Opinion of the Economic and Social Committee on the 'Annual Report on the Cohesion Fund 1996'
Date: 1997-12-10
Institutions: European Economic and Social Committee
Subjects: Cohesion Fund, activity report, environmental protection, implementation of the budget, transport infrastructure

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amplify its annual report on competition with a review
of the state of competition policies in major competitor

countries, particularly where their actions may affect
the business of EU firms.

Brussels, 10 December 1997.

The President

of the Economic and Social Committee

Tom JENKINS

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

2. General comments

2.1.

Improvements in the report

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

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 organ-
ization, transparency and scope of its content, providing
a clearer picture of how the various projects have been
implemented.

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.

2.2.

Interaction with other funds

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

The Commission pays particular attention,
2.2.1.
when carrying out prior appraisal of investment projects,

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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 conver-
gence programmes in the field of public deficit, and also
checked on compliance with the conditionality principle
in the cohesion countries.

2.4.1. O t h e r i m p o r t a n t a s p e c t s

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

2.4.2.

I n f o r m a t i o n
l e v e l s

o n

e m p l o y m e n t

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.

2.3.2. B a l a n c e
s o u r c e s

i n

d i s t r i b u t i o n

o f

r e -

3. Specific comments

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.

3.1. Budget implementation

Adjustments were made to the overall budget appropri-
ation 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 avail-
able 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 commit-
ments at 31 December 1996 totalled 99,99 % of the
appropriations available, or ECU 2 433,64 million.

Budget
amounted to ECU 1 871,982 million, or 97,75 %.

implementation of payment appropriations

These figures show very positive budget implementation
of the Cohesion Fund by the Member States. The
Economic and Social Committee welcomes the achieve-
ment by both the Commission and the Member States
of these high rates of implementation, while ensuring

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application of the conditionality principle concerning
the criteria for the introduction of the single currency.

The breakdown by Member State in 1996 was as follows:

3.2. Distribution by sector

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

The aim of achieving balance between the two inter-
vention areas was discussed in the Committee’s previous
opinion (1) and in the opinions of the European Parlia-
ment 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 %.

(1) Opinion on the Annual Report of the Cohesion Fund 1995,

OJ C 158, 26.5.1997.

Member State

Environment %

Transport %

Spain

Portugal

Greece

Ireland

49,44

49,59

53,81

45,07

50,66

50,41

46,19

54,93

Clear movement occurred towards a balance between
expenditure on environmental and transport infrastruc-
ture 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 commit-
ment appropriations continue at the mid-point of the
indicative allocation bands for each of the Member
States.

Commitment appropriations — 1996: ECU 2 443,7 million

Member State

Environment
(Unit: ECU)

%

Transport
(Unit: ECU)

%

Total
(Unit: ECU)

Allocation

ESP

GR

IRL

P

663 549 515

49,44

678 383 056

50,66

1 341 932 571

235 865 092

53,81

202 441 610

46,19

438 306 702

54,91

17,94

99 920 131

45,07

121 770 026

54,93

221 690 157

9,07

217 966 578

49,59

221 526 518

50,41

439 493 096

17,99

Total

1 217 301 316

49,86

1 224 121 210

50,14

2 441 422 526

99,91

Tech. ass.

—

—

—

—

2 212 643

0,09

Total

1 217 301 316

49,89

1 224 121 210

50,11

2 443 635 169

100,00

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.

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Payment appropriations — 1996: ECU 1 919 million

Transport
(Unit: ECU)

%

Total
(Unit: ECU)

Allocation
1996 %

Allocation
1995 %

Member State

ESP

GR

IRL

P

Environment
(Unit: ECU)

295 940 565

127 062 978

80 315 065

%

26,61

51,91

42,46

816 116 839

73,38

1 112 057 404

59,4

117 689 309

48,08

244 752 287

108 805 171

57,53

189 120 236

13,07

10,10

65

5

8

22

124 133 591

38,2

200 762 086

61,79

324 895 677

17,36

Total

627 452 199

33,54

1 243 373 405

66,46

1 870 825 604

99,94

100

Tech. ass.

—

—

—

—

1 156 625

0,06

Total

627 452 199

33,52

1 243 373 405

66,46

1 871 982 129

100,00

3.3.1. D i s t r i b u t i o n
s e c t o r

i n

t h e

t r a n s p o r t

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.

Commitments for transport projects,
by Member State and sector

Distribution
of commitment
appropriations
by type of
transport

Road

Rail

Ports

Airports

VTS (1)

Member State in %

Spain

Portugal

Greece

Ireland

83,6

16,4

—

—

—

75,5

18,0

6,5

—

—

61,3

31,0

—

7,7

—

82,9

6,9

7,0

—

3,3

(1) VTS: vessel traffic systems.

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 com-
mitments for new projects or phases of projects under
way.

The total committed contribution since 1993 of the
Cohesion Fund and its predecessor, the financial instru-
ment, 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 contri-
bution. Port infrastructure projects amounted to 1,9 %
of commitments for 1996.

Commitments for TENs projects
by transport sector

Sector

Commitments 1996

ECU million

% of total

Road

Rail

Ports

Airports

VTS (1)

Total

959,5

222,0

23,0

15,6

4,0

1 224,1

78,4

18,1

1,9

1,3

0,3

100,0

(1) VTS: vessel traffic systems.

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.

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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
less concentration of pollution;
parts of the sector:
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. D i s t r i b u t i o n i n t h e

e n v i r o n m e n -

t a l s e c t o r

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 experi-
encing 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.

Distribution %

Spain

Portugal Greece

Ireland

4.2. Most remote regions

Water supply and
quality control

Waste

Sewage, treatment

Urban environment

Reafforestation

Coastal zones

Others

23

14

45

10

5

4

—

28,1

34,5

33,4

—

—

—

4,0

30

—

69,5

—

—

—

51,7

—

45,0

—

—

—

0,5

3,3

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 rec-
ommended, particularly in the area of maritime transport
infrastructures, on account of its environmental benefits
and the number of jobs these can provide.

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

4.4. Environmental impact studies

3.3.2.1.
Better-organized information would facili-
tate comparison of Member State action: the Com-
mission is therefore urged, in future reports, to stan-
dardize and extend the information provided.

3.3.2.2.
The priorities for intervention in the environ-
mental 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

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.

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4.6. Analysis of Fund impact

4.9. Management bodies

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

In view of the cost and highly technical nature of
technology and equipment, and the scale of environmen-
tal 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 (1), 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 (2).

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 associ-
ated 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.

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.

(1) 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.

(2) 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.

Brussels, 10 December 1997.

The President

of the Economic and Social Committee

Tom JENKINS