposals on “Innovative approaches to the management of change”. Together with the 61 ongoing projects selected in previous rounds, they address two priority issues: management of restructuring and management of demographic change. With a view to mainstreaming the results, six projects were selected under the second round of the call on “Transfer and dissemination of innovation from ESF Article 6 projects”.

FIFG

Three calls for proposals were launched in 2002 and 2003. In 2002 ten innovative action projects were selected under call 2002 – 02/C 132/11. In 2003 another 12 projects were selected under call 2003/C 115/08 – Générique, plus seven more focusing specifically on the needs of women and women’s associations operating in the fisheries sector (call 2003/C 115/07 – “Femmes”).

Nine projects were brought to conclusion in 2006.

Following the 2005 ex post evaluation of transnational projects for innovative action in the fisheries sector, no new call for proposals was launched in 2006. The evaluation showed that the overall EU added value of these projects was limited. The key characteristics of the innovative action - innovation, networking and transnational cooperation – have, however, been mainstreamed into the European Fisheries Fund Regulation.

Consistency and Coordination

Consistency with other Community policies

Although this report is concerned with implementation of the regulation related to the Structural Funds in 2006, it should be underlined that extensive work was done to further improve consistency with other policies in the context of adoption of the Community strategic guidelines on cohesion.

Competition

Under Regulation (EC) No 1260/99 Member States are required to verify that all operations comply with EC legislation, including the rules on State aid. Where the Commission is informed of, or audits demonstrate, any breach of EC legislation, appropriate action is taken. In order to provide full transparency, Member States indicate the State aid schemes for which assistance from the Structural Funds is used in their programmes. The majority of regional aid schemes expired on 31 December 2006. New guidelines apply as of 1 January 2007.

Internal market

Under Regulation (EC) No 1260/99 Member States are also required to verify that operations financed by the Funds comply with EU Public Procurement Directives. Where the Commission is informed of any breach of EC legislation or where audits demonstrate that this is the case, appropriate action is taken. In the programming context the Commission requires information from the Member States in the annual reports on the programmes.

The Directorates General for Regional Policy and for Internal Market have contributed to clarify the legal treatment of concessions dating before accession of new Member States, on 1st May 2004, and which were not in compliance with the EC-Acquis.

A new regulatory framework for public procurement law has been introduced in order to provide greater further legal certainty both for the private and the public sector.

Environment

The main focus has been on using appropriate actions under the cohesion policy programmes to support compliance with the Community Acquis in the field of urban wastewater, water supply and waste management. Other important areas of investment have been in eco-innovation and rehabilitation of polluted soil. The promotion of sustainable development has been achieved with investments in environmentally-friendly transport and energy, introducing environmental criteria into project selection, and by pro-actively ensuring compliance of projects with environmental legislation.

The application of the Strategic Environmental Assessment Directive to the future Operational Programmes 2007-13 as part of ex-ante evaluation is proving to be a particular challenge for Member States – this task has been eased by the use of the SEA handbook devised by the Interreg IIIC project on Greening of Regional Development Programmes (GRDP). The European Network of Environmental Authorities (ENEA) composed principally of environmental administrations in Member States continued its work during 2006 with meetings in Brussels, and two other meetings in La Coruña (Spain) and in Rome (Italy), hosted by the relevant national networks. For the list of major projects supported in this field by the ERDF, see Part 3 of the Annex.

Transport

Cohesion programmes continue to be the main source of Community support for the realisation of Community priorities in transport. Accordingly, the main focus has been on supporting investment in line with European transport policy. For a list of major projects supported in this field by the ERDF, see Part 3 of the Annex.

Gender equality

The Commission continued its work to promote gender equality in the Structural Funds and the Cohesion Fund.

In March 2006 the Commission adopted “A Roadmap for Equality between Women and Men”, covering the period 2006-2010, which reflects the Commission’s commitment to this issue and covers all external and internal EU policies. The roadmap outlines six priority areas for EU action on gender equality: equal economic independence for women and men, an area in which the SF are contributing to achieving the Lisbon employment targets; reconciliation of work and private life; equal representation in decision-making in politics, economics and science and technology; eradication of gender-based violence and trafficking; eliminating gender stereotypes in society; and promotion of gender equality in external and development objectives. The roadmap is designed to improve governance by exploring the possibilities to develop gender budgeting at EU level, particularly in the Structural Funds within the possibilities of shared management for the new period.

In the context of the Lisbon Strategy, on 24 March 2006 the European Council adopted the “European Pact for Gender Equality”. The objective was to encourage action at Member State and European Union level to achieve the objectives of the growth and jobs strategy.

The Regulation establishing the European Institute for Gender Equality was adopted by the Council on 20 December 2006. The Institute will provide technical support both for the Member States and for the European institutions – notably the Commission – to ensure optimum implementation of Community policy in the field of gender equality. The Institute will organise collection and analysis of data at Community level, develop appropriate methodological tools, in particular for integration of the gender dimension in all policy areas, facilitate exchanges of best practices and dialogue between stakeholders and raise awareness among EU citizens.

The High-Level Working Group on gender equality, set up in 2004, met once to exchange best practices.

Coordination of instruments

The Structural Funds and the Cohesion Fund

Aid granted by the Cohesion Fund provides financing for transport infrastructure projects in the fields of trans-European networks and the environment. The Cohesion Fund enables the beneficiary Member States to channel significant public investment into these two fields of common interest, while meeting the objectives for reducing the budget deficits set in the convergence and stability programmes drawn up as part of economic and monetary union.

As a result of the enlargement of the European Union in May 2004, ten new Member States are covered by the Cohesion Fund. In 2006, before the latest enlargement to Romania and Bulgaria on 1 January 2007, there were 13 Member States benefiting from these Funds. As a result of its economic growth, Ireland has no longer been eligible for aid from the Cohesion Fund since 1 January 2004.

The principal instrument for coordinating funding under the Cohesion Fund and the Structural Funds is the strategic reference framework (SRF), which covers the whole period from 2000 to 2006. Regulation (EC) No 1164/94 provides that “Member States shall also provide the results of the environmental impact in conformity with the Community legislation, and their consistency with a general environmental or transport strategy at administrative unit or sector level”.

The four “old” Member States benefiting from the Cohesion Fund presented their SRFs for the environment and transport at the end of 2000. The ten “new” Member States presented their SRFs during the first half of 2004. Since then, decisions to finance projects by the Cohesion Fund were verified to avoid duplication with programmes adopted under the Structural Funds. In addition, SRFs make for better complementarity between the two instruments.

In certain cases, these SRFs form an integral part of the programmes approved under the Structural Funds for the period 2000-2006; this strengthens coordination between funding under the Cohesion Fund and the Structural Funds.

The Structural Funds and the EIB/EIF

Jaspers

In 2005 the Commission agreed in principle with the EIB and EBRD to strengthen cooperation, especially in relation to the Member States which joined the EU in 2004 and to Romania and Bulgaria. Because of the inexperience of the national administrations with project preparation, agreement was reached to establish a new joint structure called Jaspers (Joint Assistance to Support Projects in European Regions) to assist the twelve beneficiary countries with preparing major projects. Jaspers headquarters are in the EIB in Luxembourg but it was agreed to post the majority of the new staff in regional offices in Warsaw, Vienna and Bucharest. In 2006 the new technical assistance facility came into operation.

A Memorandum of Understanding between the Commission, the EIB and the EBRD was signed in May followed by a grant agreement for the transfer of Commission technical assistance to the EIB to fund Jaspers, signed in July. Action plans (work programmes) for 2006 were agreed with eleven of the twelve beneficiary countries. Two framework contracts to assist with the work of Jaspers were put out to tender and the successful consultants were chosen in November.

Work began on these action plans as soon as they were agreed between Jaspers and the beneficiary countries, drawing first on the core teams of experts seconded to Jaspers by the EIB and EBRD (sixteen staff-years will be contributed each year by the EIB and five to eight by the EBRD). By the end of the year Jaspers had a portfolio of 98 projects or horizontal studies and three assignments had been completed.

Posts to be funded by the Commission were advertised in May. A total of 1 600 applications were received for the 32 new posts as Jaspers experts. From these, 110 applicants were interviewed and 29 were chosen as suitable to be offered posts. Lastly, the Jaspers regional office in Warsaw began operations in November.

Jeremie

The Commission and the EIB Group have also agreed to launch a joint initiative to improve access to finance for SMEs and develop micro-credit for the next programming period, known by the acronym Jeremie (Joint European Resources for Micro to Medium Enterprises). It is targeted especially at micro to medium-sized enterprises in the regions of the EU supported by the Structural Funds. Jeremie is a direct response to the challenge which continuous economic adjustment poses to these regions.

First in February and then in April 2006 the Commission presented the legislative package necessary to provide for Jeremie to the Structural Actions Working Party of the Council. This package was included in the new general Regulation No 1083/2006 of 11 July 2006 on the Structural Funds.

In parallel, over the period May-September 2006 the Commission prepared and discussed with the Member States the rules necessary to implement Jeremie. These provisions are included in Articles 43 to 46 of Commission implementing Regulation No 1828/2006 of 8 December 2006.

A Memorandum of Understanding was signed between the Commission and the EIF in May 2006 to organise their joint approach to Jeremie. On 3 October 2006, in Luxembourg, the Commission and the EIF signed the contribution agreement, which secured the financing for the Jeremie evaluation reports in the Member States or regions for 2006.

The Jeremie evaluations are led by the EIF evaluation team in Luxembourg, supported by local consultants recruited by the EIF, with local knowledge. By the end of 2006, 15 interim reports at Member State level and 10 interim reports at regional level in three other Member States (Spain, UK and France) had been prepared by the EIF. More interim reports and all the final reports will be made freely available to the Member States or regions concerned by the EIF at the end of 2007.

Jessica

Another initiative, Jessica (Joint European Support for Sustainable Investment in City Areas), has been put in place with the EIB and the Council of Europe Development Bank to support sustainable and recyclable urban investment and development in cities in the EU from the Structural Funds. The Commission presented the new Jessica initiative to the Council for the first time in February 2006, in cooperation with the EIB.

Under Jessica, managing authorities in the Member States have the opportunity to use some of their Structural Fund allocations – principally those supported by the European Regional Development Fund (ERDF) but also, where appropriate, from the European Social Fund (ESF) – to invest in Urban Development Funds (UDFs) and recycle these resources to further rounds of investment in urban areas.

A Memorandum of Understanding was signed between the Commission, the EIB and the CEB in May 2006 on a coordinated approach to financing urban renewal and development for the 2007-2013 programming period of the Structural Funds. A grant contribution agreement for the Jessica scoping study was signed between the Commission and the EIB in December 2006. The objective of the study, carried out by the EIB in cooperation with the CEB, is to make an initial estimate of the potential demand and existing structures for urban investment under Jessica for the programming period 2007-2013, including country-specific reports for some Member States (UK, Italy, Netherlands, Spain, Poland and Hungary). The scoping study will be available to DG REGIO in February 2007.

Evaluations

Evaluation (like management) of cohesion policy is a responsibility shared between the Commission and the Member States.

In 2006 the Commission carried out strategic and thematic evaluations to support decision-making under cohesion policy. In addition, its summary reports analysed the quality and the results of evaluations carried out by the Member States. Another important task for the Commission was to provide methodological guidance to the Member States and organise exchanges of experience. No ex post evaluation was finalised in 2006.

Thematic evaluations

The following thematic evaluation was undertaken to examine the role of a particular theme in the 2000-2006 programmes:

- Study on measuring employment effects

- Evaluation of information systems and monitoring arrangements for the programmes supported by the European Social Fund

- Evaluation of the ESF support to the administrative capacity building

- Evaluation of the ESF support to anticipation and management of economic change and restructuring

- EU wide evaluation of EQUAL Community Initiatives.

Strategic evaluations

Three strategic evaluations were carried out in 2006 to support the 2007-2013 programming exercise:

- Strategic evaluation on innovation and the knowledge-based economy in relation to the Structural and Cohesion Funds, for the programming period 2007-2013.

- Strategic evaluation on the environment and risk prevention under the Structural and Cohesion Funds for the period 2007-2013.

- Strategic evaluation on transport investment priorities under the Structural and Cohesion Funds for the programming period 2007-2013.

Summary reports

Synthesis report: the mid-term evaluation of Objective 1 and 2 regions “Growing evaluation capacity” – prepared by the Commission in consultation with the Member States – analysed the outcomes of the mid-term evaluations carried out under the responsibility of the managing authorities.

Concerning the ESF, an “Overview of the final evaluations of the ESF co-funded programmes – Objectives 1 and 3” summarised useful lessons learnt from the mid-term and final evaluations.

Methodological guidance on evaluation for Member States

Methodological working documents were drafted by the Directorate-General for Regional Policy and the Directorate-General for Employment, Social Affairs and Equal Opportunities to provide guidance on evaluations carried out by the Member States (e.g. ex ante evaluations, indicators, mid-term evaluations and updates).

Other examples :

- EVALSED: on-line interactive methodological guidance for evaluation of socio-economic development;

- Guide to cost-benefit analysis of investment projects.

Controls

ERDF

- 1994-1999 programming period – follow-up

Closure audits were completed on a sample of 56 programmes covering all EU-15 countries, bringing to an end the on-the-spot audit work under this enquiry. The programmes audited cover 20% to 60% of the ERDF contribution in all Member States, with one exception, and, overall, cover 35% of the ERDF contribution to mainstream programmes (31% of the total ERDF allocation). In 2006 the follow-up of all the audits was completed, final positions were reached on the corrections to be applied and financial correction procedures were launched, where applicable.

- Assurance on the functioning of the management and control systems for 2000-2006

EU-15

An audit enquiry was started in mid-2004 to examine the effective functioning of key elements of management and control systems in Member States for mainstream programmes. The audits comprise two phases: a systems review and an audit of a representative sample of projects. The on-the-spot audits initially planned had been concluded by the end of 2006 for EU-15 and will be concluded by the end of June 2007 for EU-10.

By the end of 2006 a total of 126 audit missions had been carried out under the EU-15 enquiry planning memorandum (EPM) - “verification of effective functioning of the systems for the 2000-2006 period” – and 61 programmes had been audited. They account for 22% of the number of mainstream and Urban programmes and 52.6% of the planned ERDF contribution.

Based on the audit work performed, the main specific risk areas identified affecting key elements of the systems concern insufficient management checks by management authorities and/or intermediate bodies and deficiencies in the certification and/or audit functions. Other key elements of the system also identified as weak include the separation of functions and inadequate audit trails. In the case of public procurement, the main issues concern irregular complementary works, misapplication of the selection criteria and problems with tender evaluation.

EU-10

By the end of 2006, 28 audit missions had been carried out and 9 programmes had been audited. They account for 45% of the number of mainstream programmes and 65.5% of the planned ERDF contribution. The audits carried out showed some of the same weaknesses as for EU-15.

Interreg

A separate audit enquiry for the Community’s Interreg III initiative was launched in 2006. The approach includes a review of the systems (phase I) and expenditure checks (phase II).

In 2006 five programmes were reviewed and will be further implemented in 2007. The particular challenge is that for most of the 81 Interreg III programmes the management and control systems are distinct. The main risk factors, confirmed before the on-the-spot audit work was launched, consist of the general risk factors identified for the ERDF plus the specific factors linked to the multi-national nature of the programmes and operations, to the type of expenditure co-financed and to the complex management and control systems put in place by Member States.

Other audit work during 2006 included the examination of the annual control reports received under Article 13 of Regulation 438/2001. By the end of 2006, a total of 122 reports (50 for mainstream and URBAN programmes and 72 for Interreg III programmes, as well as Cohesion Fund) had been analysed.

ESF

During 2006, 69 audit missions were organised by the Commission: 53 system audit missions for EUR-25 on 2000-2006 plus 16 closure audits on 1994-1999.

Out of a total of 237 European Social Fund programmes, 123 have been covered by the Commission, with the emphasis on those assessed as high-risk programmes. In all, 34 programmes assessed as high-risk were audited in 2006, including 10 new programmes. Every Member State except Luxembourg was visited. In five Member States a follow-up audit was performed.

Audits in EU-15 in 2000-2006

The systems audited by the Commission so far account for 81.84% of the EUR 62.6 billion allocated to EU-15 for the period 2000-2006 (3.13% more covered in 2006). Following the Structural Funds audit strategy for substantive tests and sample check audits, 402 desk reviews were performed and 158 projects were visited on the spot.

From the beginning of 2005, the conformity of national management and control systems is evaluated in a table for each Member State and programme. For 15 operational programmes major weaknesses in one or more key elements were detected and early-warning notes were sent.

The problems identified during the 2006 audits related to inadequate first-level checks, insufficient certification procedures, breaks in the audit trail, insufficient separation of duties and long delays in performing 5% controls.

Audits in EU-10

In 2006 the Commission completed the definitive evaluations of the last eight descriptions of management and control systems received in accordance with Article 6 of Regulation (EC) No 438/2001.

A total of 15 audit missions were conducted in the 10 new Member States, one of them a joint mission with the Directorate-General for Regional Policy. These audits covered three new programmes and expenditure totalling 92.45% of the entire EUR-10 allocation. In 2006 it was possible to conduct substantive tests to confirm the level of assurance obtained on the systems not fully operational in 2005. 98 desk checks were performed and 63 projects were visited on the spot. The audits performed on EUR-10 revealed a systemic error in four programmes in two Member States. Three early-warning notes were sent.

The problems encountered during the audits related to inefficient and cumbersome procedures in relation to Article 4 of Regulation (EC) No 438/2001, insufficient certification procedures, problems with reconciliation of expenditure, ineligible expenditure and inadequate information systems.

Financial corrections

In 2006, 12 financial correction procedures and 14 action plans were agreed.

Programming period 1994-1999

In 2006, 15 missions were conducted to verify the procedures used by the independent body to establish the statement in accordance with Article 8 of Regulation (EC) No 2064/1997. The audit covered 60 programmes in 12 Member States (10 for first-phase closure audits and 50 for second-phase closure audits). The first phase aims at reviewing the process to establish the statement in accordance with Article 8 of Regulation (EC) No 2064/1997. In the second phase a sample of projects already subject to a 5% control is selected for re-performance.

The problems encountered in the first-phase closure audits mostly concerned the quality and representativeness of the 5% controls. In 2006 the second phase of closure started with the participation of an external contractor.

Integrated audit approach

As part of its audit strategy, since 2004 the Commission has applied a mutualisation concept with national ESF bodies aiming at putting into practice the single audit approach by sharing audit results with Member States and drawing part of its assurance on systems from the national audit results.

The Article 13 reports were reviewed and a response was sent to every Member State.

Generally, the Directorate-General for Employment, Social Affairs and Equal Opportunities is ready to give an opinion on 169 of the 212 EU-15 programmes. This opinion is based either on its own audits or on the national audit results received in application of the mutualisation concept.

EAGGF

DG AGRI followed the same basic approach as DG REGIO and shared the same general objectives.

By the beginning of 2006 the planned ex post audit programme for 1994-1999 had been completed. Programmes accounting for 32% of total expenditure were audited in this programme. A number of financial correction procedures are underway: bilateral meetings were held with the Member States in 2006 on 18 programmes. Four financial correction decisions covering five programmes were adopted by the Commission in the course of the year.

A total of 21 programmes, covering 38% of the planned expenditure, were audited over the year for the period 2000-2006 (EU-25). By the end of 2006 a total of 73 of the 152 programmes approved for the EAGGF-Guidance Section had been audited. Typical problems identified were: inadequate management controls, failure to verify eligibility criteria in accordance with the provisions of the agricultural legislation and a low level of independent controls. These findings are being followed up with the Member States concerned in bilateral proceedings.

FIFG

A total of six on-the-spot checks were carried out in 2006 for the FIFG. Three of these missions were to verify and follow up the effective functioning of management and control systems for the period 2000-2006, combined with sample checks in Italy (for two operational programmes), Poland and Sweden where DG FISH is “ chef de file ”. These four programmes were allocated a budget of EUR 496.6 million for the period.

Another two missions – one in France (Ile de la Réunion), the other in Portugal (Açores) – concerned system audits combined with sample checks to verify effective functioning of the management and control systems for operational programmes under Objective 1 where DG REGIO is “ chef de file ”. These two missions together with the part of the audit performed in Sweden for the “Norra” operational programme under Objective 1 implemented action No 2 (“Reliance on other DGs’ work for the assessment of Member States’ management and control systems”) of the action plan agreed between DG FISH and the IAS following its in-depth audit. These three programmes were allocated a budget of EUR 49.2 million for the period.

The last mission, in Spain, essentially concerned checking the specific measure for the conversion of fishing vessels which, up to 1999, were dependent on the fishing agreement with Morocco (EUR 128.2 million) and following up implementation of the recommendations made during a previous audit of the management and control systems for the two Spanish FIFG programmes (EUR 1 787.5 million).

