Opinion of the Economic and Social Committee on the 'Annual Report on the Cohesion Fund 1996` (98/C 73/07)

On 25 June 1997 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the 'Annual Report on the Cohesion Fund 1996`.

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 18 November 1997. The rapporteur was Mr J. Bento Gonçalves.

At its 350th plenary session (meeting of 10 December 1997), the Economic and Social Committee adopted the following opinion by 106 votes with three abstentions.

1. Introduction

1.1. Scope

The report covers current actions which commenced in previous years together with completed and planned actions, providing a fuller and more comprehensive analysis of the Fund's main interventions and its positive effects on economic and social cohesion.

1.2. Structure of the report

The comments made by the European Parliament and the ESC in previous years, particularly concerning the analytical description of how conditionality is implemented, and completed actions, are reflected in the structure of the report, with a view to improving information and publicity measures.

1.2.1. A separate section has been included on projects implemented in the most remote regions of the Union and on assessing the impact of different aspects of Fund projects.

2. General comments

2.1. Improvements in the report

Reflecting the approach adopted in its earlier opinions on the reports on the cohesion financial instrument and, more recently, on the Cohesion Fund, the Committee is pleased to note the improvements introduced with the present report, particularly in relation to the organization, transparency and scope of its content, providing a clearer picture of how the various projects have been implemented.

2.2. Interaction with other funds

Improvements have been noted in comparative procedures on the interaction and complementarity of Cohesion Fund projects with the Structural Funds (ERDF, ESF, EAGGF, FIFG), providing a comprehensive, overall view of support and its effects on social, economic and environmental aspects.

2.2.1. The Commission pays particular attention, when carrying out prior appraisal of investment projects, to ensuring that the probable effects are compatible with the investment and do not overlap with resources from other funds.

There is also a clear trend in favour of projects which aim to build upon or supplement initiatives supported by other funds and the EIB. The technical and financial content of its opinions has represented important value-added for the Commission.

2.3. Analysis of results achieved

Ex post evaluation reveals significant results being achieved by completed projects in the sphere of transport, pollution reduction, higher quality drinking water and an increase in the number of households to which it is available. Improved treatment of waste water and solid waste are areas in which the Fund has achieved visible results which are in addition clearly understood by local people.

2.3.1. 1996 was the first year in which the Commission scrutinized Member State compliance with the convergence programmes in the field of public deficit, and also checked on compliance with the conditionality principle in the cohesion countries.

2.3.2. Balance in distribution of resources

In overall terms, an almost perfect balance was struck in 1996 between the Fund's two areas of intervention, the environment and transport: 49,89 % for the environment and 50,11 % for transport infrastructures. Budget implementation in 1996 was close to 100 %, meeting the targets recommended by the Council.

2.4. Priority areas

The Cohesion Fund pays particular attention to a number of priority areas, giving preference to projects involving:

- trans-European road and rail networks;

- supply of drinking water;

- treatment of waste water;

- treatment of urban solid waste.

2.4.1. Other important aspects

Other environment-oriented actions are reported, including the following: protection of coastal zones, environmental reafforestation with an impact on preventing desertification, protection of habitats and nature conservation.

2.4.2. Information on employment levels

The report provides information on estimates of the employment impact of the projects funded, in accordance with the recommendations of the European Parliament and the ESC.

2.5. Other information

Other major points of information included in the report:

- no cases of fraud were detected during the course of the various inspections carried out, either by the Member States or by EU missions;

- a response was made to the EP's comments on information and publicity for part-financed projects, using various channels of communication.

3. Specific comments

3.1. Budget implementation

Adjustments were made to the overall budget appropriation for the Cohesion Fund in 1996, in view of inflation and the need to transfer ECU 300 000 to the budget line managed by UCLAF (the Anti-Fraud Coordination Unit).

After indexation, the commitment appropriations available to the Cohesion Fund in 1996 rose to ECU 2 443,7 million and payment appropriations to ECU 1 919 million.

3.1.1. Budget implementation in terms of commitments at 31 December 1996 totalled 99,99 % of the appropriations available, or ECU 2 433,64 million.

Budget implementation of payment appropriations amounted to ECU 1 871,982 million, or 97,75 %.

These figures show very positive budget implementation of the Cohesion Fund by the Member States. The Economic and Social Committee welcomes the achievement by both the Commission and the Member States of these high rates of implementation, while ensuring application of the conditionality principle concerning the criteria for the introduction of the single currency.

3.2. Distribution by sector

The Economic and Social Committee notes that the provisions of Article 10(2) of the Cohesion Fund Regulation, to the effect that a suitable balance should be struck between environmental and transport infrastructure projects, were put into practice in 1996.

The aim of achieving balance between the two intervention areas was discussed in the Committee's previous opinion () and in the opinions of the European Parliament and the Committee of the Regions on the Cohesion Fund reports of 1994 and 1995. Overall financial assistance committed and paid by the Fund in 1996, in percentage terms, was divided as follows:

Environment: 49,89 %.

Transport: 50,11 %.

The breakdown by Member State in 1996 was as follows:

>TABLE>

Clear movement occurred towards a balance between expenditure on environmental and transport infrastructure projects in all the countries, with greater emphasis, in at least one Member State, on environmental projects. The Committee welcomes this, which reflects one of its recommendations.

3.3. Distribution by Member State

The Committee would also note that budgetary commitment appropriations continue at the mid-point of the indicative allocation bands for each of the Member States.

>TABLE>

Allocation of payment appropriations was adjusted within the established parameters of the indicative allocation for each Member State, in order to redress the situation pointed out in the 1995 report.

>TABLE>

3.3.1. Distribution in the transport sector

As highlighted in earlier opinions, the Committee would point to the need for a better balance between different modes of transport, giving priority to those which are most environment-friendly.

>TABLE>

3.3.1.1. Although the report states that '... efforts to allocate a higher proportion of finance within the transport sector to rail transport facilities continued`, in line with remarks made by the European Parliament, the Economic and Social Committee and the Committee of the Regions in their opinions on the 1994 and 1995 annual reports, it appears that major changes in distribution did not occur.

In 1996, the Cohesion Fund allocated a total of ECU 1 224 121 million to transport projects, including commitments for new projects or phases of projects under way.

The total committed contribution since 1993 of the Cohesion Fund and its predecessor, the financial instrument, amounts to ECU 4 219 million. This is a very substantial contribution to the development of the Trans-European Transport Networks in the four cohesion countries, in which an intermodal transport approach has been employed, as advocated by the ESC.

3.3.1.2. Road projects continued to draw the bulk of support in 1996: 78,4 % of the total. Rail projects accounted for only 18,1 % of the committed contribution. Port infrastructure projects amounted to 1,9 % of commitments for 1996.

>TABLE>

The Committee notes the reduced support for port infrastructures, and draws the Commission's attention to this aspect in view of the cohesion countries' lengthy coastlines and the fact that this type of transport may be more competitive.

3.3.1.3. Diversification of modes of transport

Diversification of modes of transport should be ensured by the Member States with the help of the EU.

This approach would have beneficial effects for various parts of the sector: less concentration of pollution; creation of alternatives in the event of industrial disputes; continued job opportunities in the marine transport sub-sector.

The Economic and Social Committee recommends that the Commission urge the countries participating in the Cohesion Fund to lend greater support to rail and maritime transport infrastructures.

3.3.2. Distribution in the environmental sector

>TABLE>

The Committee recognizes the improvement in the information generally presented concerning the nature and distribution of investment in this field.

3.3.2.1. Better-organized information would facilitate comparison of Member State action: the Commission is therefore urged, in future reports, to standardize and extend the information provided.

3.3.2.2. The priorities for intervention in the environmental area continue to be projects for water supply and quality control, evacuation of urban waste water and purification and, in some countries, treatment and appropriate management of solid waste.

While acknowledging the impact of this type of project in improving the local quality of life, the Committee would reiterate its recommendation to the Commission and the Member States that they focus more on investment in protection and conservation of natural resources, landscapes of particular ecological value, and quality of life: such investment remains at a very low level given the risks of environmental damage prevailing in some cohesion countries.

In this respect, the ESC regrets that some Member States make little use of environmental afforestation, particularly in regions containing extensive areas which have forestry potential but are abandoned and experiencing soil conservation problems.

4. Conclusions

4.1. The report is informative and well-documented in relation to the material implementation of investment projects, offering physical indicators and descriptive summaries of project location and type. The Committee would however urge the Commission to make the Member States more aware of the need for better regional distribution of resources, with particular attention to the least advantaged inland rural and urban areas.

4.2. Most remote regions

As in its 1995 opinion, the Committee emphasizes the need for greater support for completion of environmental and transport infrastructures in the most remote regions.

4.3. Diversification of modes of transport

Greater diversification of modes of transport is recommended, particularly in the area of maritime transport infrastructures, on account of its environmental benefits and the number of jobs these can provide.

4.4. Environmental impact studies

The approach adopted by the Commission, of assessing the environmental impact of transport projects prior to approval, in accordance with Directive 85/337/EEC, is welcomed.

4.5. Polluter-pays principle in cross-border projects

In the environmental sphere, the polluter-pays principle merits support. The Committee would argue that this principle should also apply in the case of cross-border projects or projects involving waterways which pass through the regions of two or more Member States.

Machinery for legal action applicable to the Member States concerned should be devised in order to ensure adoption of this principle.

4.6. Analysis of Fund impact

The Committee approves the efforts made by the Commission relating to implementation of assistance for studies and technical support measures, and ex ante/ex post evaluation of projects. This enables grounds to be given for decisions approving future investment, and its impact to be assessed.

4.6.1. The Committee hails the efforts made by the Commission to analyse issues surrounding assessment of the overall socio-economic impact of the Fund in the Member States, and its contribution to Union cohesion and combating unemployment.

4.6.2. Publication is awaited of the study by the London School of Economics, although the value of the information already provided on the impact of certain projects on employment is recognized.

4.6.2.1. The Committee recommends that in future reports the Commission should not simply mention studies carried out or under way, but should provide at least a summary of their results and main conclusions.

4.7. EIB intervention

The Committee again expresses its satisfaction at the EIB's role in funding, assessing and supporting those Cohesion Fund projects in which it is involved.

4.8. Inspection missions

The Committee recognizes the effort made by the Commission to step up inspection missions and checks on Cohesion Fund projects, which the report sets out in detail. However, it would also urge greater involvement of the social and economic interest groups in the monitoring committees, and the use of cross-border committees wherever actions covering more than one Member State are involved.

4.9. Management bodies

In view of the cost and highly technical nature of technology and equipment, and the scale of environmental projects for water supply and treatment of waste water and urban solid waste intended to improve living conditions, the Committee believes that the creation of independently-run, private and/or inter-municipal management bodies, with the appropriate specialist technical and management skills, might be the best way of maximizing the impact of such projects.

4.10. Continuation of the Cohesion Fund

Returning to arguments expressed previously (), the ESC is convinced that the Cohesion Fund should continue beyond 1999. With its basic strategic aim of strengthening the economic and social cohesion of the poorer Member States and the most disadvantaged regions within them, the Cohesion Fund should be viewed from a Community standpoint ().

The Commission points in this direction in its Agenda 2000 document, proposing that the Cohesion Fund continue for the beneficiary countries.

It is also increasingly necessary to stress complementarity and consistency between the structural policies associated with the various funds in order to bring them closer into line with each other and increase their combined effect, ensuring more harmonious economic and social development.

Brussels, 10 December 1997.

The President of the Economic and Social Committee

Tom JENKINS

() Opinion on the Annual Report of the Cohesion Fund 1995, OJ C 158, 26.5.1997.

() Opinion on the Annual Report of the Cohesion Fund 1995 (CES 321/97); Opinion on the First cohesion report, OJ C 206, 7.7.1997; Opinion on the future of cohesion and the long-term implications for the Structural Funds, OJ C 153, 28.5.1996.

() In order to improve cohesion within beneficiary Member States and between Member States, Cohesion Fund action must possess a trans-national dimension to the benefit of competitiveness throughout the entire EU economy.