Opinion of the Committee of the Regions on the "Sixth Periodic Report on the Social and Economic Situation and Development of Regions in the European Union"
Date: 2000-04-12
Institutions: European Committee of the Regions
Subjects: European Union, economic and social cohesion, economic development, regional policy, social development

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Opinion of the Committee of the Regions on the ‘Sixth Periodic Report on the Social and
Economic Situation and Development of Regions in the European Union’

(2000/C 226/10)

THE COMMITTEE OF THE REGIONS,

having regard to the ‘Sixth Periodic Report on the Social and Economic Situation and Development of
Regions in the European Union’ (SEC(1999) 66 final);

having regard to the Commission’s decision of 1 September 1999 to consult the Committee on this
subject, in accordance with Article 265 (1) of the Treaty establishing the European Community;

having regard to its Bureau’s decision of 2 June 1999 to assign the preparation of an opinion to
Commission 1 for Regional Policy, Structural Funds, Economic and Social Cohesion, Cross-Border and
Inter-Regional Cooperation;

having regard to the draft opinion (CdR 388/99 rev. 2) adopted by Commission 1 on 1 December 1999
(rapporteur: Mr Bazin, regional councillor for Bourgogne, F/PPE),

adopted the following opinion at its 33rd plenary session of 12 and 13 April 2000 (meeting of 12 April).

1.

Introduction

1.1.
The Sixth Periodic Report on the Social and Economic
Situation and Development of Regions in the European Union
analyses and comments on the impact of regional policy
within the European Union and the results of the cohesion
process. It also focuses on development in 10 central and
eastern European countries and Cyprus.

The report was published by the European Commission
1.2.
on 23 July 1999 and is the last in a series of documents it
publishes every three years. In accordance with Article 130b
of the Maastricht Treaty (1), the Commission produces three-
yearly reports on economic and social cohesion, incorporating
analyses made in the periodic report. The first report on
cohesion was presented and adopted in 1996.

1.3.
Access to accurate, detailed and regularly up-dated
economic and social data covering the entire European Union
is a must. This report marks a considerable step forward from
its predecessors, since, as well as successfully updating the
it offers new and interesting perspectives on
information,
economic globalisation, the development of the information
society, the changeover to the euro, the enlargement of the
Union towards eastern Europe, the regional economy and the
labour market.

1.4.
This enables a relatively objective assessment to be
made of the major regional trends of the last decade of the
20th century, in terms of the economy, the labour market, and
demographic patterns. It is also a means of analysing regional
capacity for competitiveness, and assessing changes in those
regions assisted by the European Structural Funds and those
not. Furthermore, it is a means of knowing and comparing the
situation in ten countries of central and eastern Europe and
Cyprus.

1.5.
On the whole, therefore, the Committee of the Regions
welcomes the work done for the sixth periodic report on the
situation and development of the regions in the European
Union. The report is a landmark in the analysis of regional
data and illustrates the progress made in the field since the
publication of the fifth periodic report in 1995. There is still a
lot to be done to complete the picture, but now the way ahead
is clear, providing efforts to harmonise European statistics are
continued and the research accompanying the work of the
ESDP fulfils its promise. The competitiveness approach (second
part of the report) is important and deserves applause as it
touches the heart of the matter and opens up new horizons
for understanding and resolving divergent regional develop-
ment in Europe.

2. Suitability of the analytical framework

(1) Article 159(2) of the Amsterdam Treaty.

The basic unit of the report is the region. Although
2.1.
this appears to be the only analytical basis on which the data
can be compiled and collated, there are clearly major disparities

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between the regions concerned on a number of counts. Some
are historic entities, others are recent groupings of smaller
entities, established at completely different times, and with
widely differing geographical dimensions. Their responsibilities
and powers also vary, especially in economic terms. There are
frequent problems involved in comparing entities that have
very little in common with regard to their history, culture,
administration, politics and economy.

2.2.
The limitations of the analysis are especially glaring in
the light of the economic theory that distinguishes between
polarised regions (those with an active centre draining activity
from the surrounding area) and homogeneous regions (compo-
sed of similar sub-regions). Some of the NUTS 2 regions,
for instance, are of a polarised nature, whereas others are
homogeneous. This distinction is not made in the report,
except implicitly with reference to large urban service centres,
industrial regions with medium-sized cities or rural regions.
It is, however, difficult to compare polarised regions and
homogeneous regions. Furthermore, the case of city-regions is
atypical.

