Opinion of the Economic and Social Committee on the 'Annual report of the Cohesion Fund (1997)'
Date: 1999-02-24
Institutions: European Economic and Social Committee
Subjects: Cohesion Fund, ESC opinion, activity report

C 116/10

EN

Official Journal of the European Communities

28.4.1999

Opinion of the Economic and Social Committee on the ‘Annual report of the Cohesion Fund
(1997)’

(1999/C 116/03)

On 5 November 1998 the Commission decided to consult the Economic and Social Committee, under
Article 198 of the Treaty establishing the European Community, on the ‘Annual report of the Cohesion
Fund (1997)’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 8 February 1999.
The rapporteur was Mr Barros Vale.

At its 361st plenary session (meeting of 24 February 1999), the Economic and Social Committee adopted
the following opinion by 74 votes to two, with seven abstentions.

1.

Introduction

As in previous years, the Committee has been consulted
1.1.
on the Commission’s report on the decisions taken during
1997 regarding the Cohesion Fund. The Fund, which was
established by the Treaty of Maastricht with the aim of
boosting economic and social cohesion, provides financial
infrastructure
assistance for environmental and transport
projects in the four beneficiary countries (Greece, Ireland,
Portugal and Spain). The Fund’s budget for the period 1993-
1999 is ECU 15,150 million(1).

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

2.5.
Subject to the analysis below, the Committee is pleased
that once again the objectives set in implementing the budget
have been achieved. This applies to both commitments and
payments.

1.2.
This total includes not only the Cohesion Fund proper
(1994-1999) but also its predecessor, the Cohesion Financial
Instrument, which was in force from 1 April 1993 to 26 May
1994.

2.6.
It is worth noting that from the beginning of activity
in 1993 up to the end of 1997, the Fund committed around
two thirds of its overall budget allocation for the period
1993-1999.

2. General comments

2.1.
The Committee is pleased to have again been consulted
on the Cohesion Fund report. However it would once again
draw the Commission’s attention to the considerable delay in
the publication of the report, which makes it impossible to
address any problems promptly.

2.2.
There are some points where greater detail is needed,
for instance as regards the changes made to individual projects.
No information is given about these changes, making it
impossible to analyse the reasons for them and the resultant
solutions.

The Committee is pleased to see that some of the
2.3.
recommendations which it made in earlier opinions have been
adopted. On the whole, the report is a substantial improvement
on its predecessors.

(1) At constant 1992 prices.

2.7.
On the evaluation front — and without prejudice to
subsequent considerations — the Committee welcomes the
findings of the London School of Economics (LSE) study which
were made pubic in June. The study estimates that the Fund
should have a favourable medium and long term impact on
the beneficiary regions and countries, especially as regards
employment, the relationship between public and private
investment, and relations between the cohesion countries and
their neighbours.

2.8.
Despite the high calibre of the LSE study, its extremely
technical nature makes it difficult to identify its findings and
to glean an overall picture of the progress made in the cohesion
countries. The Committee therefore suggests that future initiat-
ives of this type be accompanied by a summary clarifying the
main findings; this would make the report more accessible and
turn it into a real work-tool.

2.9.
The Committee also welcomes the ex postproject
evaluation programmes, which bear witness to the Com-
mission’s concern for project evaluation. The Committee is
pleased that the programmes have been entrusted to outside
assessors, as an independent view can prove much more
beneficial than an in-house evaluation.

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Official Journal of the European Communities

C 116/11

2.10.
The Committee is pleased to see that project monitor-
ing and inspections have been stepped up. The number of
inspection visits has increased, and there have been checks on
all projects.

3.1.1.
resources between the two intervention areas was as follows:

In the period 1993-1997 the distribution of

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’. Compliance with this requirement must be
assessed over a period of more than one calendar year, as the
Committee recommended and the Commission decided in
1995.

3.1.2. D i s t r i b u t i o n b y

s e c t o r

a n d M e m b e r

S t a t e i n 1 9 9 7

%

1993

1994

1995

1996

1997

Environment

38,7

49,8

48,4

49,8

54,4

Transport

61,2

50,1

51,5

50,1

45,5

For the period 1993-1997 overall, the breakdown was 49,1 %
for the environment and 50,8 % for transport.

Commitments

Member State

Total
(ECU million)

Environment
(ECU million)

% of Total

Transport
(ECU million)

% of Total

% of actual
allocation

493,5

210,5

1 514,6

853,1

245,5

134,1

493,5

302,0

1,9

—

42,7

56,3

54,6

61,2

—

283,0

661,5

111,4

191,2

—

2 748,7

1 499,7

54,6

1 247,1

57,3

43,7

45,4

38,8

—

45,4

18

55

9

18

% of
indicative
allocation

16-20

52-58

7-10

16-20

Appropriations

Member State

Total
(ECU million)

Environment
(ECU million)

% of Total

Transport
(ECU million)

% of Total

573,2

1 018,2

212,0

518,0

1,4

2 322,8

193,3

333,2

64,4

296,4

—

887,3

33,7

32,7

30,4

57,2

—

38,2

379,9

685,0

147,6

221,6

—

1 434,1

66,3

67,3

69,6

42,8

—

61,7

Greece

Spain

Ireland

Portugal

Technical Assistance

Total

Greece

Spain

Ireland

Portugal

Technical assistance

Total

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Official Journal of the European Communities

28.4.1999

3.1.3.
Analysis of these tables reveals that, in the environ-
ment sector, payments significantly lagged behind commit-
ments in all countries (38,2 % and 54,6 % respectively), while
the reverse was the case in the transport sector (61,7 % and
45,4 %). Both the Commission and the Member States must
devote more attention to this point in future.

3.1.4.
The Committee notes with pleasure the increase in
investment in the environment sector, which considerably
outstripped the figure for the transport sector in 1997 in all
countries except Greece. This does much to restore the desired
balance, although the trend must continue.

The Committee is also pleased to see that

3.1.5.
the
allocation of funding has remained consistent with the indica-
tive breakdown among the eligible Member States.

3.2. Breakdown for the transport sector

Sector

(As a percentage of the total)

Commit-
ments
1993-1996

Commit-
ments in
1997

Total
commit-
ments
1993-1997

Roads

Railways

Ports

Airports/ATC

VTS

Total

73,1

56,6

69,3

19,9

32,6

22,8

3,3

3,1

0,6

1,7

8,8

0,3

2,9

4,4

0,5

100,0

100,0

100,0

Once again, the Committee calls for a better balance
3.2.1.
between the different transport modes. Road schemes again
predominated in 1997, as they have since the beginning of
the Cohesion Fund, although the Committee welcomes the
increase for the rail sector, which accounted for 32 % of the
total in 1997.

3.2.2.
The Committee is obliged to note that investment in
ports has remained extremely low throughout the Fund’s
existence, accounting for a mere 2,9 % of the total. The bulk
of this investment has been in Greece. The Commission and
Member States must strive harder to increase investment in
projects for sea and inland port infrastructure and help the
sector develop. This would do much to further the develop-
ment of the target regions, where it is difficult for such projects
to be financially viable.

3.2.3.
The Committee is pleased to see that, as in previous
years, a significant portion of the transport budget was used
for projects relating to the trans-European transport networks.
This trend should become more pronounced in the future.

Turning to the breakdown for environmental projects,
3.3.
the Committee notes again that the sums invested in nature
protection and improvement of the urban environment remain
low despite the increasing importance of these areas, which
are fundamental for safeguarding quality of life. However,
investment in these areas has increased. The Committee is also
sorry to see that the report — unlike its predecessors —
does not contain a comparative table of expenditure in the
environmental field.

3.4. More attention should focus on investment in the
forestry sector to combat desertification and other environ-
mental problems. In 1997 Spain was the only country to
present projects in this field, which also involved its outermost
regions.

3.5.
Still on the subject of breakdown, the Committee again
recommends that more attention be paid to the geographical
location of projects, which continue to focus on the main
areas of population. Investment in the outermost regions has
been low, and the Member States and the Commission should
give this matter more attention.

3.6.
The Committee is pleased to note how many jobs are
generated directly or indirectly by the infrastructure schemes
financed by the Fund. Both direct and indirect jobs are
generated in the short term, but in the longer term the most
lasting jobs are those generated indirectly. The Commission
estimates that 20 jobs are generated directly per million ecus
of grant in transport projects and 25 in environmental projects.

3.7.
The Committee welcomes the significant improve-
ments in the presentation of the report, and in particular the
clearer layout and the summary. This makes the report easier
to read and analyse.

3.8.
The Committee is also pleased at the improvements
made in the monitoring process, and notes that in the course
of the year the Commission held two meetings in Brussels
with the social partners, including representatives from the
cohesion countries.

3.9.
The Committee notes that more public projects are
being managed by the private sector; these mainly concern
airports, bridges, ports and incinerators. The Committee trusts
that this trend will make for more dynamic, efficient and
high-quality services for the community.

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3.10.
The Committee notes that applications for Cohesion
Fund assistance are mainly made by national governments, as
stipulated in the regulation establishing the Cohesion Fund,
although some initiatives originate with local or regional
authorities. The Committee urges the Commission to show
greater flexibility when applying this principle, by being more
open to intermediary bodies and thereby encouraging dialogue
and possibly helping to secure projects with considerable
potential which otherwise would not have materialized.

3.11.
The Committee feels that the publicity measures to
be undertaken by the cohesion countries are modest and have
virtually no impact, being limited to the actual site of the
project and lacking any access to the mass media, such as
television and the press. The general public is therefore
unaware that the EU has contributed to the schemes. The case
funding to this area should be
for allocating additional
considered so that the EU’s commitment to the development
and modernization of the cohesion countries is apparent both
in those countries and in the contributing countries.

The Committee is pleased to see that once again the
3.12.
Cohesion Fund has been properly coordinated with other
Community policies, and in particular with competition policy
(which the Commission has striven to safeguard) and public
procurement; in this latter area, the Commission notes that
national authorities have cooperated more in applying Com-
munity procedures.

3.13.
The report states that the Commission wishes the
Cohesion Fund to continue in the seven-year period 2000-
2006, and the Committee has taken a similar view in a number
of earlier opinions. The current beneficiary countries should
continue to receive support irrespective of whether they enter

Brussels, 24 February 1999.

the third stage of EMU, provided that their per capita GNP
remains less than 90 % of the Community average. The
Committee suggests that different criteria be established for
countries taking part in EMU on the one hand, and for Greece
and future members on the other. After the applicant countries
(some of whom will qualify for the Cohesion Fund) join the
EU, the Fund’s resources will have to be reinforced rather
than redistributed. A reduction in budgetary capacity would
undermine the primary objective of boosting economic and
social cohesion, and would mean that fewer high-quality
projects could be approved.

The Committee welcomes the Commission’s pro-
3.14.
posals regarding the continuation of the Cohesion Fund, which
envisage a budget allocation of ECU 3 000 million per year for
the four current beneficiary countries. The central and eastern
European candidate countries are to have a separate budget of
ECU 1 000 million per year for the period 2000-2006, in the
form of pre-accession aid under the ISPA (pre-accession
structural instrument), which is being set up as a counterpart
to the Cohesion Fund. The Commission also states that
countries taking part in the third stage of EMU will have to
comply with the growth and stability pact, and that the
conditionally principle should continue to apply to all
countries.

The Committee is pleased to see that once again no
3.15.
cases of fraud were detected. It stresses the need to provide
information on any omissions or irregularities in the manage-
ment of assistance.

The Committee welcomes the increase in the number
3.16.
of inspection and monitoring visits by the monitoring com-
mittees in the four countries, notably to the most complex
projects.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI