Opinion of the European Economic and Social Committee on "Economic and social cohesion: regional competitiveness, governance and cooperation"
Date: 2003-09-25
Institutions: European Economic and Social Committee
Subjects: EU regional policy, competitiveness, economic and social cohesion, governance, regional cooperation

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on ‘Economic and social cohesion:
regional competitiveness, governance and cooperation’

(2004/C 10/19)

In the context of the activities of the Italian Presidency of the European Union, the Italian permanent
representative to the EU asked the European Economic and Social Committee in a letter dated 8 April
2003 to draw up an opinion on Economic and social cohesion: regional competitiveness, governance
and cooperation.

In view of the urgent nature of the work, the Committee decided at its 402nd plenary session (meeting of
25 September 2003) to appoint Mr Malosse as rapporteur-general and adopted the following opinion by
76 votes to one.

1. Presentation

1.1.
The draft constitutional treaty presented to the Italian
Presidency on 18 July 2003 confirms and strengthens cohesion
policy as one of the essential pillars of the European Union.
The European Economic and Social Committee has been one
of the instigators and chief supporters of this policy since its
emergence at the beginning of the 1980s.

As a trailblazer for administrative simplification (1), the
1.2.
Committee is concerned about signs of bad governance
such as delays in programme implementation,
inadequate
partnerships with the socio-economic players and contradic-
tions between the Union’s various policies. EU enlargement on
1 May 2004 will see the arrival of countries which will be the
major beneficiaries of this policy but which have no experience
of implementing it and in many cases lack the capacity to do
so. In an increasingly globalised economy, better governance
is the only way to secure the future of cohesion policy.

The Committee unswervingly supports the implemen-
1.3.
tation of the Lisbon process to make the European Union the
most competitive knowledge-based economy in the world by
2010. This objective could galvanise the EU public, but it is
being called into question by economic instability and a lack
of real commitment on the part of the Member States and the
Union to put the main planks of the Lisbon process into
practice. A genuine dialogue has yet to be promoted with
businesses, the social partners and all the other civil society
players, notably those who can inform the public about the
reforms, plans and aims of the Lisbon process.

(1) The EESC was the first EU body to adopt a code of practice

regarding simplification.

1.4.
Accordingly, the Committee — acting at the request of
the Italian Presidency — will draw up a series of recommen-
dations for the future of cohesion policy, focusing on the
topics of competitiveness, governance and cooperation. These
recommendations will also draw on the recent work of the
Committee’s Section for Economic and Monetary Union and
Economic and Social Cohesion (2).

2. Regional competitiveness

2.1.
The aim of a renewed cohesion policy must be to
enable the whole EU area to adjust to the challenges of the
knowledge-based economy and thus help all regions to take
account of the Lisbon objectives. The Union should now be
able to find its way back to strong growth. For the past twenty
years, despite being the world’s leading industrial and trade
power,
the Union has appeared as an outsider who is
dependent on the outside world to relaunch its economy. Such
a situation is not natural. With the majority of its members
sharing a single currency since 1 January 2002, the Union
should be able to assert itself as a major player on the world
stage, able to build growth from its own resources.

2.2.
The lack of cohesion within the Union is clearly a
source of weakness. The Italian Mezzogiorno, the rural and
outlying regions of France, and, more recently, Germany’s new
Länder have all shown how a lack of cohesion can impede a

(2) See the following opinions in particular:

— Second report on economic and social cohesion — OJ C 193,

10.7.2001, p. 70.

— The EU’s economic and social cohesion strategy — OJ C 241,

7.10.2002, p. 151.

— The future of cohesion policy in the context of enlargement
and the transition to a learning society — OJ C 241,
7.10.2002, p. 66.

— Second progress report on economic and social cohesion.

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country’s economic and social progress. The same is true of
the Union as a whole. For the last five years the acceding
countries have had the highest growth rates in Europe and the
best development prospects, but their accession will widen
regional development gaps within the Union. EU cohesion
policy must thus be continued and reinforced. In its twenty
years of existence this policy has achieved very encouraging
results, enabling the cohesion countries to close the economic
gap. It has been less successful for lagging regions within
individual countries, and in some cases subnational disparities
have actually worsened. The Commission should devise inno-
vative arrangements to meet the challenges posed by enlarge-
ment,
for example by exploring synergies between the
measures undertaken through the Structural Funds, investment
loans from the European Investment Bank and capital available
from the private sector. Such synergies have considerable
potential to boost productive investment, not least in the
acceding countries.

policy should draw on past experience and incorporate best
practice. This should be a basic tenet of future cohesion policy
regulations. In this context, the techniques for assessing the
effectiveness of Structural Fund measures need to be developed
and improved.

2.5.
Direct subsidies for businesses severely distort compe-
tition between regions. However, more general support may
be necessary — in ways that do not disrupt the market — in
order to foster entrepreneurship. It could take the form of
support
for the creation of new activities or assistance
with development strategy, research and training for small
businesses.

2.3.
The experience of past years shows that the countries
and regions which succeed are those which manage to harness
and exploit their assets — first and foremost, their human
resources, but also their natural heritage and their geographical
situation. There is no ‘magic formula’ for this, just a spirit of
social consensus in support of ambitious goals and targeted
investment to create a level playing field for these countries
and regions when it comes to sustainable development.
Education/training and research, and high-quality infrastruc-
ture, are the keys to this. The majority of people in the Member
States and the candidate countries aspire to a European model
of society that is typified by the fight against poverty and
social exclusion and better use of the potential of the least
developed regions. There is a danger that any system that did
not strengthen this approach would weaken cohesion and
aggravate the constraints on structural measures. Further steps
must be taken to strengthen this model of society, the key
political
tenets of which are public participation in the
democratic process, the development of competences, access
to general
interest services, equal opportunities and the
provision of basic social guarantees.

2.4.
EU aid should be proportional and should be tapered
in the light of the results achieved. It should be targeted on
priorities defined under EU auspices by local stakeholders
(including the private sector) acting jointly. The future cohesion

2.6.
The Committee therefore calls for an active policy to
help the least developed countries and regions (Objective 1 of
cohesion policy) become more competitive. This policy should
be provided with significant resources, which should be
targeted on education and training, infrastructure, sustainable
development, enterprise and SMEs, and the capacity of civil
society organisations to mobilise local players. It must respect
certain basic principles which must continue to underpin
cohesion measures as they have done since 1988, namely
concentration, programming, additionality and partnership.

2.7.
The Committee calls for EU aid to be given further to
EU regions which cease to qualify for Objective 1 because of
the statistical effect of enlargement, with the focus on measures
for skills development, promoting entrepreneurship and job
creation. It considers that some of the current Objective 1
regions will continue to need support after 2006, and that
they should not be denied it merely because enlargement
will bring down the Union’s average per capita GDP. The
Committee stresses that this historic enlargement must be
backed by measures to boost cohesion, as part of a regional
policy which embraces the whole EU area.

2.7.1.
The current distribution between Objectives 1, 2 and
3, where support levels and activity focus vary, should be
replaced with a more flexible system. Three different support
levels should be maintained, with the highest level of support
going to remaining and new Objective 1 areas. A lower
per capita support level should be provided for remaining
Objective 2 and previous Objective 1 areas. An even lower
level of support should be provided for remaining areas within
the enlarged EU. As regards the latter, the focus should
be entirely on skills development and experience-swapping
between regions.

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The Committee thinks that the Union and its Member
2.8.
States must continue to show solidarity towards regions with
serious structural problems (the outermost regions, islands,
upland areas, landlocked regions, sparsely populated regions,
etc.) which need specific support for the provision of services
of general interest, especially communication and transport
networks (including broadband). Reform of cohesion policy in
the wake of enlargement must not weaken support for these
extremely vulnerable communities. In this area too, action is
needed to encourage the development of human resources.
This must remain a key priority and must receive additional
EU support. Community solidarity would produce added value
by tapping into successful experiences and enabling these
regions to play their part in the major EU policies.

3. Governance

3.1.
Better governance of cohesion policy is vital: the added
value of Community cohesion policy depends on it. An
effective cohesion policy must be clear and transparent and
must enjoy the support of its beneficiaries, who should also
play an active part. Above all,
it must encompass all the
various factors that can generate economic, social, cultural,
environmental and human development. These factors appear
increasingly interlinked.

3.2.
The Committee would first reiterate its call for real
simplification of cohesion policy procedures. This vital EU
policy needs root-and-branch reform if it is to remain fully
credible. Alongside this essentially operational concern, a
forecasting instrument should also be put in place to study
trends and track the parameters that govern real convergence
and dynamic competitiveness factors.

3.3.
The Committee has stated on a number of occasions
that the principles underpinning the Structural Funds should
be retained and developed after 2006. Aside from the debate
(already mentioned) on the future of the concentration of
support, steps must be taken to ensure that Structural Fund
programmes are devised and managed with due respect for the
subsidiarity principle. This means establishing a policy for the

in contrast

full and active involvement of local authorities and socio-
economic partners,
to initiatives that simply
increase the role of national governments. The Committee
could see no merit in a proposal which effectively put the
monitoring of the Structural Funds into the hands of national
governments.

3.4.
To ensure a better distribution of roles between the
several levels of decision-making, one of the most critical steps
(if not the most critical) is that the European Union should take
radical steps to follow through the principles of subsidiarity in
decision-making. A better distribution of roles between the
EU, the Member States and the regions is vital in order to
avoid overlapping and excessive delays. The Union should set
the main priorities — based on the Lisbon objectives — and
the regions should be responsible for implementing them. The
role of the Member States should be to check that this is done
properly.

Good EU governance is based on representative and
3.5.
participatory democracy. The role of
the socio-economic
partners should be reviewed and strengthened. Socio-econ-
omic organisations should be directly involved in the establish-
ment of priorities, on the basis of EU priorities and in
partnership with the local authorities. They should also be
involved in the monitoring and evaluation exercises conducted
by local and regional steering committees. This partnership
approach has proved crucial
to the success of cohesion
measures and should be made a key instrument of cohesion
policy. A genuine partnership that involves all the socio-
economic partners at all stages of the programming is vital if
this policy is to be implemented more effectively. Any move
to downgrade the role of the partnership in cohesion measures
is bound to limit their usefulness and scope. The Committee is
currently drafting a separate exploratory opinion which con-
tains practical proposals for enshrining these principles in new
regulations (1).

3.6.
The rigid programming system based on Single Pro-
gramming Documents (SPD) should be replaced by contracts
with specified objectives. A significant proportion of the
programmes should give local organisations or socio-econ-
omic representatives global grants, which should be used to
manage small-scale projects. Systematic use would also be
made of new financial engineering formulas for SMEs.

(1) Partnership for implementing the Structural Funds.

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The additionality requirements should be made more
3.7.
flexible, tying them to the achievement of objectives rather
than to each individual project. The EU could thus become the
sole public source of support for the target priorities stemming
from the Lisbon objectives.

Aid for previous programmes has been spread too
4.3.
thinly, and this has undoubtedly made them less effective and
less high-profile. The Committee recommends that priorities
be limited to fields which would help crossborder regions to
become competitive, such as the university network, research
facilities, shared facilities for supporting small businesses,
improvement of transport and communications, and a joint
programme for sustainable development.

A single Structural Fund should be set up, operating
3.8.
on a multiannual basis but with an indicative budget and
flexible provisions so that the regions or countries which
prove the most able could receive funds from a performance
reserve. This reserve could also be used for formulating
innovative projects,
implementing them on schedule but
also authorising emergency funding in particularly difficult
situations.

3.9.
The Committee thinks that the discussions on the
future cohesion policy should be launched as soon as possible.
Sufficient time must be devoted to this to ensure that the
debate does not merely look at financial considerations and
neglect the socio-economic implications, as the latter are vital
in the context of enlargement and increasing globalisation.
The debate must be thorough and transparent, and civil society
players must be given a central role in it.

4. Cooperation between regions

4.1.
There is broad consensus on the importance of cooper-
ation between regions and on the Community added value of
EU action. This was reaffirmed at the informal EU council
meeting in Chalkidiki on 16 May 2003.

Given the effects of enlargement and globalisation,
4.2.
cohesion policy must promote a more polycentric develop-
ment within the EU. This approach requires not only shared
objectives, but also a recognition of Europe’s diversity. Despite
transnational and
implementation difficulties, crossborder,
interregional cooperation within the EU are recognised as
essential instruments for the integration of regions which for
years have lived ‘back to back’. Internal border regions which
have often been marginalised are now finding new vigour
through new links and forms of solidarity. After 1 May 2004
the EU will have some large new internal border regions. The
Interreg programme must thus be continued and extended,
albeit with new priorities and significant streamlining of its
governance: procedures must be radically simplified.

4.4.
Cooperation along borders with third countries
(including the ‘new neighbours’ to the east and non-member
Mediterranean countries) must also be stepped up, as the
enlarged Union cannot accept the creation of a new Berlin
wall. The aim must also be to instil a spirit of cooperation in
these border regions, encouraging them to get to know each
other and exploit potential synergies.

To ensure that the Lisbon objectives are implemented
4.5.
effectively,
the Committee recommends programmes for
exchanging best practice, involving EU regions and the socio-
economic players. These could focus on the following: the
fight against exclusion, equality between men and women,
boosting employment levels, spreading the knowledge-based
economy, stepping up research, the quality of training, entre-
preneurship, and the application of the Charter for Small
Enterprises.

4.6.
The Committee advocates a non-bureaucratic method
for supporting cooperation between regions. This means that
management should not be left solely to the Member States.
The Committee therefore calls for the establishment of an
EU cooperation facility which regions and socio-economic
operators could access directly, providing co-funding with
Member States (and in third countries). The facility could be
managed by a special European agency which would also
organise meetings to promote experience-swapping.

5. Conclusions

5.1.
The Community’s regional cohesion policy should
undergo radical reform and aim to increase the competitiveness
of EU regions that under-use their own resources, rather than
using public aid to compensate for development disparities.

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EU intervention should provide real added value and should
draw on successful experiences and cooperation between
regions. This added value will help the least developed regions
to play their part in the major Community policies.

make the EU the most competitive knowledge-based economy
in the world and allow all regions to play a full part using their
own particular assets.

5.2.
The Committee calls for a radical reform of economic
and social cohesion policy methods and priorities to meet the
challenges posed by enlargement and the knowledge-based
economy. The new cohesion policy for 2007-2013 must tie
in with the Lisbon strategy as a matter of priority, in order to

This reform should be built on the principles of
5.3.
competitiveness and cooperation between regions. Its success
will be secured through new methods of governance based on
transparency, simplification of procedures and a genuine
partnership with the local and regional socio-economic
players.

Brussels, 25 September 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on ‘The contribution of other
Community policies to economic and social cohesion’

(2004/C 10/20)

On 23 July 2002, Mr Michel Barnier, European Commissioner responsible for regional policy, acting on
behalf of the Commission, asked the European Economic and Social Committee to draw up an opinion
on ‘The contribution of other Community policies to economic and social cohesion’.

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 11 September
2003. The rapporteur was Mr Dassis.

At its 402nd plenary session on 24 and 25 September 2003 (meeting of 25 September), the European
Economic and Social Committee adopted the following opinion by 66 votes to 21, with ten abstentions.

1.

Introductory remarks

European Constitution, along with EMU and the completion
of the internal market.

1.1.
Highly significant recent events have demonstrated
that the road to political union is still going to be a long and
arduous one. Certain European governments seem to have
forgotten the stance that was constantly promoted in the
1970s and 80s, i.e. that European integration was the only
option for European countries, as none of them could influence
world developments alone.

There are certain factors in the current environment, primarily:

— the intensification of market globalisation,

— EU enlargement and its opening up to the countries of

central and eastern Europe,

— the predominance of a knowledge-based society and

economy, and

However, economic and social cohesion is one of the basic
aims laid down by the Treaties and confirmed in the draft

— the more general social and political features of the 21st

century,