Opinion of the Committee of the Regions on the "Annual Report of the Cohesion Fund - 1997"

(1999/C 374/15)

THE COMMITTEE OF THE REGIONS,

having regard to the Annual Report of the Cohesion Fund 1997 (COM(1998) 543 final);

having regard to the letter of 7 October 1998 from the European Commission consulting the Committee on the subject under the first paragraph of Articles 161 and 265 of the Treaty establishing the European Community;

having regard to the decision of the bureau of 18 November 1998 to instruct Commission 1 for Regional Policy, Structural Funds, Economic and Social Cohesion and Cross-Border and Inter-Regional Cooperation to prepare the opinion;

having regard to the Draft Opinion (CdR 2/99 rev. 2) adopted by Commission 1 on 30 June 1999 [rapporteur: Mr Vieira de Carvalho (P, EPP)];

referring to its Opinion on the Proposal for a Council Regulation (EC) amending Regulation (EC) No 1164/94 establishing a Cohesion Fund and the Proposal for a Council Regulation (EC) amending Annex II to Regulation (EC) No 1164/94 establishing a Cohesion Fund (CdR 235/98 fin)(1);

referring to its Opinion on the First cohesion report (CdR 76/97 fin)(2);

referring to its Opinion on the Proposal for a Council Regulation (EC) establishing a Cohesion Fund and the Proposal for a Council Regulation (EC) laying down detailed rules for implementing Regulation (EC) establishing a Cohesion Fund (CdR 16/94)(3);

referring to the Opinion of the Economic and Social Committee (Section for Economic and Monetary Union and Economic and Social Cohesion) on the Annual Report of the Cohesion Fund 1997 (CES 192/99)(4);

referring to the decisions on Agenda 2000 taken by the Heads of State or Government on 24 and 25 March 1999 in Berlin,

adopted the following opinion at its 30th plenary session of 15 and 16 September 1999 (meeting of 16 September).

1. Introduction

1.1. The Commission report covers Cohesion Fund decisions taken during 1997. The Fund is an instrument set up by the Maastricht Treaty, with the aim of boosting economic and social cohesion by offering financial assistance to the less prosperous Member States (Greece, Ireland, Portugal and Spain) for environmental and transport infrastructure projects, and in order to enable these countries to carry out national programmes to meet the convergence criteria for the third stage of economic and monetary union.

1.2. 1997 was the Fund's fifth year of operation in the four beneficiary countries: the strategy employed in previous years was not substantially altered.

2. General comments

2.1. The Committee of the Regions congratulates the European Commission for the substantial improvement in the report, noting that the comments made in previous opinions have been taken on board. These have produced adjustments to the way the document is presented.

2.2. The Committee notes with satisfaction the detailed coverage of the main developments in each country. However, greater harmonization of the descriptive analysis in each case would be advisable, in order to facilitate comparison of data from country to country.

2.3. Similarly, the Committee recommends the use of diagrams and maps wherever possible to illustrate the overall progress of the projects financed and their geographical spread: this would make for faster consultation and use.

2.4. The legal and administrative procedures governing the management, operation, evaluation and monitoring of projects have been stabilised, and the report shows that this has benefited the application of the Fund.

2.5. The Committee welcomes the findings of the London School of Economics study, which showed a strong positive relationship between public and private investment, resulting in significant long-term employment effects, and also important economic spillovers between regions and between the cohesion countries and their neighbours.

2.6. The Committee also welcomes the ex-post evaluation programme, which bears witness to the Commission's concern for project assessment. The COR hopes that the programme will provide analysis data and comparable results for the four beneficiary countries, in order to improve ex-ante evaluation and project monitoring.

2.7. The Committee welcomes the efforts of the beneficiary Member States to meet the public deficit targets set by the Council. It does, however, recommend that the Member States maintain these efforts, and that the Commission carefully monitor the budget situation and strive to increase awareness of the Fund in the beneficiary countries whenever necessary.

2.8. The Committee of the Regions notes the decision taken by the Heads of State or Government in Berlin that the four current beneficiary countries will continue to be eligible within the Cohesion Fund framework beyond 2000 and that eligibility will be reviewed in 2003, midway through the planning period. The COR acknowledges the vital role played by the Cohesion Fund in furthering convergence between Member States, but also notes that to date none of the beneficiary countries has reached the threshold of GNP of 90 % or more of the Community average.

2.9. The Committee points out that while progress has been made in the cohesion countries in both the transport and environmental sectors, much remains to be done in terms of improving the relevant infrastructures. Given the need for constant improvement in both euro and non-euro countries, it is right that the Fund should continue.

2.10. The Committee supports the decision to amend, rather than replace, the current regulation governing the Fund. It believes that this will permit a smooth transition between the financing periods.

2.11. With regard to other Community policies, the Committee would highlight the Commission's coordinating work, particularly concerning legislation in such fields as the environment, the trans-European transport network and the Structural Funds.

2.12. The Committee welcomes the Commission's proposal to set up a Pre-Accession Structural Instrument (ISPA), to help the candidate countries achieve Community transport infrastructure and environmental standards.

2.13. The Committee welcomes the monitoring and control work undertaken by the Monitoring Committees in each Member State, and by the inspection missions for projects assisted by the Fund.

2.14. According to the Report the Commission only knows of one case of irregular use of Cohesion Fund resources. The Committee is pleased to learn this since that implies that resources are used properly in the vast majority of cases. However, the Committee has noted the Commission's observation that national authorities fail to monitor systematically the use of funding for Cohesion Fund projects etc., which aggravates the risk of fraud. Further, the Committee observes that the Commission considers that it is difficult to assess the impact of the appropriations earmarked for fraud prevention in the absence of notifications of cases of fraud. The Committee regrets that the Commission has found grounds for such serious criticism and fully supports all efforts to achieve more effective prevention of irregularities and fraud in all Structural Fund areas. All authorities concerned must shoulder their responsibilities in this connection.

3. Specific comments

3.1. Management of financial assistance

3.1.1. The Committee is pleased that once again the budget implementation objectives for both commitments and payments have been fully met.

3.1.2. The Committee notes that between 1993 and the end of 1997, the Fund committed around two thirds of its overall budget allocation for the first stage of the Cohesion Fund (1993-99).

3.1.3. The COR is also pleased to note that once again, the allocation of funding has remained consistent with the indicative breakdown among the eligible Member States, in accordance with the provisions of Annex I of the regulation establishing the Fund.

3.1.4. The Committee notes with satisfaction that in 1997, for the first time, investment in the environment (54,4 %) was greater than that in transport (45,5 %), redressing the low levels of the previous years. It also notes that a similar trend occurred in nearly all countries.

3.1.5. For the 1993-1999 period, the Committee welcomes the improved balance in distribution of Fund resources between the transport and environment sectors (50,8 % and 49,2 % respectively). No major difficulties are thus expected in continuing this trend for the entire 1993-1999 period of the first generation Cohesion Fund.

3.1.6. The Committee must, however, emphasize that the sums invested in nature protection and improvement of the urban environment remain low, although these are crucial factors in safeguarding quality of life.

3.1.7. Attention is bound to focus on the urban environment over the coming years, especially in view of the acknowledged powerful current trend towards urbanisation on the European continent, where some two-thirds of the population lives in urban areas which barely occupy 1 % of its surface area. Urban areas are thus subject to greater environmental pressures, such as air and water pollution, contaminated land, generation of liquid and solid waste, and noise. Future assistance must pay due attention to these problems, for which society is coming to demand increasingly high standards.

3.1.8. Although road projects continue to receive the bulk of Cohesion Fund support (57 %), the COR welcomes the significant increase in the share of the transport budget going to railways, accounting for almost a third of overall transport commitments in 1997.

