Opinion of the Economic and Social Committee on the 'Annual Report of the Cohesion Fund (1998)'
Date: 2000-03-29
Institutions: European Economic and Social Committee
Subjects: Cohesion Fund, activity report, dissemination of information, implementation of the budget

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possible to comment on the details of
the Commission
proposal. For purposes of transparency, the ESC also urges

that consolidated texts be at the very least made available at all
times, via CELEX.

Brussels, 29 March 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

Opinion of the Economic and Social Committee on the ‘Annual Report of the Cohesion Fund
(1998)’

(2000/C 140/06)

On 18 October 1999, the Commission decided to consult the Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the ‘Annual Report of the Cohesion
Fund (1998)’.

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 7 March 2000.
The rapporteur was Mr Victor Hugo Sequeira.

At its 371st plenary session of 29 and 30 March 2000, (meeting of 29 March), the Economic and Social
Committee adopted the following opinion by 83 votes to one.

1.

Introduction

1.1.
In accordance with the Cohesion Fund Regulation, the
Economic and Social Committee was again asked to issue its
opinion on the 1998 Annual Report of the Cohesion Fund.
This instrument was set up with the aim of boosting economic
and social cohesion within the European Union and providing
for environmental and transport sector
financial support
projects in Greece, Ireland, Portugal and Spain for the 1993-
1999 period.

This fund has an initial budgetary allocation of ECU
1.2.
15 510 million (1) for a period which runs beyond the period
of the current Community Support Framework (CSF II), since
it fully incorporates the cohesion financial instrument in force
between 1 April 1993 and 26 May 1994.

2. General comments

nevertheless reiterate a concern already voiced in its opinions
of previous years regarding the late presentation of this report
by the Commission.

2.2.
The present report has been issued even later than the
1997 report. This makes it impracticable for the Commission
to take suitable action to correct any errors or follow-up
concerns or proposals expressed by the Committee or any
other body. This point is particularly important in the year
currently under consideration, since 1999 is the last year of
the Cohesion Fund under the 1994/99 Community Support
Framework.

2.3.
The Committee welcomes some of the improvements
made to the presentation of the report, especially those relating
to its structure and the summaries of some chapters and
points, which make the document more concise and easier to
understand.

2.1.
The Committee welcomes the opportunity to express
its views on the 1998 Cohesion Fund report, but it would

(1) At 1992 prices. After adjustment this sum amounts to Euro

16 750,8 million.

2.4.
The Committee is pleased to note the results of the
conditionality study carried out by the Commission, which
revealed that the four Member States benefiting from the
Cohesion Fund were complying with the established macro-
economic standards.

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2.5.
The delays and slowness in national governments’
submission of requests for payments, as discovered by the
Commission in the course of its monitoring missions, merit
comment by the Committee; it wishes to register its concern
about this.

These delays — in addition to creating financial
2.5.1.
inefficiencies (possible temporary lack of resources) — can
have a detrimental effect on how projects are actually
implemented, compromising the ultimate objective of the fund
which is to boost economic and social cohesion.

2.6.
The Committee again welcomes the fact that no case
of fraud was discovered or reported regarding the use of
resources in the Cohesion Fund framework.

In the Committee’s view, the Commission’s monitoring
2.7.
activities for the projects financed by the current Cohesion
Fund, whether carried out by the monitoring committees or
inspection missions, play a key role since they can raise
the ‘alarm’ for sponsor bodies, identify errors or delays in
programmes in good time and devise solutions jointly with
other bodies to improve project implementation.

3.2. Financial implementation

The Committee is again pleased to note that the
3.2.1.
outstanding implementation rate for the Cohesion Fund was
maintained at 100 % in 1998.

Good financial implementation in the period finishing
3.3.
in 1998 led to ECU 13 632,5 million being used, i.e. 81,4 %
of the Cohesion Fund’s total financial allocation for 1993-
1999.

3.3.1.
For 1999, ECU 3 118 million have been budgeted
for, which is equivalent to 18,6 % of the whole of the Cohesion
Fund and represents an increase in 8,6 % over the budget
allocated and implemented in 1998.

