7. 3. 77 Official  Journal  of the European  Communities No C 56/49 
ANNEX 
to the  opinion  of the  Economic  and  Social  Committee 
The following  amendment  was  rejected: 
Paragraph  1.3.3. 
After  paragraph  1.3.3  insert  a new  1.3.4  reading  as follows: 
'1.3.4.  The  Committee  is aware  of the  difficulties  which  would  be posed  — at the present 
stage  of the extension  process,  and  in the context  of the recommendation  under  review  — by 
the adoption  of provisions  providing  for a Community  financial  contribution  for the measures 
proposed  by the Commission.  The  Committee  nevertheless  considers  that  such  a contribution 
should  not be ruled  out for the subsequent  stages  of extension.' 
Reasons 
It must  be possible  to consider  making  provision  for  Community  part-financing  — as an 
expression  of Community  solidarity  — when  preparing  subsequent  stages  of extension  of social 
protection. 
Voting 
For : 16, against:  39, abstentions  : 14. 
Opinion  on the first  annual  report  on the European  Regional  Development  Fund  1975 
and the  summary  analysis  of annual  information  1976 
The opinion  of the Committee  is not based  on any  published  text. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 141st  plenary  session  held  on 29 and  30 September  1976  the Committee,  acting 
on a proposal  from  the Bureau,  decided  to deliver  an opinion  on the  abovementioned 
subject  on its own  initiative. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the  above  matter  at its 
143rd  plenary  session,  hdld  in Brussels  on 24 and  25 November  1976. 
The full  text  of the opinion  is as follows: 
No C 56/50 Official  Journal  of the European  Communities 7.3.77 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to Article  20 (4)  of its Rules  of 
Procedure, 
Having  regard  to the decision  taken  on 29 September 
1976,  instructing  the  Section  for  Regional  Develop-
ment  to make  preparations  for the idrawing-up  of an 
own-initiative  opinion  on the first  annual  report  on 
the European  Regional  Development  Fund  1975  and 
the summary  analysis  of annual  information  1976, 
Having  regard  to its previous  opinions  and  studies  in 
the 'field  of regional  development, 
Having  regard  to the  opinion  issued  by the Section 
for Regional  Development  on 11 November  1976, 
Having  regard  to the discussion  at its 143rd  plenary 
session  held  on 24 and  25 November  1976  (meeting 
of 24 November  1976), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
unanimously,  with  two  abstentions: 
1. Introduction 
1.1. The  Committee  welcomes  the 'first  annual  report 
on the  European  Region  ail Development  Fund  con-
cerning  the  initial  activities  off the  Fund  and  the 
problems  encountered  in connection  with  its imple-
mentation  during  the  year  1975.  The  setting  up of 
the Fund  and  of the Committee  for Regional  Policy 
is a significant  step  in the  path  to a Community 
regional  development  policy  which  the Committee  has 
consistently  and  frequently  advocated  in its opinions 
and studies  on the subject  during  recent  years. 
1.2. As  an indication  of the  Committee's  commit-
ment  and  extensive  interest  in the  progress  of 
regional  development  in the  Community,  reference 
is made  to its record  in this  field,  viz.: 
1.2.1.  Opinion  of 25 October  1973  (*): 
— draft  Decision  off the Council  on the creation  of 
a Committee  for regional  policy, 
— proposed  Financial  Regulation  on special  pro-
visions  to ibe applied  to the  European  Regional 
Development  Fund,  and 
— proposal  for a Council  Regulation  establishing  a 
European  Development  Fund. 
I1) OJ  No C 86, 16. 10. 1973. . 1.2.2.  Study  of 25 October  1973: 
— implementation  olf a common  regional  policy. 
1.2.3.  Opinion  of 29 November  1973  (2): 
— proposal  for a Council  Regulation  on the list of 
priority  agricultural!  iregions  and  areas  referred  to 
in the Regulation  on finance  from  the Guidance 
Section  of the  European  Agricultural  Guidance 
and Guarantee  Fund  for  projects  falling  within 
development  programmes  in priority  agricultural 
regions,  and 
— proposal  for a Council  Regulation  on the  list of 
regions  and  areas  referred  to in the  Regulation 
establishing  a European  Regional  Development 
Fund. 
1.2.4.  Opinion  (additional)  of 26 June  1974  (3): 
— provisional  measures  to be put into  effect  pending 
creation  of the  European  Regional  Development 
Fund. 
1.2.5.  Opinion  of 1 April  1976  (4): 
— regional  development  problems  of the Community 
during  the period  1975  to 1977  and  the establish-
ment  of a common  regional  policy. 
1..3. By  means  of the  procedures  of consultation 
and right  of initiative,  translated  into  constructive 
opinions  and  studies,  the Committee  has  contributed 
to the  promotion  of the  Fund  as an important  in-
strument  in the  evolution  of a Community  regional 
policy.  In such  circumstances  the  Committee  has 
already  deplored  its exclusion  from  the provisions  of 
Article  16 of the Regulation  and  it maintains  that  the 
opportunity  for  correcting  this  omission  should  be 
taken  in the forthcoming  re-examination  of the Fund 
Regulation  by the  Council  before  1 January  1978. 
The Committee,  does,  however,  express  its 
appreciation  of the efficiency  and goodwill  which  the 
Commission  has demonstrated  in keeping  it informed 
on progress  in the field  of regional  development. 
(2) OJ  No C 37, 1. 4. 1974. 
(3) OJ  No C 116,  30. 9. 1974. 
(«) OJ No C 131,  12. 6. 1976. 
7. 3. 77 Official  Journal  of the European  Communities No C 56/51 
1.4. The  Committee  is confident  that  the  brief  ex-
perience  of the operation  of a Fund  with  very  limited 
resources  can  only  be the prelude  to an extension  of 
effort  and  direction  sustained  by  more  adequate 
funds.  The  Committee  is determined  to preserve  a 
continuity  of pressure  for  the  creation  of a Com-
munity  regional  policy,  to encourage  definition  of 
such  a policy,  and  to promote  the  priority  and 
urgency  of the allocation  of Community  resources  to 
its implementation.  The  Committee  has  therefore 
decided  to deliver  an opinion  on its own  initiative 
on the  first  annual  report  on the  European  Regional 
Development  Fund,  and  on the  summary  analysis  of 
annual  information. 
2. General  comments Fund  heading:  (a) commitment  appropriations;  and 
(b) payment  appropriations.  For  the  first  year  the 
budget  was  fixed  at 300  million  u.a.  for  commit-
ments  and  150  million  u.a.  for  payments.  It was 
predictable  that  there  would  ibe >a large  accumulation 
of projects  awaiting  approval  in the first  year  and  it 
is not  surprising  that  the first  and  smallest  appropri-
ation  was  quickly  exhausted.  The  limitations  of the 
Fund  are  indicated  by the  number  of 'Projects  not 
approved  for  Fund  grant  in 1975'  (Table  3 of the 
report),  but  which  include  projects  otherwise  eligible 
for approval  (i.e.,  'they  may  be the  subject  of Com-
mission  Decisions  in 1976').  As 99-94%  of 'commit-
ment'  appropriations  available  had  been  made 
during  the  year,  the  projects  not  approved  would 
have  exceeded  the budget  provision  in the Regulation 
for 1975.  Considering  the severity  of the  unemploy-
ment  problem  in Member  States  at the  present  time 
and the urgency  of accelerating  regional  development 
projects,  the  Committee  hopes  that  this  obstacle  in 
the interpretation  of commitments  has  not  caused  a 
deferment  of urgent  projects. 
2.1. The  report  refers  to the  rapid  erosion,  through 
inflation,  in the value  of the Fund  over  the short  time 
span  of three  years.  In 1977  the  total  value  of aid 
grants  are  estimated  to be reduced,  in effect,  by 
approximately  one  third.  The  amount  allocated  has 
been  fixed  in advance  and  is not  adjustable  to meet 
the inflated  cost  of future  development  projects  at 
current  prices.  The  Committee  insists  that  efforts  be 
made  to re-establish  the  original  value  of the  Fund 
during  the  remaining  part  of the  current  period.  If 
similar  problems  are  to be avoided  in connection 
with  the  new  Fund  which  is expected  to take  effect 
from  1 January  1978  there  should  be a mechanism 
which  will  ensure  the  preservation  of the  Fund's 
original  value,  if necessary,  by annual  review  of the 
appropriation.  The  Committee  also  draws  attention 
to the  fact  that  the  same  inflationary  influence  will 
deter  industrial  and  service  projects  in the  private 
sector  particularly,  and  some  Member  States  may 
find difficulty,  due  to the  decline  in private  and 
public  investment,  in supplementing  the former  level 
of regional  development  as intended  by the  creation 
of the Fund. 2.3. The  report  (paragraph  38)  interprets  Article  2 
of the  Fund  Regulation  as applying  to the  three 
years  1975  to 1977  cumulatively  and  variations 
within  that  period  may  arise  in commitments  for 
individual  Member  States.  When  the  commitment 
entitlement  for  a Member  State  is exceeded  by ap-
proved  grants,  a compensating  adjustment  in the 
allocation  will  be made  in the  subsequent  years  of 
the Fund.  It follows  that  an excessive  allocation  to 
any Member  State  must  restrict  the  allocation  to 
some  or all the other  Member  States  in any  one  year 
if there  is a rigid  limit  in the overall  Community  com-
mitment  appropriation.  As there  is an inevitable  time 
gap between  commitment  and  payment  (only  one 
third  of commitments  were  actually  paid  during  the 
year)  (Table  6 of the  report),  the  commitments  for 
the first  year  of the  Fund  might  have  been  more 
flexible  without  any  risk  of exceeding  the total  pay-
ment  appropriation. 
2.2. The  total  amount  allocated  to the  Fund  was 
1 300  million  u.  a. (including  150  million  u. a. 
financed  by the  EAGGF  Guidance  Section),  to be 
distributed  in annual  appropriations  over  the  three 
years  1975  to 1977.  The  appropriation  for  the  first 
year was  limited  to 300  million  u.a.  and  500  million 
u.a. for each  of the remaining  two  years.  The  annual 
budget  shall  indicate  for the relevant  year  under  the 2.4. Annexed  to this  opinion  is a summary  of the 
operation  of the  Fund  for  1975  constructed  from 
various  tables  in the report  and  the summary  analysis 
of annual  information  1976.  The  total  grant  value 
of projects  applications  appear  to be 25-2%  in excess 
of 1975  total  Member  State  entitlement  limits.  It was, 
therefore,  inevitable  that  a substantial  number  of the 
No C 56/52 Official  Journal  of the European  Communities 7.3.77 
projects  would  fail  to secure  approval  for that  reason 
alone.  As the report  points  out  (paragraph  37) these 
excess  applications  gave  the Commission  an oppor-
tunity  to apply  a selective  procedure. 3. Administrative  activity,  1975 
3.1. The  administration  of the  Fund  relies  on the 
cooperation  of four  groups  of participants. 
2.5. In the first  few  months  of its existence,  four  of 
the Member  States  have  experienced  a substantial 
deferment  of project  applications  exceeding  20%  in 
grant  value  in each  case.  The  evidence  at this  early 
stage  indicates  that  the  resources  of the  Fund  are 
inadequate  and  as experience  develops  there  should 
emerge  a new  pattern  of national  quotas  to reflect 
the needs  of the regions  more  accurately.  The  small 
number  of projects  exceeding  10 million  u.a.  in both 
industrial  and  services  investment  and  infrastructure 
investment  (41  out of a total  of 1 183)  as shown  by 
Table  VII  of the  summary  analysis  of information 
suggests  that  the  Member  States  concerned  have 
given  preference  to the inclusion  of smaller  projects 
because  of the  limitation  of resources,  despite  the 
Commission's  request  and  preference  for  'major 
projects  of 10 million  u.a.  or more'. (a) Member  States  shall  submit  requests  for assistance 
from  the Fund  to the  Commission  (Article  7.1). 
The Regulation  refers  to the necessity  to conform 
to specified  criteria  and  these  appear  in detail  in 
the different  clauses  off the Regulation. 
(b) Aid from  the  Fund  shall  be determined  by the 
Commission  (Article  7.4)  and  the  Fund's 
assistance  shall  be decided  by the Commission  in 
accordance  with  procedure  laid  down  in Article  12 
(Article  5.1). 
(c) The  Fund  Committee  is composed  of representa-
tives  of the  Member  States  and  chaired  by the 
Commission.  The  representative  of the  Com-
mission  shall  submit  drafts  of the decisions  to be 
taken  and  if these  decisions  (of the Commission) 
are not  in accordance  with  the  opinion  of the 
Fund  Committee  (weighted  majority  voting 
applies)  the  Commission  shall  defer  their  appli-
cation  for  two  months  and  they  shall  be com-
municated  by the Commission  to the Council  for 
determination  (Articles  11 and 12). 
2.6. The  objective  of the  Fund  is 'to correct  the 
principal  regional  imbalances  within  the Community 
resulting,  in particular,  from  agricultural  preponder-
ance,  industrial  change  and  structural  underemploy-
ment'  to quote  Article  1 of the Regulation.  While  it 
would  be impractical  to expect,  after  such  a short 
period  of Fund  operations,  a review  of the economic 
impact  of the initial  regional  grants,  there  is a refer-
ence to the  economic  circumstances  in which  the 
Fund  was  established.  Comparative  figures  for 1970 
and 1975  are quoted  for the gross  domestic  product 
(GDP)  per  capita  in the  Member  States  and  some 
regions  (Annex  I, Table  3 of the report  and  Table  IV 
of the summary  analysis  of annual  information).  The 
figures  are,  of course,  national  averages  and  do not 
specifically  refer  to the  regions  which  qualify  for 
grant  aid from  the Fund.  Furthermore,  the choice  of 
comparisons  between  1970  and  1975  in each  Mem-
ber State  is difficult  to understand,  bearing  in mind 
that the  enlargement  of the  Community  at the  be-
ginning  of 1973  would  affect  comparisons  in the new 
Member  States.  Reference  to the tables  in the appen-
dices  of the summary  analysis  of annual  information 
discloses  a lack  of uniformity  and  in some  instances, 
relevance  to a comparison  of regional  problems. (d) The  Committee  for Regional  Policy  must  be con-
sulted  (in respect  of infrastructure  projects  costing 
10 million  u. a. or more  before  obtaining  the 
opinion  of the Fund  Committee  (Article  5.2). 
3.2. The  Commission  in its report  derives  some 
satisfaction  from  the simplified  procedure  in dealing 
with  applications  (paragraphs  31 and  32).  This  is 
described  as a rationalization  on internal  procedures 
and is a most  commendaible  example  of a practical 
approach  by a sympathetic  administration  when  deal-
ing with  urgent  business.  A study  of the  procedure 
demanded  by  the  Regulation  indicates  that  co-
operation  from  the Fund  Committee  must  have  been 
equally  forthcoming,  and  especially  with  an accumu-
lation  of available  projects,  decisions  could  be easily 
confined  to those  clear  of any  controversy  and  suf-
ficient  to meet  the quota  commitments. 
3.3. Having  regard  to the  admittedly  limited  size 
(paragraph  109)  of the  Fund  and  the  objective  of 
encouraging  a complementary  effort  in regional 
development,  the  Committee  views  the  inclusion  of 
7. 3. 77 Official  Journal  of the  European  Communities No C 56/53 
completed  projects  as a questionable  exercise  in 
expediency  to secure  the  financial  quota  allocated  to 
each  Member  State.  The  Committee  recalls  that  the 
resources  of the  Fund  are  to be distributed  on a 
cumulative  basis  over  the  three-year  period.  If aid 
had ibeen  restricted  to the 'submission  of new  projects 
which  would  be influenced  by such  assistance,  this 
would  have  meant  merely  a deferment  of the  quota 
entitlement  to a later  date  in the period  of the present 
Fund. 3.6. The  Regional  Policy  Committee  shall  report  on 
its activities  to the  Council  and  the  Commission  and 
the latter  shall  inform  the  European  Parliament 
thereof  in its annual  report  (Article  2.2 of the Council 
Decision  on  the  Regional  Policy  Committee).  The 
terms  of reference  of this  Committee  are  of consider-
able importance  in the  ultimate  achievement  of the 
Community's  regional  objectives  and  the  Committee 
regrets  that  very  little  information  is available  in the 
report  and  elsewhere  on this  Committee's  activities 
other  than  a summary  of the  standard  outline  of 
regional  development  programmes  recommended  to 
be presented  by the Member  States. 
3.4. The  primary  qualification  in the  Regulation  is 
that requests  for  assistance  from  the  Fund  shall  be 
granted  to 'applicant  Member  States'  (Article  2). 
Having  regard  to the  origin  of applications  and  the 
representative  composition  of the  Fund  Committee 
and Committee  for Regional  Policy,  (the Committee  is 
surprised  that  some  projects  have  not  been  approved 
due to failure  in meeting  the  specified  criteria  and 
formal  conditions  in the  Regulation  (paragraph  36). 
The representatives  of the  Member  States  on the 
Fund  Committee  may  therefore  be invited  to improve 
liaison  between  the  Commission  and  the  regional 
authorities  in the  Member  States  and  to provide 
expert  interpretation  of the  Regulation  and  guidance 
before  submission  of requests. 
3.5. Requests  for  aid  from  the  Fund  must  be 
processed  through  the  Member  States  and  there  is no 
possibility  for  the  Commission  to consider  projects 
which  have  failed  to secure  the  approval  of  the 
respective  national  governments  or  to inform  the 
unsuccessful  applicants  of  the  reasons  for  their 
failure.  The  Council  Decision  of 18  March  1975 
setting  up a Regional  Policy  Committee  has  specified 
among  its tasks  the  promotion  of better  information 
services  for  both  public  and  private  investors  in 
regional  development.  In Article  5 of that  Decision 
the said  Committee  may  receive  (subject  to its own 
Rules  of Procedure)  opinions  from  interested  parties 
from  the regions  and  from  trade  unions  and  business 
organizations.  The  Committee  holds  the  view 
that direct  contacts  between  the  Community  auth-
orities  and  the  interested  parties  at regional  and  local 
level  might  do  much  to relieve  the  frustration  of 
those  who  have  promoted  projects  which  have  failed 
to secure  a sympathetic  reception  from  a national 
government.  Further  the  Committee  is of the  opinion 
that there  should  be  a mechanism  to encourage 
Member  States  to consult  with  local  groups  who 
should  be involved  in the  decision-making  process 
in the development  of the regions. 3.7. One  of the  priority  tasks  of the  Committee  for 
Regional  Policy  is to study  the  technical  methods  for 
preparing  regional  development  programmes  and  to 
study  such  programmes  presented  by Memiber  States, 
particularly  in respect  of the  regions  referred  to in 
Article  3 of the  Fund  Regulation.  Assistance  from  the 
Fund  will  be restricted  to investments  falling  within 
the framework  of a regional  development  programme. 
An amendment  to  this  exclusive  condition  was 
adopted  as mentioned  in paragraph  82 of the  report: 
'Programmes  for all regions  to receive  Fund  aid  have 
to be notified  to the Commission  by the  end  of 1977 
with  the  annual  information  statements  taking  the 
place  of programmes  in the meantime'.  In the absence 
of the  supporting  data  of the  regional  development 
programmes  the  annual  information  and  statistical 
summary,  as required  in Article  6 of the  Regulation, 
is essential  for  any  appraisal  of the  situation  in each 
region.  The  Committee  draws  attention  to the  first 
chapter  of the programme  outline  which  provides  for 
an economic  and  social  analysis  and  urges  that  the 
statistical  summary  be prepared  in accordance'  with 
the guidelines  in this  chapter  of the programme. 