2.3.
An inevitable but somewhat distorting statistical effect
can sometimes negate analyses of inequality between regions.
The larger and more populous the region, the more likely it is
that indicators will be based on averages that mask sharp
contrasts. A region thought to be wealthy will often contain
pockets of poverty. It is clearly the job of every Member State
to establish its own standards of social equity, but the European
Union cannot simply disregard these situations, which can
often lead local people to question the ‘European idea’ and
hold the European Union responsible. It should be noted that
the NUTS 2 classification is based on the decisions of each
Member State and cannot hope to meet the optimal criteria
set by the European authorities in all circumstances. The
Committee of the Regions hopes that the necessary resources
will be deployed to gradually improve the quality of the
statistics and provide a better picture of the inequalities within
Europe’s regions; and it would be prepared to play a part in
that process.

2.4.
The data on the ten central and eastern European
countries and Cyprus are brief and occasionally insufficiently
reliable, in spite of recent statistical progress. A partnership
should possibly be established to improve the quality of this
information, which will be essential for the enlargement of the
European Union and the credibility of any future regional
policy.

2.5.
The Committee of the Regions would recommend the
use of more finely-tuned and reliable indicators to measure

inequalities.

In the report

interregional
they are assessed
basically as a function of the ratio of GDP per head in a specific
region to average GDP per head for all the regions. This is a
somewhat simplistic method in the light of the more sophisti-
cated tools economic science has to offer in this day and age.
The relevance of criteria quantifiable largely in financial terms
is questionable, as societies can develop differently and give
priority to other values. The 21st century may witness the
development of personal or social
‘demand’ focused more
on spiritual aspirations,
ideals of solidarity and ecological
objectives, setting greater store by food quality and needs
relating to physical health and quality of life, etc.

Furthermore,

the Committee of

2.6.
the Regions rec-
ommends eliminating the effect of regional population changes
in future. The advantage of GDP per capita is that it enables
the situation in the regions to be evaluated from the viewpoint
of individuals, but the disadvantage is that changes in the
overall situation of a region are hidden by changes in the
number of inhabitants. Thus a region that has grown wealthier
while attracting more inhabitants in search of work may seem
to have made less progress in terms of per capita GDP than in
terms of regional GDP. The GDP per head ratio, therefore,
tends to underestimate inequalities. The weakness of basing
the analysis on GDP her head alone is offset, however, by the
detailed study in the second part of the report of the factors that
contribute to GDP formation and regional competitiveness.

3. Sustained high unemployment and the means of

addressing it

3.1.
Unemployment and underemployment are the most
serious concern of the Committee of the Regions. It therefore
seems appropriate to examine this aspect of the report first.
Although the situation is improving in places, the European
Union still has a high unemployment level, which affects
16,5 million people and is at the root of major human
difficulties and social ills, as well as economic imbalances in
the geographical breakdown of the production of goods and
services.

The report underlines the fact that unemployment
3.2.
persists in the places it has taken root, and that any reductions
do not make up for the increases. Pockets of geographically-
localised unemployment are still necessarily at the top of the
agenda. Unemployment is extremely unequally spread over
the Union. A decade on, it is still the same 25 regions that are
least affected by the problem. In the regions with least access
to work and jobs, the unemployment rate has risen over the
same period from 20 % to 24 %, in contrast to the 4 % rate
in the more privileged areas. Long-term unemployment is on
the increase, along with unemployment among young people
looking for their first job.

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3.3.
The report suggests that approximately half the unem-
ployment can be put down to a structural situation caused by
an imbalance in the structure of supply and demand for
labour. The Committee agrees with this analysis, while feeling
that the report could have drawn clearer conclusions in terms
of:

— the need to develop initial and continuing training, the key
to adapting people to the requirements of the labour
market and the major changes it is currently undergoing;

— the dissemination of information on the labour market, to
both companies and job seekers, especially in an EU-wide
context;

— measures to ensure labour market flexibility.

3.4.
The report is not very forthcoming on the subject of
female employment. It notes that women, who often have
children to take care of, should have access to part-time work
and flexible hours. This makes it harder for women with
jobs. The Committee of the
children to secure high-level
Regions believes that more definite progress is needed to
achieve equality between men and women with regard to work
and access to economic and social responsibilities. A debate is
also needed on the adverse and beneficial effects on women of
positive discrimination measures provided for under family
policy in certain countries. The report, meanwhile, highlights
the link between low unemployment and high female employ-
ment. This is partly explained by women working part-time or
special hours. The report points out that 80 % of women
working under such arrangements choose to do so. Healthy
economies need people to work part-time, special or flexible
hours; as women are more interested in such arrangements
than men, more of them are employed.

On interregional inequalities, the report shows that
3.5.
certain regions have an unsatisfied demand for labour while
others are in the opposite situation. The problem could be
eased through measures to encourage spatial mobility (foreign
language learning, more flexible labour market, teleworking,
etc.).

The report could have shed more light on the Com-
3.6.
mission’s position on the relationship between the social
protection provided for job seekers and the constituent factors
of unemployment. It gives little attention to minimum salaries,
unemployment benefits or, more generally, worker assistance
and protection. However, there is currently no clear-cut answer
to this question, either in practical or theoretical terms.

3.7.
Several times, the report states that regions with a high
proportion of jobs in agriculture and connected activities often
have an unemployment problem, and it recommends that
those regions diversify towards industry and services. This
view is not entirely accurate, however, as it is necessary to
avoid any rejection of farming, any belittling of its economic
and social importance, or the wider acceptance of an excess-
ively production/productivity-based model. A move towards
less intensive agriculture, paying greater attention to environ-
mental standards and matching consumer demand for natural
products, could save and create new jobs in Europe. Not all
regions have the same predisposition to produce food prod-
ucts, but, with the right help to make the necessary changes in
production methods and prepare for the future, some could
specialise to social and economic advantage.

The report is right to state that the economic base of
3.8.
the least
i.e. by
favoured regions must be strengthened,
developing outward-looking activities. While this concept is
acceptable at a microeconomic level in a region, bearing in
mind the shortcomings of the regional economic base model,
the overall benefit to the European Union depends largely on
exports outside the Community market.

4. Demographic trends reach crisis point

4.1.
There is no question that demographic trends are
reaching crisis point. The report’s forecasts stretch up until
2020, and are based on current trends. It therefore appears
probable that:

— low birth rates will result in the ageing of the population,
with all the social and economic consequences that entails;

— the active population will also age, raising very serious
questions as to the competitiveness and adaptability of
human resources in Europe, faced with a changing world;

— the labour supply and active population will start to shrink
from 2005/2010 onwards; this will be an imbalanced
process and will depend on the immigration policy chosen
by Member States and the European Union.

Very soon, cohesion will require a new vocabulary, centred on
population, rejuvenation and the generation balance.

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4.2.
The report points out the effects of an ageing active
population on the lack of worker adaptability to new tech-
nologies. If the work force is to remain dynamic, priority must
be given to research into measures designed to promote
continuing training, access to a wider range of technologies
and the implementation of management techniques suited to
a population at an advanced stage in its working life.

5.3.
The Committee of the Regions applauds the progress
made by several of the less privileged European regions in
recent years. The advances made between 1991 and 1996
appear to have been significant and rapid, though largely
owing to growth in the new German Länder. Meanwhile,
between 1986 and 1991, the apparent decline in growth was
the result of the opposite phenomenon in the same region.
Growth in the regions outside the new Länder in fact been
more or less steady.

4.3.
Quite rightly, the report examines the ageing phenom-
enon from the viewpoint of the dependency of the elderly,
which is set to have a major impact on the social budgets of
the Members of the European Union in the coming years.

4.4. Without youth, a dynamic renewal of generations and
a policy to boost birth rates, Europe will grow old and lose the
staying power which can only come from the rejuvenation of
its human resources.

5. Convergence is a reality but some areas are still lagging

5.1.
The report states that there has been genuine conver-
gence, and notes that over the last 10-year period, GDP in the
10 regions where it was lowest has risen from 41 % of the EU
average to 50 %.
the
It also mentions that
25 poorest regions is up from 52 % to 59 % of that average,
while the GDP of the four ‘cohesion’ countries has shifted
from 65 % to 76,5 % of the average (estimated at 78 % for
1999). It states in particular that trade between those four
countries and the Member States of the Union doubled over
the same period.

the GDP of

5.2.
Some areas are still lagging, however, and it is clear
that even in the cohesion countries, where the report’s findings
argue for a new policy, towns and cities are more often than
not still attracting GDP to the detriment of rural regions. This
uneven distribution of GDP is a reality throughout Europe, it
is a root of social tension and the Union has paid out
considerable sums to try and reverse the process and will
continue to do so. However, care must be taken to ensure that
the free enterprise that is so precious to the EU does not
generate excessive imbalances in the growth of Europe’s
regions. The European Union’s regional policy must not just
fight the imbalances that arise from the current climate of
mergers, globalisation and relocation, but also contribute to
preventing them in the first place.

5.4.
Overall, three main phenomena stand out: continued
buoyant growth along the urban, industrial axis that crosses
the European Union diagonally, further strengthening these
growth poles; uneven progress made by the Objective 1
regions in catching up; and weak growth in several so-called
peripheral regions that do not qualify for Objective 1.

5.5.
The Committee has doubts as to whether the average
should be used for country convergence analyses. By grouping
the four cohesion countries together to show convergence,
table 1 in the statistical annex to the sixth report hides the fact
that growth in Greece and Spain during the 1991-1996 period
was lower than the European average (+1 % and + 1,3 %
average annual growth respectively in contrast to the +1,5 %
European average). Clearly, with strong Irish growth (+7,1 %
annual average) brought into the equation, the four countries
taken together show much higher average growth (+1,7 % as
opposed to +1,5 %). The wisdom of using the average here is
highly debatable.

6. Competitiveness

6.1.
The report opts to measure the competitiveness of the
regions by the ratio of GDP/population to output per inhabi-
tant, already used to assess regional development
levels.
This appears to be a far cry from the two definitions of
competitiveness proposed by the same report, namely ‘the
ability of companies, industries, regions, nations and supra-
national regions to generate, while being exposed to inter-
national competition, relatively high income and employment
levels’ and above all ‘ability to produce goods and services
which meet the test of international markets, while at the same
time maintaining high and sustainable levels of income’. The
choice of GDP per head does not really solve the problem.
Being competitive means producing at prices lower than
or equal
the natural
consequence. The report does not examine competitiveness so
much as provide an explanatory breakdown of disparities per
head. The analysis is interesting, but calls for a number of
comments.

to world prices, with employment

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6.2.
The report in actual fact considers that GDP/population
= (GDP/employment) × (employment/ working-age popu-
lation) × (working-age population/total population). The last
element
in the breakdown (working-age population/total
population) goes by the board somewhat as it contributes little
to overall change and is little influenced by policy. The report
mentions earlier, however, that this ratio is decreasing over
time.

The report is practical and objective regarding foreign
6.7.
direct
It can play an important role in the
investment.
development of all regions by helping to raise productive
capacity and output. Through stable, favourable employment
conditions and the provision of good in-house training, direct
inward investment can also contribute to improving social
conditions. However, any detrimental fall-out for the European
economic or working culture must be addressed, should it
arise.

6.3.
The report uses the two other elements to define
competitiveness, the ratio (GDP/person employed), i.e. labour
productivity, and the ratio (employment/working-age popu-
lation), i.e. the employment rate. Part 3 of the report apparently
adopts a differing standpoint, namely that the employment
rate is not determined by external factors but rather dependent
on productivity. It states that while competitiveness depends
on productivity, improved productivity is a necessary con-
labour pro-
dition for increased employment. Therefore,
ductivity is definitely a factor in competitiveness, as it stimu-
lates growth in output and thus employment; at the same time,
however, productivity gains lead to fewer workers being
required for the same output.

6.4.
On the subject of productivity and the employment
rate, it would appear that only labour productivity is at a
satisfactory level. This is encouraging, but full employment,
the aim of any society, remains elusive. The explanatory factors
studied by the report
include the structure of economic
activity, degree of innovation, regional accessibility and the
skills of the work force. While economic structure is slow to
change, innovation levels could be improved more rapidly by
EU measures such as an improved patents system or action to
encourage the transformation of innovations into marketable
products and services.

6.5.
The report highlights the inadequate dissemination of
innovations within Europe, in contrast to the US in particular.
The Committee of the Regions believes that the research,
innovation and technological development necessary to all
Europe’s regions must be stepped up.

6.8.
Transport and communication infrastructure will be
vital for the enlarged continent-wide European Union. Both
therefore be set.
geographical and modal priorities must
Interpersonal relations and trade in goods and services are as
old as the history of European civilisation and it will be
through their promotion that Europe is built.

Geographically, the Union must encourage the estab-
6.9.
lishment of modern transport and communications links
throughout its territory. They are indispensable between East
and West as a signal of the cohesion that the Union intends to
establish with the candidate countries of Central and Eastern
Europe. The Union must also help to forge the missing links
in the north-south axis in the West of the continent, not
forgetting those regions situated on the extreme periphery,
islands especially, which require appropriate means of trans-
port and communications.

6.10.
In modal and intermodal terms, the European Union
must undergo a transport and communications revolution like
that of the 19th century, based on current advanced tech-
nology. It must focus less on individual projects than on a
European strategy, and projects should be backed only insofar
as they fit in with that strategy. Roads, railways, shipping,
especially coastal shipping waterways and aviation must all
play their part within an intermodal whole, protecting the
environment while remembering that transport and communi-
cations contribute to quality of life and are of the essence of
civilisation itself. Clearly, much more than in the past, a
distinction must be drawn between passenger transport and
goods transport. This is the challenge facing the European
Union. The Committee of the Regions will lend its support.

The report clearly shows that

though small and
6.6.
medium-sized companies are said to play a key role in job
creation, the exact scale of their contribution is difficult to
assess, partly as a result of statistical confusion between
In general,
decision-making centres and production units.
Europe is still lagging behind in the area of risk capital and
financial support for high-tech SMEs.

6.11.
The report remains objective with regard to energy,
which nonetheless is currently a highly sensitive issue. It
ignores the issue of energy sources, with the exception of
renewables. In particular, the thorny topic of nuclear power is
conspicuous by its absence. One interesting idea is that of

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energy intensity (energy consumption per unit of GDP), which
is greater in the less favoured regions. This would suggest that
moves to develop energy infrastructure and break energy
dependency must be accompanied by energy saving measures.
Although the less developed regions use less power per head
and cause less pollution, they use more fossil fuels. The report
suggests that they could rely on renewables. This would be
realistic only for the sun-drenched regions of the south, for
very windy areas or, at all events, areas with plenty of unused,
non-agricultural land, as solar and wind power installations
use a lot of space, especially when a major supply is required.

Interesting information is provided on telecommuni-
6.12.
cations infrastructure (number of lines per inhabitant) and
quality of service (rate of digitalisation). The mobile telephone
phenomenon — via GSM or satellite — is not mentioned,
however, although it constitutes an opportunity for the
economic infrastructure of less-developed regions that are
often not as well covered by specialist companies. The regions
that are ill-served by the new communication technologies,
the gateway to the modern world, are also the most neglected
by the market and free enterprise.

6.13. Water supply is another of the major challenges
facing tomorrow’s Europe, and is a problem determined largely
by geography. The report gives indications of reserves per
inhabitant in each country. This shows that the most developed
countries are in the most difficulty, and must invest the most
financially. The report is right to point out that recycling
household waste is certainly the best way forward in terms
of environmental protection, although it is bound to be
expensive.

6.14.
The report highlights national disparities in human
capital, an area in which change is inevitably slow. It gives
little information on the link between human capital and
economic performance, although it is known that human
capital can generate increasing returns, which can however
hinder the convergence process, according to the endogenous
growth theory.

very few decisions are taken locally, with the exception of
regionally-based SMEs. There is no proof that decentralisation
is always the most effective system. In any case, this requires
competition conditions (transparency, full information, inde-
pendent operators) that are not always present. Public manage-
ment by results is not such a new idea, and as the report
mentions, it is not so far removed from centralised planning;
it is not effective every time. The report is also positive
when promoting private intervention in partnership with
government as a more effective form of public management.
However, this can often have negative effects, for instance,
pressure groups, a tendency towards corruption, the fact that
it is major companies rather than SMEs that have the most
influence, with all the monopolistic tendencies that entails, not
to mention pressures from the banking and finance sector. As
the report points out, the horizontal management network
model can become cumbersome: very often, this type of
institution tends to favour compromise, i.e. zero change.

All

in all, the second part of the periodic report
6.16.
deserves recognition for its quality.
It offers very good
prospects for a genuine plan for the balanced development of
Europe’s regions. The chapter entitled ‘Explaining competi-
tiveness: common features of successful regions’ will doubtless
prompt further research in the months ahead. Nonetheless,
the outline of the four most important factors in the growth
of GDP are convincing:

a) The structure of economic activity is a major factor that
demands a special political effort to redistribute Europe’s
productive machinery and find ways of striking a better
balance.

b) The extent of innovative activity is also a key factor. Once
again in political terms, it demands better coordination
between research and development policies and economic,
social and regional cohesion. This is underlined in the
chapter on RTD.

c) The Committee obviously welcomes the attention paid to
the accessibility indicator. Its high correlation with GDP
comes as no surprise, but needs confirmation nonetheless.
It can only be hoped that the additional research in the
pipeline will enable this critical factor to be taken rapidly
into consideration in the implementation both of regional
policies and of the trans-European networks (review of
TEN-T) and all transport policies.

6.15. With regard to institutions and social capital, the
report strikes an optimistic note when it affirms that ‘European
integration is a key force in this, since it exposes regions to
institutional models and competition from all over the Union’.
However, regions are dependent on the state for their public
institutional structures, and often have only limited room for
manoeuvre. The institutional structure of firms is such, that

d) Lastly, the area of skills is also critical and requires better
coordination between the relevant ERDF and ESF policies.
The Commission has made this point on several occasions,
but insufficient heed has been taken in the SPD and CSF.
There is definitely room for innovation in this area.

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To conclude, map 29 of
the report gives a remarkable
summary of the reality of the centre-periphery relationship as
it stands in Europe. There are few more convincing arguments
for using an indicator of this type in the structural policies.
The development of these four key variables, in relation to that
of GDP, will, furthermore, provide a sound basis for evaluating
the development of
the centre-periphery relationship in
Europe.

The impact assessments presented show that

7.5.
the
Structural Funds have had a beneficial effect on the regions
that have received assistance, reducing regional disparities. The
Committee of the Regions welcomes this success.

The convergence issue raises an important economic

7.6.
question, in terms of the balance between:

— the search for maximum overall growth on the one hand,

and

7. The effectiveness of cohesion policy

— even growth or development of the regions on the other.

7.1.
This opinion could not cover the specific situation in
each of the EU regions, unless each presented its comments,
hopes and demands; this would not however match the
Committee’s brief to issue a coherent opinion.

The report does not conceal the fact that, in spite of
7.2.
major progress made in recent years, the impact of regional
cohesion policy is still largely inadequate. There are sometimes
significant disparities between the regions of a single country,
and between all the regions. It must be said that the cohesion
objective is very ambitious and the first of its kind in the
history of the continent. Furthermore, its impact cannot be
assessed properly over such a short period. The Structural
Funds appear to have made a positive contribution to reducing
inequalities within the European Union, benefiting Greece,
Ireland, Portugal and Spain in particular, taking those countries
as a whole. The report correctly points out the difficulty in
assessing the effectiveness of the Structural Funds with regard
to other factors that cannot easily be incorporated into the
evaluations.

In spite of the efforts made in the Objective 1 and
7.3.
Objective 6 regions, unemployment rates have remained
disappointing overall, while GDP per inhabitant is tending to
converge towards the average. The report highlights poor
activity rates, linked to unemployment, but it limits itself to
noting the situation without attempting to seek the real
reasons for it. Certain regions have benefited greatly from
development aid. As the report suggests, an objective assess-
ment should be conducted of the effectiveness of this financial
aid in giving every less-developed region the same oppor-
tunities to advance.

The search for equity aims to give as much as possible to the
least favoured region while remaining effective, i.e. ensuring
maximal overall development. However, equality is not always
effective and it is not always by seeking equal development
for regions that maximum overall development is attained.
Interregional equality should not necessarily be sought above
all else, as regional equality has consequences for overall
performance.

7.7.
An evaluation of the cost of the Structural Funds in
terms of overall growth would provide a useful indication of
results. This is not to say that the Funds should be called into
question, but rather that
indication should
obviously be available given that the Funds are aimed at more
egalitarian growth.

this type of

7.8.
Similarly, an evaluation of the multiplier effect of the
sums injected would be useful (i.e. the relationship between
the growth of a region’s GDP that can be imputed to the
Structural Funds, and the total amount of Structural Fund
money involved). This performance indicator, however simple
its form, would be of great use in deciding the future direction
of the Structural Funds, over and above the data on growth in
GDP or reduced unemployment presented by the report.

7.9.
The aim of equal development between the regions is
more difficult to achieve than the objective of equal growth
rates, as the former implies convergence, with the less favoured
regions having to grow more quickly than the more advanced
regions.

8. Enlargement

The situation in the Objective 2 regions seems to have
7.4.
improved overall, but these regions are still often vulnerable
(closing down and relocation of production units). In the
Objective 5b regions, an increase in the active population has
hindered a fall in unemployment, although employment has
increased. The cause for that increase is diversification of
activities in an economy based mainly on agriculture.

8.1.
The report takes the overall view that the countries of
central and eastern Europe and Cyprus are legitimate candi-
dates for accession given their political choices, their move-
ment towards a market economy and the progress they have
made over the last decade.

8.8.2000

EN

Official Journal of the European Communities

C 226/37

The Committee of

8.2.
the Regions does not have a
decision-making role here, but it would nevertheless remark
that:

— the countries in question are not the only countries likely

to apply for membership of the European Union;

economic criteria, and especially not on criteria for the
harmonious development of those countries’ regions. The
applicant countries still have a good deal of catching up to do:
regional issues play second fiddle to national matters where
EU accession is concerned, although harmonious regional
development is obviously desirable.

— it is impossible to disregard the myriad political, economic,
social, cultural and ideological factors linked to the past,
present and future of these countries, which are not
reflected principally in regional GDP but
in national
objectives that are not easily defined;

— the European Union must learn how to manage the hopes
it arouses to ensure they are realistic; to do this it must
evaluate the many implications these accessions will
inevitably have for the Union’s internal and external
policies, and assess the real capacity of the Union and of
the countries concerned to form tomorrow’s Europe in a
genuine spirit of solidarity;

— the European Union must be able to continue developing
its approach to these countries in a responsible way,
without losing sight of the fact that the foundation stone
— i.e. the European entity — is solely political and moral,
based on a system of free societies with unity of purpose:
for
first and foremost Europe must provide an ideal
community life, with a single destiny, only then will it
succeed;

— while definitely not sceptical about enlargement,

the
Committee is adamant that it must be a success; otherwise
it may engender major difficulties in the European Union
and the applicant countries. The preparation phase would
benefit from the greater involvement of the Committee of
the Regions, which, as the representative of local and
regional authorities,
is in a position to establish and
nurture the grass roots cooperation needed for success.
The fact that a country has applied must not lead to
excessive pressure on its people in terms of economic
adjustment and lifestyle, as that could provoke a backlash.

8.3.
According to the report, the disparities between the EU
regions and the applicant regions are still great, with a few
exceptions. Membership of the EU will not depend solely on

Brussels, 12 April 2000.

This brings us back to the growth versus equal
8.4.
development of regions debate, an issue that cannot be
ignored. Should these countries develop as quickly as possible
in order to reach the level necessary for accession to the
Union? Or should they seek regionally balanced growth, which
will necessarily be slower (in the knowledge, as the report
states, that the shock of transition from the previous era is still
far from having been totally absorbed, with GDP and GDP per
inhabitant having plummeted)?

8.5.
The report suggests that the CEEC are benefiting from
a major influx of foreign direct investment, but that these
flows are focused on a few countries only and come from just
a few Union Member States. This issue is and will remain a
sensitive one, in the light of centuries of European history.

8.6.
The report assumes that these countries have already
made decisive progress towards moulding their societies to the
European Union model. The truth is, however, that the type of
society they are developing is still on the drawing board. The
Committee of the Regions believes it has a major role to play
here as decentralisation and balanced mutual support are the
twin pillars of the Europe it wishes to see created, based on a
system of social values.

8.7.
The Committee of the Regions hopes that the countries
in question will equip themselves with regional political and
administrative structures, so that they can tackle the same
issues within the same institutional framework. The Committee
of the Regions can be a partner in implementing regional
strategies in these countries.

Cyprus is clearly a case apart. Its economic perform-
8.8.
ance would suggest it will be ready for accession to the Union.
GDP is 75 % of the EU average. Employment is high and
unemployment is low, but productivity is also low and this is
where efforts must be concentrated.

The President

of the Committee of the Regions

Jos CHABERT