3.3.2.
Consequently the Committee hopes that Member
States will have sufficient capacity to absorb the resources still
available under the legal framework of this Cohesion Fund and
thus guarantee a final implementation rate of 100 %.

3.4. Distribution of funds

The Committee feels that it would have been appropri-
2.8.
ate to include a point on the main political proposals for the
future, as in the previous annual report, particularly regarding
developments and priorities under the next Community sup-
port
It believes that documents such as the
Commission’s communication on ‘The Structural Fund and its
coordination with the Cohesion Fund’ issued in July 1999
should have been referred to in the report under discussion.

framework.

The Committee is also pleased to note that in 1998
3.4.1.
the Cohesion Fund’s resources were allocated amongst its
beneficiaries in accordance with the distribution previously
established on an indicative basis.

3.4.2.
per Member State:

Percentage distribution of financial appropriations

3. Specific comments

3.1. Principles governing eligibility

Indicative allocation
range

Commitments
implemented %
1993-1998

16-20

52-58

7-10

16-20

18,0

55,0

9,0

18,0

Greece

Spain

Ireland

Portugal

3.1.1.
The Committee is pleased to note that work has
been completed on establishing the principles governing the
eligibility of expenditure for project support and that this has
been appended to all Commission decisions on allocating
grants from the Cohesion Fund; this will certainly have a most
positive impact on the transparency of financial relations
between all parties involved in the process.

3.1.2.
The Committee nevertheless regrets the fact that this
work was only completed and applied in the course of 1998,
i.e.
less than two years before the end of the period of
application of the current fund.

3.5.
As regards the allocation of resources between the two
areas of fund intervention, the Committee welcomes the efforts
over the last few years in general, and in 1998 in particular, to
strike a better balance between environmental projects and
transport infrastructure projects.

3.5.1.
These developments meant that at the end of 1998,
appropriations were shared out equally between the environ-
mental sector (50,1 %) and the transport sector (49,9 %); this
balanced distribution was reflected in each of the beneficiary
Member States, albeit with slightly different relative percent-
ages.

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3.5.2.
of resources was as follows:

In the 1993-1999 period, the percentage distribution

1993-1997

1998

1993-1998

Environment

Total

Greece

Spain

Ireland

Portugal

Transport

Total

Greece

Spain

Ireland

Portugal

49,1

54,2

48,3

47,0

47,7

50,8

45,8

51,7

53,0

52,3

53,5

40,6

55,3

55,0

60,1

46,5

59,4

44,7

45,0

39,9

50,1

51,4

49,8

48,7

50,3

49,9

48,6

50,2

51,3

49,7

3.6. Without prejudice to the general comments made in
point 2.3 above, the Committee feels that some aspects of the

3.8.2.

Commitments and payments by sector and Member State

analysis per beneficiary Member State in Chapter 3 of the
present report, entitled ‘Managing Projects and Measures
Adopted’, are not as good as in previous years; this is due not
only to an excessive summarisation of some of the points
broached but also the fact that harmonised framework sum-
maries were not presented for some Member States.

3.7.
On the basis of the indicator entitled ‘Payments as % of
Total Commitments’ the Committee deemed the level of
project implementation to be satisfactory and notes a slight
improvement over the 1993-97 period, particularly in environ-
mental action.

3.8.
The Committee nevertheless feels it must highlight a
number of disparities, both between the two spheres of
intervention — in that the indicator referred to above amounts
to 87,8 % for transport and only 57,9 % for the environment
— and between beneficiary Member States — where the
indicator varies from 67,8 % for Spain to 90,8 % for Portugal.

3.8.1.
This warrants greater attention and far greater effort
on the part of the Commission, since the current financial
framework of the Cohesion Fund is nearing its end, so as to
ensure that all the projects currently being implemented can
be completed and paid for in good time.

Commitments per sector 1993-1998
ECU million

Payments by sector 1993-1998
ECU million

% of payments relative
to commitments 1993-1998

Total

Transport

Envi.

Total

Transport

Envi.

Total

Transport

Envi.