A total of 83 projects, worth a total eligible amount of EUR 21.9 million with an FIFG contribution of EUR 14.3 million, were checked by desk review and on site. A total of EUR 1.9 million was identified as potentially ineligible. The follow-up to the audits has not yet been finalised as the findings are still being discussed internally within DG FISH and externally with Member States.

Closure of the 1994-1999 programming period

By the end of 2006, 38 out of the 52 FIFG programmes for the period 1994-1999 had been closed. Four are in the process of being closed (for three a recovery order has been launched and for one consultations are in progress with the Legal Unit on a draft financial correction decision) and for eight the reply from the Member State is awaited or being examined by DG FISH. Several weaknesses were identified for which flat-rate or net financial corrections were applied. The last two closure proposals are being prepared. 80% of the total number of programmes have been, or are in the process of being, closed.

OLAF

During 2006, OLAF undertook 44 missions in the Member States relating to measures co-financed by the Structural Funds. Some 30 of these missions concerned on-the-spot checks[13], while 14 were conducted for other purposes, e.g. to gather information or to assist either national administrations or judicial authorities. Among problems identified were cases of false declarations, false invoicing and failure to respect public procurement rules.

In 2006, Member States reported to the Commission, in accordance with Regulation (EC) No 1681/94[14], some 2 853[15] cases of irregularities involving EUR 461 650 245 affecting measures co-financed during the 1994-1999 and 2000-2006 programming periods. Both the number of cases and the amounts involved showed a slight decrease compared with 2005[16], probably as a result of the changes made by Regulation (EC) No 2035/2005[17], particularly the raising of the threshold for reporting irregularities from EUR 4 000 to EUR 10 000. The financial figures demonstrate increased awareness of their obligations and better reporting by the Member States.

Further simplification of the legal framework on reporting irregularities for the new generation of cohesion policy programmes (2007-2013) is provided for by the Commission implementing Regulation laying down detailed rules on management and control of the operational programmes[18].

Committees Assisting the Commission

Committee on the Development and Conversion of Regions (CDCR)

The CDCR was consulted on:

- the fields of technical assistance on the initiative or on behalf of the Commission;

- the amendment of Commission Regulation (EC) No 448/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds as regards reporting on cancellation proceedings and on re-use of the funds cancelled.

A new Coordination Committee of the Funds (COCOF) was established under Article 103 of Regulation (EC) No 1083/2006 which entered into force on 1 August 2006.

The Committee was consulted as a management committee on:

- the rules for implementing Council Regulation (EC) No 1083/2006 laying down general rules on the ERDF, the ESF and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 and Regulation (EC) No 1080/2006 on the ERDF; and

- the method for calculating the structural public and equivalent expenditure for additionality purposes.

The Committee was consulted as an advisory committee on:

- the list of areas eligible under the European Territorial Cooperation Objective;

- the cost-benefit analysis methodology;

- the guidelines concerning the evaluation methodology; and

- the allocation of technical assistance on the initiative or on behalf of the Commission.

- Before it was formally consulted, the Committee, whether the CDCR or the COCOF, held technical discussions on most of the above-mentioned issues.

A subgroup of the Committee was set up on spatial planning and urban issues.

ESF Committee

The Committee set up pursuant to Article 147 of the Treaty (ESF Committee) met three times in plenary session and its Technical Working Group met six times. It discussed a wide range of issues relating to both implementation of the 2000-2006 programming period of the ESF and preparations for the 2007-2013 programming period.

The ESF Committee examined issues concerning the new regulations for 2007-2013, including ESF support for education and training, health, anticipation, management of change and restructuring, social partners, migrants and mainstreaming Equal principles. It was informed of ESF information and communication activities at national and EU levels.

It was also kept informed of progress on the Community strategic guidelines for 2007-13, the European employment strategy, the European Globalisation Fund, the Gender Equality Pact and the reforms of the sugar sector.

Committee on Agricultural Structures and Rural Development (STAR)

The STAR Committee met 12 times in 2006 and gave favourable opinions on 31 amendments to rural development programmes under Article 44(2) of Council Regulation (EC) No 1257/1999 and six amendments to rural development programmes under Article 4 of Council Regulation (EC) No 1268/1999.

Committee on Structures for Fisheries and Aquaculture (CSFA)

In 2006, the Committee was consulted on a number of issues: the draft working paper on ex ante evaluation for the European Fisheries Fund Operational programmes; the draft working paper on indicators for monitoring and evaluation for the European Fisheries Fund Operational programmes; discussion on draft Commission regulation laying down detailed rules for the implementation of Council Regulation (EC) No 1198/2006 on the European Fisheries Fund; draft Codification of Commission Regulation (EC) No 908/2000 of 2 May 2000 laying down detailed rules for calculating aid granted by Member States to producer organisations in the fisheries and aquaculture sector.

Part 2: Analysis per Member State

Belgium (

THE YEAR 2006 WAS THE LAST YEAR FOR COMMITMENTS FOR THIS PROGRAMMING PERIOD. IT WAS VERY IMPORTANT TO COLLECT ALL THE INFORMATION NECESSARY FOR THE FINAL MODIFICATIONS TO THE PROGRAMMES BEFORE THE END OF THE YEAR. AT THE END OF DECEMBER, THE MONITORING COMMITTEES APPROVED THE MODIFICATIONS TO ALL THE PROGRAMMES.

Preparations for the 2007-2013 period

On top of the ongoing management of the 2000-2006 programmes in Belgium, the preparations for 2007 – 2013 were intense in 2006.

A bilateral meeting with the Belgian authorities was organised on the preparation of the Community Strategic Guidelines. The coherence with the revived Lisbon strategy was also an important topic in 2006. A follow-up exercise was held to examine the level of implementation of the Belgian National Reform Programme in order to prepare the Commission’s annual report to be communicated to the Council.

The first phase in the preparation of the NSRF plans was completed. After a first draft of the NSRF was received in July 2006, a first meeting with the national and regional authorities was organised in that month.

A new draft was submitted in October 2006, on the basis of which the Commission issued some observations to the authorities. A new meeting took place at the end of November, which was followed by a letter with observations sent to the Belgian authorities.

Objective 1

For the only Belgian programme (Hainaut) under Objective 1, almost the entire budget envisaged until the end of the period had been assigned to measures and/or projects.

One new modifying decision was adopted, on 28 December 2006, for the transfer of funds from the EAGGF to the FIFG for the Hainaut Objective 1 programme and, on 18 December, the Monitoring Committee approved the adjustment of the financing plan to ensure optimum utilisation of the budget still available.

The level of expenditure under the ERDF amounted at the end of 2006 to EUR 346 540 429.57, i.e. 81.05% of the ERDF appropriation. Overall execution for EAGGF-Guidance at the end of 2006 amounted to EUR 22 631 009, i.e. 52.53% of the EAGGF appropriations. For one of the four funds (EAGGF), the n+2 rule was applied in 2006. For the ESF, the payment claims transmitted to the Commission at the end of 2006 amounted to EUR 139 480 595.44 (69.67% of the total ESF appropriation).

Objective 2

For the seven programmes under Objective 2 from which Belgium benefits, the annual reports were all approved by the corresponding Monitoring Committee and transmitted to the Commission for examination. For each programme, two Monitoring Committee meetings were organised in June and in December 2006

The main subjects dealt with by the Monitoring Committees were:

- the approval of the 2005 Annual Implementation Reports,

- the programme modifications,

- the follow-up of the n+2 situation;

- the preparation of the 2007-2013 programmes.

For the Objective 2 SPD in the Walloon Region (Meuse-Vesdre and Rural), the December 2006 Monitoring Committees ratified modifications to ensure the sound management of each programme, requiring adjustment of the financing plan and the adoption of new modifying decisions in 2007. However, the transfer of funds between ESF and ERDF for two Objective 2 programmes in Wallonia was not possible.

The levels of ERDF expenditure were EUR 95 132 842.06 and EUR 36 762 348.62, respectively, which corresponds to 68.58% and 67.02% of the ERDF appropriation. For the ESF, the payment claims transmitted to the Commission at the end of 2006 amounted to EUR 16 589 497 and EUR 3 656 156, respectively, corresponding to 64.47% and 64.92% of the ESF contribution.

For all four Objective 2 programmes in Flanders, the allocated funds have been nearly fully committed. The level of payments fully met the required n+2 level for the ERDF (total ERDF payments: EUR 126 754 529, i.e. average expenditure of 71.67% of the total ERDF contribution). For the three Objective 2 programmes involving the ESF, payment claims transmitted to the Commission amounted to EUR 12 119 265, corresponding to 70.72% of the ESF appropriation.

For Antwerpen, the Monitoring Committee decided in June 2006 on an amended financial plan to take account of an ESF n+2 decommitment of EUR 142 596. The corresponding Commission Decision was adopted on 25 October 2006.

The Monitoring Committee for Oost-Vlaanderen decided in June 2006 to amend the Programme Complement to make minor financial adjustments between measures within priority 1 to ensure efficient management of the programme.

At the end of 2006, as this was the last opportunity to amend the SPD financial tables for the programmes, the Monitoring Committees for Limburg and West-Vlaanderen decided on changes in the financial plan. For Limburg, ERDF funds were transferred between priorities 1 and 2 and between measures within priority 1, and there were small shifts between public and private expenditure within various measures. For West-Vlaanderen, the modifications also included such shifts and a small increase in private expenditure. Indicators were adapted to these shifts. At the same time, technical revisions to a number of indicators were made.

For Antwerpen, the Monitoring Committee decided in December 2006 on a revision of the financial plan of the Programme Complement in order to bring it in line with the modification of the SPD as mentioned above.

For Oost-Vlaanderen, the Monitoring Committee decided in December 2006 to modify the financial plan of the Programme Complement to make financial transfers between private and public national expenditure, and between measures, within priority 1.

For Bruxelles Capitale, expenditure under the ERDF (only an intervening fund) continued to make progress in 2006 and was concentrated at the end of the year, avoiding a decommitment under the n+2 rule.

The level of expenditure under the ERDF amounted at the end of 2006 to EUR 31 996 771.57, i.e. 69.73% of the ERDF allocation.

Objective 3

The total ESF appropriation for Objective 3 is EUR 798.4 million, divided over five operational programmes. All five programmes are performing according to plan.

For the Federal SPD, the total ESF budget amounts to EUR 72.1 million. The level of expenditure declared to the Commission in 2006 amounts to EUR 29.8 million (41% of the total ESF appropriation). Under the n+2 rule, a decommitment of EUR 1 967 006 was to be applied at the end of 2006.

The Flemish programme has a total ESF budget of EUR 392.5 million. The entire budget has been allocated to projects, which can run until 2007. The declared expenditure at the end of 2006 amounted to EUR 294.1 million or 75% of the total ESF budget.

The programme for Wallonia has a total ESF budget of EUR 297.9 million. At the end of 2006, the level of expenditure came to EUR 211.8 million or 71% of the budget. The programme is being implemented as anticipated.

The ESF budget for the Brussels region amounts to EUR 24.7 million. At the end of 2006, 89% of this budget (EUR 21.9 million) had already been claimed from the Commission.

The German-Speaking Community has a separate Objective 3 programme with a total ESF budget of EUR 11.2 million. At the end of 2006, the expenditure claimed from the Commission amounted to EUR 9.5 million or 85% of the total budget. The implementation of this programme is well-advanced.

Fisheries outside Objective 1

The total FIFG allocation to the fisheries programme is EUR 36.050 million. The main measures, in line with the common fisheries policy, are the scrapping of vessels, modernisation of the fleet, processing and marketing, collective investments and innovative measures.

Implementation has been rather slow and the FIFG allocation has been reduced to EUR 24.140 million.

Due to the corrective measures put in place by the authorities with the aim of improving implementation, the programme was close to meeting its n+2 target for 2006.

Community Initiatives

Equal

There are two EQUAL programmes in Belgium: one for the French- and German-speaking communities, and one for the Dutch-speaking community.

The French- and German-speaking programme proceeded without any major difficulties in 2006. In financial terms, at the end of 2006, the rate of execution of the ESF part of the programme was 67%. Automatic decommitment under the n+2 rule was avoided for 2006. The programme’s Monitoring Committee approved one modification to the financial tables, changing the balance between priorities (basically, a higher proportion of the budget for the themes employability, life-long learning and asylum seekers and a decrease for the business creation theme).

The Dutch-speaking EQUAL programme also proceeded without major difficulties in 2006. At the end of 2006, the rate of execution of the ESF part of the programme was 56%. There will be an automatic decommitment of EUR 1.237 million under the n+2 rule.

The two EQUAL programmes supported around 125 projects, mainly in fields such as employability, adaptability, life-long learning and social economy.

The success of EQUAL was due mainly to the fact that a very broad partnership was developed. Indeed, each EQUAL project involved the participation of a large number of partners such as the regional authorities, public employment services, NGOs, companies and social actors such as the trade unions. By working with such a variety of partners, EQUAL was able to respond more adequately and effectively in the fight against discrimination and inequalities on the labour market. Disadvantaged people also became involved. This broad partnership applied throughout all stages of programming, starting with the analysis of needs through to the design and definition of activities. The participation of the private and public sectors and the NGOs made it possible to set up a forum facilitating dialogue and consensus.

Leader Belgium has two Leader+ programmes: one for Flanders, involving a total public expenditure of EUR 7 984 200, and one for Wallonia, involving a total public expenditure of EUR 20 669 294. For both programmes, the allocated funds have been fully committed. The Flemish programme was amended in 2006 to modify the financial table.

At the end of 2006, total financial execution came to EUR 6 552 995, i.e. 45.74% of total EAGGF-Guidance expenditure earmarked for the period 2000-2006

Urban

There are three URBAN II programmes in Belgium. The programmes for Brussels, Antwerp and Sambreville were all approved on 12 November 2001 and two of them were modified in 2006 (Antwerp, Sambreville). Each programme originally received EUR 7.173 million from the ERDF, but due to the n+2 rule this contribution was reduced at end of 2005 to 7.130 million for Antwerp. The total budget for Brussels is EUR 14.9 million, for Antwerp EUR 22.9 million and for Sambreville EUR 17.1 million.

Annual reports for 2005 were submitted for all three programmes and approved.

For all three programmes, the management authority is the region. The Monitoring Committees for the programmes have met at least once.

All three programmes reached the n+2 goals for 2006.

Overall comments concerning the 2000-2006 period in Belgium

The Sambreville programme is the strongest in Belgium and has already reached a significant number of its targets. Many of the projects have been completed or have been started. Some tangible benefits are starting to become visible in terms of jobs created, unemployed trained, SMEs started, companies expanding, etc. The added value of URBAN II is that it has made a big difference by starting a dynamic that has changed the image of Sambreville, allowing it to attract some high-value companies and work in a stronger partnership with the private sector and the local population. The Antwerp programme had a very slow start, although the projects currently being developed should make the impact more tangible. The Brussels-Capital URBAN II programme has been seen more as a small appendix to the Objective 2 programme, but it has been successful in complementing the latter and the municipal “contrats de quartier”.

Closure of the 1994 – 1999 programming period

At the end of 2006, 2 ESF interventions remained open, with a RAL of EUR 10.608 million.

CYPRUS(

Preparations for the 2007-2013 period

The preparations for the 2007-13 funding period are well under way. The NSRF was discussed at several meetings throughout the year. The official submission took place on 22 December 2006 and its acceptance has been communicated to the Cypriot authorities.

Objective 2

For the programming period 2004-2006 Cyprus has one SPD 2 financed by the ERDF with a total of EUR 28.022 million.

For the SPD 2, two rural areas and two urban zones are eligible. In terms of ERDF expenditure, the year 2006 was marked by good progress. As a result of substantial efforts to accelerate implementation, the payment rates for the ESF and ERDF reached 36% at the end of the year, thus avoiding automatic decommitment.

One Joint Monitoring Committee meeting was held for all Operational Programmes. The Annual Review Meeting was postponed, but finally took place in February 2007.

The contracting rate at the end of 2006 reached 115% and certified expenditure 40%. The monitoring of the programmes is now very tight and the risk of automatic decommitment has decreased.

Objective 3

The Single Programming Document for Objective 3 for the period 2004-2006 covers a total budget of EUR 43.8 million, of which the ESF contributes EUR 21.9 million.

In 2004 activities centred mainly on the necessary administrative and institutional preparations for implementation, while 2005 saw the launch of concrete implementation. In 2006, the progress of implementation was considerable.

With regard to the current period 2004-2006, a Monitoring Committee meeting was held in Nicosia for the SPD 3 in April 2006. The 2005 Annual Implementation Report was submitted to the Commission on 30 June 2006 and discussed at the Annual Review Meeting for Objective 3.

The issue of strengthening further the management capacity of the final beneficiaries was discussed with the Cypriot authorities on various occasions during 2006. Though the Cypriot authorities seemed aware of the potential risk of an automatic n+2 decommitment, as all ESF projects were running on a very tight financial implementation schedule, the Commission services nevertheless held two technical meetings with the Planning Bureau and the final beneficiaries to consider the progress made and the potential n+2 risks. Following these meetings, the Cypriot authorities adopted additional administrative measures to simplify and accelerate effective financial implementation.

Subsequently, three interim payment requests were presented and processed within the reporting period, ensuring the timely absorption of financial resources and avoiding an n+2 decommitment for 2006, while minimising the n+2 risk for the subsequent years 2007-2008.

Fisheries outside Objective 1

Cyprus’ Fisheries Operational Programme, adopted by the Commission in 2004, entered its third year of implementation. At the end of 2006 a good part of the programme resources had been allocated by the managing authority and payments reached nearly 50% of the total available FIFG funds, thus avoiding the risk of losing funds under the n+2 Rule.

The Monitoring Committee met in 2006 to discuss the following items: the measures to be financed; the tasks of the managing authority and final beneficiaries; the monitoring and evaluation of progress; communication and awareness-raising; and approval of changes to the Programme Complement. At the end of the year 2006, the Operational Programme was modified (Commission Decision C(2006) 7270, 27 December 2006) in order to maximise the prospects for better implementation. The amount of the Community contribution remained unchanged.

Community Initiatives

Equal

The Cyprus EQUAL programme has three priority axes: employability, equal opportunities between women and men, and asylum seekers. Under these axes, seven projects were selected under Action 1, which also included a transnational cooperation dimension. Action 1 has been fully implemented. Some delays occurred in implementing the programme in 2006 due to a lack of resources.

The ESF contribution for Cyprus amounts to EUR 1 808 793, and at the end of 2006 expenditure came to EUR 496 596. Utilisation was above the 2006 target, so automatic decommitment under the “n+2 rule” was avoided for 2006.

Key activities undertaken during Action 1 were partnership development and establishing systems for operation, the development of an equal opportunities policy and strategy, the formation of a transnational partnership and preparation of a transnational cooperation agreement, and the preparation of a development partnership agreement. Cyprus was awarded an EQUAL grant in 2006 for an exchange event on youth employability to take place in the latter half of 2007.

Finally, delays also occurred in producing a mid-term evaluation report for the period 2004-2006.

Czech Republic (

THE CZECH REPUBLIC SHOWED A RELATIVELY SLOW START IN ABSORBING THE STRUCTURAL FUNDS DURING THE PROGRAMME PERIOD 2004-2006. FOR MOST OPERATIONAL PROGRAMMES, HOWEVER, A SOLID PROJECT PIPELINE HAS BEEN DEVELOPED, ALTHOUGH THE IMPLEMENTATION OF THE PROJECTS ON THE GROUND IS STILL CLEARLY LAGGING BEHIND.

The absorption of the Structural Funds accelerated in the second half of 2006, so the risk of losing money by the end of 2006 due to the n+2 rule was resolved for all programmes, including SPD Prague Objective 2 and SPD Prague Objective 3, the programmes facing the most serious absorption problems. The year 2007 will show whether absorption has really taken off since the second half of 2006.

In comparison with the other new Member States, the Czech Republic is still in the slower group of countries where absorbing the Structural Funds is concerned, but signals (contracting levels) are indicating an upward trend. To improve the situation, the Commission has strongly recommended an action plan to establish a basic harmonised monitoring and forecast system.

The 2005 Annual Implementation Reports were submitted for each Operational Programme in due time. For the most part, they were complete and of good quality, often providing very detailed information. All of them were deemed admissible and thus accepted by the Commission without significant objections.

Objective 1

The Community Support Framework (CSF) for the period 2004-2006 covers a total budget of EUR 1 954 million, of which EUR 1 454 million is contributed by the Structural Funds (63% ERDF, 25% ESF, 11.5% EAGGF and 0.5% FIFG). Five Operational Programmes are implemented under the CSF.

The CSF managing authority, at the Ministry for Regional Development, is responsible for the effectiveness, correct management and delivery of the support provided by the Structural Funds in the Czech Republic.

The Monitoring Committee for the CSF met on 15 June 2006. The annual report for 2005, the modifications to the CSF, the evaluation of CSF implementation and the structural policy after 2006 were discussed. The evaluation paid special attention to the reasons for the low absorption of funds. Its conclusions and recommendations should provide the basis for a list of action points to improve Structural Fund implementation.

The Joint Regional Operational Programme (JROP) is the largest Czech OP with a share of 31.2% (EUR 454 million) of the total Objective 1 allocation (28% ERDF and 3.2% ESF). Two Monitoring Committee meetings took place in 2006: on 19 April and 14 November 2006. The implementation of the JROP had progressed compared to the year 2005: 100% of the budget was approved by the end of 2006, although only 54% of that budget was contracted and 39% of the amount was spent, of which 26% was certified. The best performing measures in the JROP are the schemes supporting regional business infrastructure and the development of services in tourism. Two interim payment claims of EUR 73 429 237 were submitted by the end of the year, which represented 16% of the total budget for 2004 – 2006. The amount of payments was sufficient to avoid the application of n+2 rule for the 2004 commitment.

The Industry and Enterprise Operational Programme is the third largest OP with 17.9% (ERDF only) of the total Objective 1 allocation. Two Monitoring Committee meetings were organised for this OP in 2006: on 17 May and 23-24 November. The managing authority opted for the continuous submission of applications, and by the end of December 2006 1 002 individual projects were contracted, corresponding to EUR 315 million (91% of the total budget). The most popular measures remain schemes to support small and medium-sized enterprises, innovation schemes and two loan schemes aimed at starting entrepreneurs and firms in the initial development stage, whereas schemes aimed at energy savings and renewable sources of energy are lagging behind for the moment. By the end of 2006, interim payments had reached an amount of EUR 55 072 317, which is the highest figure for all Operational Programmes in the Czech Republic. This Operational Programme had attained the threshold for the n+2 rule for the 2004 commitment.

The Infrastructure Operational Programme is the fourth largest OP, with almost 16.9% (ERDF only) of the Objective 1 budget allocation. Two Monitoring Committee meetings were held for this programme in 2006: on 8 June and 11 December. Progress with this OP, in comparison to the year 2005, is good especially for priority 1 — “Modernisation and development of Transport infrastructure” and priority 3 — “Environmental infrastructure improvement”. Six interim payment requests representing an amount of EUR 133 599 665 in total expenses have been submitted to DG REGIO. This amount corresponds to 40% of the total allocation for 2004 – 2006.

The Human Resource Development Operational Programme accounts for a share of 21.2% (EUR 422.4 million, ESF contribution) of the total Objective 1 allocation. Two Monitoring Committee meetings took place in 2006: on 13 June and 14 December 2006. Implementation caught up during 2006, with about 95% of the total budget of the OP being contracted, although in terms of spending the OP is still clearly lagging behind. The best performing measures are 3.1 (Enhancing the quality of education at school and school facilities) and 1.1 (Strengthening active employment policy for job seekers and job applicants). Interim payment claims totalling EUR 28 786 967.93 were submitted by the end of the year 2006, which represents 9% of the total budget for 2004–2006. The amount of payments was sufficient to avoid the application of the n+2 rule for the 2004 commitment.

The Agriculture and Rural Development Operational Programme saw two meetings of its Monitoring Committee, one in June and one in November 2006. The 2005 annual implementation report was submitted to the Commission in June, but was missing mandatory information. It was resubmitted in August and subsequently approved. The implementation of the programme is progressing satisfactorily, the most popular measure being investment in agricultural holdings (constituting 51.05% of the OP, with 41% having been paid). 27.06% of the allocated funds had been utilised by the end of 2006. During the year the Czech authorities submitted a proposal to the Commission for the reallocation of funds in several areas. Four interim payment requests amounting to a total of EUR 39 455 945 were submitted to DG AGRI during 2006. This corresponds to 23.24% of the total EAGGF allocation for 2004-2006 for this OP.

Fisheries

The implementation of the FIFG allocation for 2004–2006 was very low in the Czech Republic. Consequently, unused 2006 funds (covering a total amount of EUR 3 140 617) were transferred from the FIFG (i.e. from measure 2.3 Fisheries and 3.1 Technical Assistance) to the EAGGF (sub-measures 2.1.2 Restoring the potential of agricultural landscapes and its conservation and 2.1.3 Management of agricultural water resources and providing for their functioning; measure 1.1 Investment in agricultural holdings).

Objective 2

Single Programming Document Prague Objective 2 receives EUR 71.3 million from the Structural Funds (ERDF only). Two Monitoring Committee meetings were organised for this programme in 2006: on 31 May and 15 November. The progress of the SPD 2 is still clearly lagging behind the other Operational Programmes in the Czech Republic. The ratio of approved budget to total available budget is only 81% and the rate of realised expenditure is only 33%. This programme ran a high risk of running foul of the n+2 rule for the 2004 commitment, but in the end succeeded in submitting a sufficient amount in payment claims. Following the Commission recommendations, the managing authority has undertaken several corrective measures to improve absorption in 2007.

Objective 3

Single Programming Document Prague Objective 3 receives EUR 58 793 363 from the Structural Funds (ESF only). One Monitoring Committee meeting took place in 2006 on 14 June and the second was postponed to 13 January 2007. Implementation caught up during 2006, with about 83% of the total budget contracted, although in terms of spending the SPD is still clearly lagging behind. The best performing measures are 3.1 (Development of initial education as a basis for lifelong learning) and 2.1 (Integration of specific groups at risk of social exclusion). Interim payment claims totalling EUR 9 938 770.59 were submitted by the end of the year 2006, which represents 17% of the total budget for 2004–2006. This programme ran a high risk of running foul of the n+2 rule for the 2004 commitment, but finally, at the very last moment, it succeeded in submitting a sufficient amount in payment claims to avoid decommitment.

Community Initiatives

Equal

The Czech EQUAL programme proceeded without any major difficulties in 2006. In financial terms, at the end of 2006, the rate of execution of the ESF part of the programme was 30%. Automatic decommitment under the n+2 rule was avoided for 2006.

A major evaluation of the ongoing results of the programme was carried out.

As a result, the Monitoring Committee approved modifications to the financial tables of the programme in order to maximise the effectiveness of funds allocated to the programme by reallocating resources among the priorities, based on the two years of practical experience with managing and implementing CIP EQUAL.

The Czech Republic leads at EU level the following communication and learning platforms:

- Learning Seminar on Evaluation in Prague, November 2006

- Community of Practice on Evaluation

GERMANY(

Preparations for the 2007-2013 period

The first German draft NSRF was received by the Commission on 1 February 2006. On 27 September the Commission services received the final draft NSRF following a joint meeting on 27 July in Berlin. After consultation of all competent Commission services, an assessment of the document was sent to the German authorities on 23 October.

The NSRF was drafted in a process of dialogue including different partners at regional and federal level. In the final version, major observations and suggestions set out by the Commission were taken into account. 10 proposals for ERDF Operational Programmes reached the Commission before the end of the year, of which 2 were formally acceptable.

In summer 2006 the Federal Employment Ministry (BMAS) decided in favour of separate Länder OPs in the West, as had been decided earlier for the Eastern Länder , in addition to a single multi-objective federal ESF OP.

Objective 1

On 18 May the Monitoring Committee for the Community Support Framework had its last meeting in Eisenach. Questions relating to the closure of the 2000-2006 programmes were among the main issues discussed at this meeting. The representatives of two working groups — on Equal Opportunities and Environmental Monitoring — reported on their activities. The results of these working groups are a good example of cooperation between the East German Länder .

Three programme modifications were necessary to adjust the structure of the programmes to changing socio-economic conditions and shifts in demand. 16 modifications to the Programming Complements were necessary in order to fine-tune the implementation process.

The follow-up of the mid-term evaluation showed once again that refinement of regional policy instruments is crucial to achieve optimal development results in the next programming period. As far as support for the competitiveness of businesses is concerned, a reduction in intervention rates might be indicated to avoid over-financing. Research and development activities should be fostered more actively. Infrastructure investment should be better focused on already existing economic potential.

The individual regions face different implementation problems with the ERDF. In Sachsen-Anhalt, slow execution of infrastructure projects was reported. In other cases the project selection criteria were not yet sufficiently clearly defined.

A big step forward was taken with the establishment of ‘risk capital funds’, especially in Thüringen and Berlin. This instrument is designed to foster entrepreneurship and innovation in general. In addition, Mecklenburg-Vorpommern and Saxony established ‘micro-lending funds’ under the ESF to support newly established small businesses. The risk-capital approach may become a valuable tool for the creation of self-employment as a way out of unemployment.

21 major projects have been proposed by the managing authorities and accepted by the Commission, mostly coming under the “Transport Infrastructure” and Sachsen-Anhalt programmes. Some other cases are still under examination. One project was rejected.

The financial and physical implementation of most of the Objective 1 ESF OPs is well advanced. There were no n+2 decommitments in 2006 except for Saxony, and there are low n+2 risks for 2007. More than 90% of the resources for 2000-2006 have been committed at national level and 82% of the ESF allocation has been paid out (including payment on account).

In 2006, EAGGF commitments for the six Objective 1 programmes in Germany amounted to EUR 500.124 million. The payments made in 2006 by the Commission to the regions totalled EUR 526.880 m.

In 2006 17.57% of the commitments for the year 2006 were used and the cumulative EAGGF contribution during 2000-2006 reached 86.25% of the amount committed for the programmes at the end of 2006. The total eligible costs foreseen for 2006 were EUR 635.565 million.

The FIFG programme for Germany under Objective 1 performed well enough to avoid any decommitment at the end of 2006. Legally binding commitments by then amounted to EUR 85 824 318.48, while payments to ultimate beneficiaries had reached EUR 77 367 143.34 . The present programme cover is EUR 91 495 213. The commitment and payment rates are 93.8% and 84.55%, respectively.

Objective 2

In 2006, the meetings of the Monitoring Committees for the 11 West German Länder combined reporting on programme implementation with discussions on the possible future budget distribution between the Länder and the advantages that the new Structural Fund regulations offered them.

Seven programmes had adjustments made to their priority structure — with Baden-Württemberg introducing two requests — with the aim of preventing loss of funding at the end of the programming period. A large number of modifications to the Programming Complements (11) were also notified to the Commission.

Special ESF priorities are only implemented in seven programmes. Despite the complex and scattered eligibility area, only one programme lost a small amount of funding under the n+2 rule. The eleven Länder had different experiences and faced different problems in the implementation of the programmes, which are not easy to summarise here. A common theme was a certain weakness in demand for business support, given the muted economic development. Long-term national planning processes for infrastructure projects also had to be taken into account. Niedersachsen reported that “local activation” (with networking) was not easy to achieve, so money had to be shifted to other priorities. Hessen on the other hand reported difficulties with technology transfer institutions and support for technology activities. Other regions complained of a lack of innovative ideas. Saarland went on the offensive here and organised a seminar on that theme in Saarbrücken in May. In Bremen the combination of technology-oriented infrastructure with the management and marketing of technology and start-up centres was very successful.

Five major projects have been proposed by the managing authorities and accepted by the Commission.

In 2006, payment requests for EUR 35.2m were received. For the whole period 2000-2006, a total of 51% was paid out following payment requests (58% including payment on account).

Objective 3

Germany presented a modification request for the Objective 3 Programme at the very end of 2006, which is under consideration and will be decided in 2007.

The modification is prompted by changes in German labour market policy and calls for a shift of funds in favour of measures for young people, lifelong learning and local social capital.

Two meetings of the Monitoring Committee were organised with the participation of the Commission. During these meetings, particular emphasis was given to the n+2 risk for the year 2007 and to the final deadline for modifications to the financial tables. The main issues for programme closure were presented and discussed.

Fisheries outside Objective 1

The Fisheries programme for Germany outside Objective 1 faces another decommitment of EUR 9 015 404 at the end of 2006.

Accumulated payments amount to EUR 36 194 321.12 and legally binding commitments total EUR 44 814 392, or 46.14% and 57.13%, respectively, of the remaining programme cover of EUR 78 441 931.

Community Initiatives

Equal

The German EQUAL programme proceeded without difficulties in 2006. In financial terms, at the end of 2006, the rate of execution of the ESF part of the programme was 68%. Automatic decommitment under the n+2 rule was avoided for 2006.

After the amendment of the Decision in 2004, no further modifications have been made. The Monitoring Committee for the programme met twice. At both meetings, the managing authority informed the members about the mainstreaming activities. The first meeting was held in connection with a symposium on regional labour market development ( Thinking European – acting regionally ). EQUAL projects had already provided considerable input to e.g. regional development in the area of Dessau.

Further mainstreaming activities were pursued. Germany was active in organising national thematic networks and events such as the “Netzwerk Gründungsunterstützung” and the “Kooperationsnetzwerk Migranten”.

Here, the most active thematic networks were in the field of entrepreneurship, combating racism, the ageing society (“initiative 50+”), lifelong learning, reconciling family and professional life, and migrants

In 2006 Germany was already very much focusing on the German presidency from January 2007. In order to improve mainstreaming activities in 2007, there will be closer collaboration with the press office of the ministry concerned.

Leader

Thirteen German regions ( Länder ) and the national network are participating in the Community Initiative Leader+. The total eligible costs foreseen for 2006 were EUR 89.421 million, including an EAGGF Guidance contribution of EUR 52.5 million. In 2006 EUR 73.288 million were paid, of which EUR 0.457 million were from the 2006 commitment.

All German regional programmes underwent modifications in 2006 due to the fact that this was the final opportunity to make any before programme closure. No Leader+ funding had to be decommitted under the n+2 rule, and the implementation of the programmes progressed satisfactorily. For all programmes, an annual report for 2005 was received and accepted in 2006.

The annual meeting between the managing authorities and the Commission was postponed until February 2007 for practical reasons.

Urban

There are twelve URBAN II programmes in Germany with a total ERDF contribution of EUR 150.9 million (Berlin, Bremerhaven, Dessau, Dortmund, Gera, Kassel, Kiel, Leipzig, Luckenwalde, Mannheim/Ludwigshafen, Neubrandenburg and Saarbrücken). The six programmes in the new Länder each receive EUR 15