3.1.9. The Committee must point out the low level of investment (1,7 %) in the port sector in 1997, particularly since sea transport is of considerable economic importance in the four beneficiary countries. In this respect, the Committee would urge the Commission and the cohesion countries to step up sea and inland waterway port projects, in order to promote and develop a sector which is crucial to consolidating these countries' links with the outside world.

3.1.10. In this regard, the role of intra-European coastal shipping should also be strengthened, providing an alternative to congested goods transport routes on land and ensuring a more balanced environmental and spatial planning solution, which offers clear advantages in terms of speed and cost/efficiency.

3.1.11. Still within the transport sector, the Committee would stress the need to implement intermodally-based projects, so as to make transport systems as a whole more efficient and assure smoother movement of persons and goods.

3.1.12. Similarly, future actions should encourage an increase in logistical centres, with the aim of introducing rapid and effective distribution of goods; in turn, these should be linked with multimodal centres so as to connect the various modes of goods transport.

3.1.13. The Committee stresses the need to safeguard the future funding of small-scale projects. It is convinced that in spite of the need to finance large-scale projects and to ensure a strategic approach to project development, a number of small-scale projects, especially in the area of the environment, could be of particular value in the cohesion countries. It is vitally important that local authorities set their own priorities in this regard.

3.2. Subsidiarity and partnership

3.2.1. The Committee calls upon the Commission to ensure that local and regional authorities are involved at all stages of the Fund from priority-setting to monitoring and evaluation.

3.2.2. The Committee would argue that this also means that all applications for funding should be accompanied by opinions, drawn up by the regional and local authorities of the regions concerned, on the regional and inter-regional impact of the projects in question. When approving projects, the Commission should take account of these opinions, issued by the authorities who are directly concerned.

3.2.3. The COR recalls that a number of initiatives in this area emanate from local or regional authorities. It therefore recommends that Cohesion Fund rules be applied in a more flexible way, as they stipulate that applications for Fund support must come from central governments. The COR urges the Commission to be more open to intermediate tiers of authority: this would facilitate dialogue and help to secure projects of great potential which might not otherwise come to light.

3.2.4. Although it welcomes the greater commitment to public/private sector partnerships, the Committee feels that decisions on the revenue-generating potential of the projects and their suitability for private sector involvement should be made at national level following consultation with the local and regional authorities involved.

3.2.5. The COR would point out that the interests of private and regional/local operators may often differ and that this can stand in the way of private sector funding. There are often difficulties in encouraging such investment in transport and environmental services in certain more peripheral areas of countries. There is also a need to ensure that there is an equitable provision of infrastructure and services and it should be emphasized that in some cases local and regional authorities are best placed to provide (finance) and maintain this type of infrastructure.

4. Conclusions

4.1. The Committee notes the decision reached by the Heads of State or Government in Berlin that the four current beneficiary countries will continue to receive assistance under the Cohesion Fund after the year 2000 and that eligibility will be reviewed in 2003, midway through the programming period.

4.2. The Committee is pleased to note a better balance between investment in the areas of the environment and of transport. It must, however, draw attention to the low level of investment in nature protection and improvement of the urban environment.

4.3. The Committee considers that the future funding of small-scale projects must be safeguarded, recalling that some of these have had a considerable impact, particularly in the area of the environment, and that it is vitally important that local authorities set their own priorities in this regard.

4.4. The Committee calls upon the Commission to ensure that local and regional authorities are engaged at all stages of the Cohesion Fund, and recalls the importance of initiatives in this area on the part of local and regional authorities.

Brussels, 16 September 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER

(1) OJ C 51, 22.2.1999, p. 10.

(2) OJ C 379, 15.12.1997, p. 34.

(3) OJ C 217, 6.8.1994, p. 1.

(4) OJ C 116, 28.4.1998, p. 10.