Greece

Spain

Ireland

Portugal

2 448,7

1 191

1 257,7

1 691,1

878,2

812,9

7 493,5

3 764,4

3 729,1

5 080,6

3 383

1 697,6

1 225,7

628,8

596,9

922,1

536,1

386

2 455,7

1 220,5

1 235,5

2 230,3

1 178,1

1 052,2

Technical assistance

8,2

—

—

4,7

—

—

Total

13 631,8

6 804,7

6 818,9

9 928,8

5 975,4

3 948,7

69,1

67,8

75,2

90,8

57,3

72,8

73,7

89,9

85,3

96,5

—

87,8

64,6

45,5

64,7

85,2

—

57,9

3.9.
As regards the financial allocation between projects in
the environment sector, the Committee notes an increase in
assistance for the waste water sector in compliance with the
requirements laid down by Directive 91/271/EC.

Because of the importance of this issue, particularly
3.9.2.
for the Member States bordering the Mediterranean,
the
Committee wishes to highlight a) the impact of the fight
against desertification, b) water-protection and c) the fight
against water-erosion so that Member States can step up their
afforestation policies through the Cohesion Fund.

Nevertheless, the Committee reiterates its concern
3.9.1.
about
the amount of support being allocated to nature
protection, particularly erosion control and afforestation,
whose share of total assistance fell in the 1993-1998 relative
to the 1993-1997 period, falling to 8,6 % from 9,2 %.

3.9.3.
Consequently, it is hoped that in 1999 more atten-
tion will be paid to environmental protection; this is essential
for improving the living conditions of the local population
and for sustainable development at regional, national and even
world level.

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3.9.4.
ment sector.

Percentage distribution of allocations in the environ-

Percentage distribution of allocations in the transport sector

Drinking water

Waste water

Solid waste

Erosion control
and afforestation

Other

Total

1993-1997

1998

1993-1998

31,7

40,6

10,2

9,7

7,8

30,5

47,9

14,2

4,6

2,7

31,4

42,3

11,1

8,6

6,7

100,0

100,0

100,0

Roads

Railways

Airports

Seaports

Traffic control systems

1993-1997

1998

1993-1998

69,3

22,8

3,9

3,3

0,7

42,7

45,9

10,4

0,8

0,1

64,1

27,4

5,2

2,8

0,6

Total

100,0

100,0

100,0

3.12. Assessment of the impact of the Cohesion Fund

3.10.
As for the distribution of resources in the transport
sector, the Committee is pleased to note that in 1998, contrary
to the earlier trend, support
for rail projects has been
predominant, absorbing 45,9 % of the transport sector allo-
cation for 1998.

3.12.1.
The report reaffirms the positive impact of the
Cohesion Fund on economic activity, particularly on job
creation in the beneficiary countries. The various quantitative
assessment studies on the impact of the fund provide some
information as to the extent of these effects.

3.11.
In view of the fact that 1998 was the penultimate year
of the Cohesion Fund under the 94/99 financial framework, the
Committee continues to express its concern that the road
transport sector continues to account for most of the resources
budgeted for the transport sector — around 64,1 % — over
the 1993-1998 period, and it recommends that actions and
measures be implemented to reduce this imbalance.

In its Opinion on the 1997 Cohesion Fund Report,
3.11.1.
the Committee expressed its concern about the fact that less
investment was being allocated to maritime, port and river
projects and called for a special effort to correct this. Therefore,
although aware of
forward by the
Commission, namely that these activities generate income and
are therefore not given the same support by the Cohesion
Fund, the Committee feels it must express its concern about
the new reduction in the share of financial support allocated
to ports as a proportion of all resources allocated to the
transport sector in 1998.

the explanations put

The Committee feels that the transport priorities
3.11.2.
recently announced by the Commission in its Communication
on ‘The Structural Fund and its coordination with the Cohesion
Fund’, particularly as regards boosting the efficiency of trans-
port networks and securing a better inter-modal balance
(between the different transport types), should not be over-
looked by the Cohesion Fund.

The most advanced economic model used for
3.12.2.
measuring the impact of
the Cohesion Fund is the one
developed by the London School of Economics. The Com-
mission should divulge more information about the data
produced by this model. The Commission has briefly outlined
some of the results from that study; unfortunately it has not
presented any quantitative data, even in a non-technical form.

The Commission has nevertheless referred to some
3.12.3.
interesting data regarding the partial impact of the fund on
road investment in Spain and Portugal (but not in Ireland or
Greece).

3.12.4.
The Commission has maintained the estimate pre-
viously presented in the 1997 Report on the impact of the
Cohesion Fund, namely that for every million ecu of financial
assistance granted, 20 jobs are directly created in the transport
sector and 25 in the environmental sector. These estimates
essentially reflect the direct impact of investment, but do not
allow an assessment of the supply side effect of improvements
in the competitive situation of the region concerned. Conse-
quently these estimates should be viewed and interpreted with
some caution, in terms of both medium-term job sustainability
and difficulties in determining whether or not a project would
have been implemented without financial support.

3.12.5.
The Committee welcomes the announcement that
the Cohesion Fund generated 398 600 new jobs between
1993 and 1998 although for the same reason as set out above,
these estimates should be presented by the
it
Commission with a certain amount of caution, highlighting
the main problems associated with them.

feels that

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3.13.
As regards the ex-post evaluation studies, the Com-
mittee welcomes its main results both in the environment
sector — noting positive benefits for local populations,
economic development and the environment — and in
the transport sector where, although the impact on direct
employment is not long-term, a (fairly) positive impact has
been noted on economic activities and local populations,
particularly in terms of a) a reduction in travelling times and
costs and b) improved economic and social systems.

3.14. Anti-fraud allocations

3.14.1.
The Committee is pleased to note that applications
for assistance under the budgetary heading for appropriations
to combat fraud are generally earmarked for the vocational
training of staff in specialised investigations and the risk of
fraud in projects financed by the Cohesion Funds (five out of
six applications for assistance), enabling more effective and
efficient monitoring and inspection of the use of resources in
the future.

4. Conclusions

4.1.
The Committee hopes that the next annual reports will
include more detailed and comprehensive information on the
qualitative and quantitative impact of the Cohesion Fund.
Indeed the Committee believes that it is a matter of key
importance for the main results of the assessment of the fund
to be published and disseminated and for these results to be
discussed by the Commission and other bodies involved.

4.2.
The Committee feels that the Commission should
make a greater effort to step up the monitoring and inspection
of any delays; Member States and their governments should
also make a greater effort to submit payment requests to the
Commission in good time,
thus improving the financial
management of the fund.

Brussels, 29 March 2000.

4.3.
The Committee also hopes that the Commission will
strive to reduce the delays in submitting the annual reports to
the ESC which were noted in the previous time period.

The Committee believes that the Commission should
interactive transport and

4.4.
encourage the establishment of
environment projects in future Cohesion Fund action.

4.5. The future of the Cohesion Fund

4.5.1. While the Economic and Social Committee is issuing
its opinion on the Report on the 1998 Cohesion Fund, the
European Union is on the point of establishing a new
Community Support Framework for the period from 2000-
2006; the Committee therefore feels this is a good time to
express a number of concerns and suggestions about the future
of the Cohesion Fund.

4.5.2.
Although it acknowledges that much progress has
been achieved by the four Member States benefiting from the
Cohesion Fund, the Committee would like to reiterate the
importance it attaches to its continuity as an instrument for
promoting and consolidating economic and social cohesion in
the European Union.

The forthcoming enlargement of the European Union
4.5.3.
is without doubt one of the greatest challenges facing the EU.
The Committee believes that this matter must continue to
receive special attention from the Commission, particularly as
regards economic and social cohesion policy and the Cohesion
Fund. It points out that it is fully available to take part in the
discussions on this subject, and welcomes the decisions taken
at the Berlin Council in this connection.

The Committee believes that the Cohesion Fund
4.5.4.
should back up the overall policies defined by the European
Union. It therefore reiterates the importance of linking this
fund up with the other structural funds, particularly as regards
the objectives and guidelines for the period 2000-2006
contained in the Commission’s Communication on the ‘The
Structural Funds and their Coordination with the Cohesion
Fund’.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI