Opinion of the Economic and Social Committee on the 'Annual Report of the Cohesion Fund 1995` (97/C 158/02)

On 16 September 1996 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Communities, on the 'Annual Report of the Cohesion Fund 1995`.

The Section for Regional Development and Town and Country Planning, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 10 March 1997. The rapporteur was Mr Barros Vale.

At its 344th plenary session (meeting of 19 March 1997) the Economic and Social Committee adopted the following opinion with 87 votes in favour, 4 votes against and 7 abstentions.

1. Introduction

1.1. The Economic and Social Committee is again required to draw up an opinion on the Commission Report on the decisions it adopted in 1995, with the recipient Member States, under the Cohesion Fund instrument set up by the Maastricht Treaty. The purpose of the instrument is to strengthen economic and social cohesion by providing financial assistance to Ireland, Greece, Portugal and Spain to complete environmental and transport infrastructure projects. Financial support, totalling ECU 15 150 million at 1992 prices, has been planned for the 1993-1999 period.

1.2. Financial support began on 1 April 1993 when the Cohesion Financial Instrument was set up. It operated until 26 May 1994, when the Regulation establishing the Cohesion Fund came into force. Decisions taken between that date and the end of 1994 relate to the Cohesion Fund.

1.3. 1995 was therefore the first year in which the machinery set up by the Cohesion Fund was fully applied: the relevant Report was consequently the first to correspond to one calendar year, in accordance with the Regulation.

1.4. The Economic and Social Committee supported the proposals to set up the CFI and the Cohesion Fund: an opinion on the 1993/1994 CFI Report and on the 1994 Cohesion Fund Report submitted by the Commission was drawn up by the appropriate section and adopted by the plenary session of 20 December 1995.

2. General comments

2.1. The Economic and Social Committee is pleased to be asked once again to give its opinion on the Cohesion Fund Report, but must again draw the Commission's attention to two points which are essential if the recommendations contained in the present opinion are to have the desired impact: (i) the Commission's failure to submit the Report within the established deadline and (ii) the omission, in certain cases, of adequate, comparable data enabling the ESC to analyse as effectively as possible the appropriateness of the projects presented..

2.2. Notwithstanding the recommendations made in this regard in the previous opinion, the Commission again submitted the Report in September of this year, significantly later than the six-month deadline set. This means that the Committee can only examine the decisions made at the end of the following period of Fund application: its recommendations cannot therefore be studied by the Commission with a view to making actions under the Cohesion Fund more effective.

2.3. Despite the positive developments regarding the information contained in the Report, a number of shortcomings are still apparent, in particular the lack of comparative data on the link between Fund participation and other national or Community public means, forming a comprehensive framework covering all the projects supported, which would provide an overall view of the aid supplied and how it ties in with other national and Community means and policies. Neither does the Committee view as adequate the information and conclusions presented on the economic and social impact of Cohesion Fund decisions, or regarding the criteria used in the applying the principle of conditionality, as required under Article 6 of the regulation establishing the Cohesion Fund.

2.4. The Economic and Social Committee is pleased to note that, as mentioned above, 1995 was the first full year of Cohesion Fund activity and that, as recommended in its previous opinion, the present Report for the first time covers one calendar year.

2.5. The Committee is also satisfied at the positive trend concerning the general stabilization of legal and administrative rules and procedures. Significant improvements, reflected in the Report, have resulted, particularly in terms of management and operation, and project evaluation and monitoring.

2.6. The ESC welcomes the fact that some of the recommendations contained in its previous opinion have been taken up, although it suggests that in future reports, the Commission refer more explicitly to the Committee's recommendations.

2.7. Subject to closer examination below, the Committee is satisfied at how the Commission and the Member States have again managed to use all the financial assistance made available by the Community budget for commitment appropriations and, for the first time, for payment appropriations.

2.8. Also subject to more detailed consideration below, the Committee notes the positive developments concerning project evaluation, monitoring activities, and interinstitutional dialogue, where much remains to be done, particularly regarding the active involvement of the social partners.

2.9. The ESC would reiterate its views on the usefulness and importance of the Report making some mention of the continuation of the Fund after 1999, given the special effort which will be required of the cohesion countries in meeting and keeping to the convergence criteria and the positive influence that continuing the Cohesion Fund could have on achieving this aim.

3. Specific comments

3.1. Article 10(2) of the Cohesion Fund Regulation states that 'a suitable balance shall be struck between projects in the field of the environment and projects relating to transport infrastructure`. The Commission has, since 1993, complied with this principle, stipulated by regulation, in a flexible manner.

Over the last three years, the following balance has been struck between the two Cohesion Fund sectors:

3.1.1. Distribution by sector

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Distribution by beneficiary country was as follows:

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The ESC is pleased to note that its earlier recommendation, that the suitable balance stipulated in the Regulation should have a reference period of more than one calendar year, has been accepted. The flexibility applied by the Commission must be viewed in this context.

The Commission has accepted this reasoning, clarifying the issue on 2 November 1995 (Cohesion and the Environment, COM(95) 509).

The Economic and Social Committee nevertheless repeats its call for a better balance between the two sectors which, while having progressed in terms of aggregate amounts (1993-95), fell back slightly in 1995 compared with 1994.

The Committee also recommends more balanced application of the 50/50 rule between the Member States.

3.1.2. Distribution by country

Again, the ESC is pleased to note that the budgetary commitment appropriations continue to be very close to the mid-point of the indicative allocation bands for each of the Member States.

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The Committee is, however, obliged to point out to the Commission that the same does not apply for payment appropriations. Although understandable at this stage, the Commission and the Member States will have to tackle this question in the future:

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3.2. Distribution in the transport sector

As in its previous opinion, the Committee urges that a better balance be struck between different modes of transport, giving priority to those which are most environment-friendly.

In contrast to the claims made in the introduction to the Report, no improvements have been noted in this respect: the weight of the road sector remains excessive in relation to other modes of transport, particularly rail.

The Committee therefore again draws the Commission's attention to the need for a better allocation of resources in this area and, as mentioned above, giving priority to those sectors which are most environment-friendly and contribute most to economic development and the implementation of more balanced land-use planning. This seems to be the case with combined and multi-mode transport, where the Commission should examine the possibility of introducing differential rates of Community aid, matching the degree to which projects reflect these factors.

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Also in connection with transport and, in particular, evaluation of the impact of the resources applied to the different modes of transport, the Committee recommends that the Commission, together with the Member States, consider adopting a common evaluation method to assess the rate of return on all the proposed projects.

3.3. Distribution in the environmental sector

The Report does not provide data on distribution of investment in the environmental sector, except in the case of Spain. It therefore recommends that the Commission extend this to the other countries in future reports.

What information is given, however, justifies repeating the recommendation to the Commission and Member State that they focus more on nature conservancy resources, which remain very low given the continuing serious danger of desertification in some of the Member States.

4. Other comments

4.1. The Committee would also recommend, in connection with the distribution of resources, that the Commission make the Member States more aware of the need for better regional distribution of resources with particular attention to the most remote regions. This echoes its previous opinion.

4.2. The Committee congratulates the Commission on the positive trends apparent in the presentation of the Report and, more generally, on the evident effort that has been made to provide higher-grade and more detailed information.

Note is taken of the enhanced data on the projects funded and the evaluation criteria used by the Member States and, as urged by the ESC, the inclusion in the Annexes of maps. These provide an overall view of how the approved investments match the established priorities in the Trans-European Networks sector.

4.3. Nevertheless, the Committee must suggest improved use of the information provided in the Report, replacing some aspects which are of less interest, on account of their nature and their highly detailed character, with the recommendations made in this opinion and, more generally, with an inventory of the effectiveness of all resources applied during the period.

4.4. The Committee also acknowledges the positive developments concerning integration of investments with national and Community objectives. However, it appears to the Committee that in addition to the concerns about double funding, which are adequately aired in the Report, progress should be made in future reports towards shedding greater light on the contribution made by the Cohesion Fund to achieving the abovementioned national and Community objectives.

4.5. In line with the previous opinion, the ESC agrees with the Commission on the initiatives undertaken under 'Assistance for studies and technical support measures - Technical assistance`, although it considers that despite the progress achieved, the under-utilization of allocations under this heading remains a matter of particular concern.

4.6. The Committee also welcomes the Commission's joint initiative with the London School of Economics, and hopes that despite the delay in publication, the study will fulfil the expectations contained in the Report. However, it urges the Commission, in future reports, not simply to refer to studies, but to present a summary of their main conclusions.

4.7. The Committee again endorses the involvement of the EIB in funding, evaluating and monitoring Cohesion Fund projects, but would again recommend more detailed information on the EIB's role and on the projects it is involved in.

4.8. The Committee also welcomes the inclusion in this Report of the effect on job creation of all the investment over the period, and urges the Commission to go further in this direction, since this kind of information best describes the impact and effectiveness of the resources applied and whether they contribute to real cohesion between the recipient countries and the other EU countries.

4.9. Once again echoing its previous opinion, the Committee urges that in future reports, the Commission provide general information on the percentage of approved projects in relation to the total submitted, and clearer explanations of the main reasons for rejecting projects.

4.10. The Committee welcomes the information provided on the progress made under the convergence programmes by the four Member States. However, the report gives insufficient information regarding the content and effects of the recommendations made by Council in 1994 and 1995 to the three Member States with excessive government deficits and does not make any reference to the consequential action required to be taken by the Commission in 1996 under Article 6. The Committee considers the transparent application of this rule to be a vital safeguard and calls on the Commission to give a full explanation of the action that has been taken in compliance with Article 6 in its report for 1996.

4.11. The ESC acknowledges the Commission's efforts in stepping up inspection missions, although these still appear inadequate given the large number of projects. As pointed out by the Committee in its previous opinion, the results must also be more detailed in future reports, particularly with regard to the management and monitoring arrangements in the Member States.

4.12. The Committee also recognizes the improvements made in terms of the meetings of monitoring committees, and urges the Commission to go further to ensure their effectiveness

4.13. The Committee would restate that the social partners must be more closely involved in defining project priorities and in implementing and monitoring them.

In view of the lack of results in this regard, the ESC again calls upon the Commission to take on board, by analogy, the comments made in an earlier opinion on Article 4 of the Framework Regulation of the Structural Funds.

The Committee also emphasizes that the Commission must alert the Member States to the need to consult their respective economic and social councils on the prior establishment of Cohesion Fund priorities.

4.14. The Committee welcomes the Commission's intention, as expressed in the Report, to encourage grouping of the smaller-scale projects often submitted in the environmental sphere, as previously recommended by the ESC.

4.15. The Committee notes that the Commission has not recorded any cases of fraud in project funding. It again insists, however, that future reports provide proper information on any irregularities or omissions in the management of funds.

4.16. The ESC endorses the Commission's increased efforts on information and publicity, as previously recommended.

4.17. The Committee once again draws the Commission's attention to the need for future reports to include more detailed information on how, and to what extent, the Cohesion Fund is interconnected with other Community instruments and programmes. It also asks the Commission to report on the impact and importance of the investments made, with a view to assessing whether the Fund should continue to operate after 1999.

Brussels, 19 March 1997.

The President of the Economic and Social Committee

Tom JENKINS