3.8. The  voluminous  extent  of the  annual  infor-
mation  from  the  Member  States  is indicated  by the 
size of the  documents  referred  to in Table  I in the 
summary  analysis  and  it would  be impracticable  to 
reproduce  all in detail.  It is understandable,  therefore, 
that this  supplementary  information  to the  report 
must  be a summary  analysis.  The  statistics  in the 
appendices  are,  however,  far  from  uniform  in the 
presentation,  and  comparisons  and  coordination  with 
grant  aid  to the  regions  are  difficult.  At this  early 
phase  in the  operation  of the  Fund  and  in the  first 
report  one  cannot  expect  the  overall  statistical 
summary  to indicate  by region  the  results  achieved 
No C 56/54 Official  Journal  of the European  Communities 7.3.77 
during  the previous  year  as a result  of action  taken 
in each  region.  The  Committee  nevertheless  wishes 
to emphasize  that  such  information  must  be included 
in future  reports. Convenient  though  this  option  may  be from  an 
administrative  point  of view,  and  politically  for the 
Member  States,  the Committee  believes  that  the  aid 
would  be more  apparent  by its alternative  use  as 
supplementary  aid to specific  projects. 
4. Regional  development  programmes 
4.1. The  Regional  Policy  Committee  adopted 
unanimously  on 1 December  1975  an outline  for 
regional  development  programmes,  a task  imposed 
by Article  6.4  of the  Regulation.  The  draft  plan 
recommended  opens  with  the  observation  that  'this 
outline  of what  regional  development  programmes 
should  contain  is indicative  and  should  be interpreted 
in a flexible  manner  ..The  outline  for  regional 
development  programmes  in Chapter  1 calls  for the 
production  of  'relevant  statistics'.  While  the 
introduction  refers  to flexibility  in interpretation,  the 
Committee  is of the opinion  that  too much  flexibility 
may result  in incomplete  data  and  may  therefore  fail 
to give  a clear  picture  of the  development  in the 
regions  from  one year  to the next. 
4.2. It is, therefore,  opportune  at this  stage,  when 
the regional  development  programmes  have  not  yet 
been  produced,  to urge  that  the statistical  information 
to be contained  in them  should  be, at least,  enough 
to provide  internationally  and  inter-regionally 
comparable  data  relating  to certain  key  development 
indicators.  Such  agreed  minimum  data  requirements 
might  therefore  be made  mandatory  in the submission 
of the  programmes  and  the  annual  information 
statements. 5.2. The  alternative  treatment  of aid  contributions 
known  more  familiarly  as 'topping  up'  has  distinct 
advantages  to the Community  image  and  publicity  in 
regional  development.  Of  course  a discretionary 
choice  must  be exercised  in allocating  assistance  but 
this arises  mainly  because  the  Fund's  resources  are 
inadequate  to meet  all of the  requirements  of the 
situation.  The  Committee  regrets  the bias  expressed 
'by the Commission  (paragraph  66)  against  'topping 
up' and  suggests  that  comparisons  with  the individual 
grants  under  the FEOGA  scheme  might  ibe made  in 
this respect. 
6. Conclusions 
6.1. On  a proposal  from  the  Commission,  the 
Council  shall  re-examine  the  new  Fund  Regulation 
before  1 January  1978  (Article  18).  When  re-exam-
ining  the  Regulation,  the  Commission  shall  in due 
course  make  the appropriate  proposals  for the Com-
munity's  regional  policy  and  for  aid from  the Fund 
during  the  subsequent  period  (Article  2.2).  The 
European  Regional  Development  Fund  report  for its 
second  year,  which  may  be expected  in 1977,  will 
have  an important  effect  on the  evolution  of Com-
munity  Regional  Policy  and  the  Fund  dimensions  to 
be provided  for that  future  programme. 
5. Complementary  effect  of Community  regional  aid 
5.1. Much  attention  has  been  given  by the  Com-
mission  in the report  to the effects  of assistance  from 
the Fund  in the augmentation  of individual  effort  by 
Member  States  in regional  development.  As all the 
Member  States  have  exercised  the option  in Article  4 
of the  Regulation  for  contributions  to industrial 
investments  to be considered  as a partial  refund  of 
national  aid (paragraph  6 of the report),  it is difficult 
to monitor  precisely  the  additional  projects  under-
taken  as a result  of Fund  assistance.  The  Commission 
has to  rely  on  information  about  budgetary 
acknowledgement  of aid from  the Fund  together  with 
an appropriate  increase  in the  national  annual 
commitment  after  making  allowance  for  inflation. 6.2. The  Committee  expects  that  the  statistical 
information  in the second  annual  report  will  enable 
comparison  between  1975  and  1976  for  all regions 
as defined  in Article  3 of the  Fund  Regulation  and 
particularly  gross  domestic  product  per  capita, 
unemployment  as a percentage  of labour  force 
together  with  comparative  national  and  Community 
averages. 
6.3. For  the purpose  of assessing  the extent  to which 
aid is concentrated  in the  most  needy  regions,  the 
contributions  which  are  also  made  to regional 
development  from  other  Community  sources  should 
be coordinated,  identified  and  recognized.  The  Com-
mittee  therefore  expects  a summary  of the  corre-
sponding  assistance  received  by the  regions  from 
FEOGA,  the Social  Fund,  the ECSC  and the European 
7. 3.77 Official  Journal  of the European  Communities No C 56/55 
Investment  Bank  and  for  comparison,  the  contri-
bution  from  national  sources  for the two  years  1975 
and 1976. 
6.4. The  Committee  appreciates  that  there  was  a 
limited  demand  for  the  use  of the  control  and 
surveillance  procedures  in the  first  few  months  of 
the implementation  of the  Fund.  Nevertheless,  the 
Committee  expects  a rigid  application  of the  powers 
of the Commission  as defined  by the Fund  Regulation 
and expects  reassurance  on a thorough  monitoring 
routine  in surveying  the progress  of accepted  projects. 
6.5. The  Committee  approves  the  emphasis  by the 
Commission  in the  report  on the  degree  of erosion, 
through  inflation,  in the value  of the Fund  and  would 
support  a recommendation  for  a budgetary  sup-
plement  to restore  the  Fund  to the  value  intended 
when  it was  created. 
6.6. The  Committee  expects  that  the  budgetary 
provisions  for 1977,  the last  year  of the current  Fund, 
will provide  for  an equilization  of the  cumulative 
payment  appropriations  for  the  whole  period  with 
the commitment  appropriations,  subject  only  to 
administration  and  monitoring  procedures. 
6.7. As  the preparation  of the  second  annual  report 
of the  operation  of the  Fund  must  coincide  with  the 
preparation  of a preliminary  draft  of the  Com-
mission's  proposal  to the  Council  on the  future  of 
the European  Regional  Fund,  the  Committee  takes 
this early  opportunity  to  make  the  following 
recommendations: 
6.7.1.  A larger  Fund  is necessary; 
6.7.2.  Provision  should  be  made  for  an  annual 
review  of the  Fund  with  budgetary  supplements  as 
required; 
6.7.3.  The  system  of aid  distribution  in accordance 
with  national  quotas  raises  the  question  as to its 
incompatibility  with  the  priority  of social  needs,  in particular  since  the  resources  available  are  limited. 
A more  flexible  distribution  system  will  have  to be 
introduced; 
6.7.4.  Use  of European  Investment  Bank  loans  at 
reduced  rates  should  be encouraged,  with  particular 
emphasis  on  small-  and  medium-sized  enterprises, 
and the  recipients  should  be protected  against  the 
exchange  rate  risk  of adverse  currency  fluctuations 
on loan  redemption; 
6.7.5.  Eliminate  the  minimum  investment  threshold 
of 50 000  u.a.  laid  down  in Article  4.1 of the present 
Fund  Regulation  to permit  consideration  of small 
and medium  projects,  and  should  the  need  arise, 
permit  group  schemes  to  meet  the  minimum 
employment  requirement; 
6.7.6.  As  increased  employment  prospects  can  be 
expected  in the  tertiary  sector  during  the  next  five 
years,  greater  emphasis  should  be given  to this  sector 
in the new  Fund  Regulation; 
6.7.7.  Member  States  should  involve  interested 
parties  in the  regions,  such  as local  authorities, 
appropriate  organizations,  the business  organizations 
and the  trade  unions,  in the  decisions  regarding  the 
setting  of priorities  and  the selection  of projects  to be 
assisted  by the Fund; 
6.7.8.  Utilization  of Article  5 of the Council  Decision 
of 18 March  1975  setting  up a Regional  Policy  Com-
mittee  should  be encouraged; 
6.7.9.  Provision  should  be made  for  consultation 
with  the  Economic  and  Social  Committee  on  the 
annual  report. 
Done  at Brussels,  24 November  1976. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI