Opinion of the Committee of the Regions on the 'Annual Report of the Cohesion Fund - 1997'
Date: 1999-09-16
Institutions: European Committee of the Regions
Subjects: Cohesion Fund, activity report

23.12.1999

EN

Official Journal of the European Communities

C 374/67

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

2. General comments

The Commission report

1.1.
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.

(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.

The Committee of

2.1.
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.

Similarly,

2.3.
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.

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Official Journal of the European Communities

23.12.1999

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.

2.12.
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.

2.5.
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
effects, and also
important economic spillovers between regions and between
the cohesion countries and their neighbours.

long-term employment

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.

2.13.
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 obser-
vation 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).

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

The COR is also pleased to note that once again,
3.1.3.
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.

2.11. With regard to other Community policies, the Com-
mittee would highlight the Commission’s coordinating work,
particularly concerning legislation in such fields as the environ-
ment, the trans-European transport network and the Structural
Funds.

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.

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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.

Attention is bound to focus on the urban environ-
3.1.7.
ment 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.

3.1.13.
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.

3.1.10.
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/ef-
ficiency.

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.

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

Similarly,

future actions

3.1.12.
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.

3.2.5.
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.

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4. Conclusions

The Committee notes the decision reached by the
4.1.
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.

The Committee considers that the future funding of
4.3.
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