Report from the Commission - 15th Annual Report on the implementation of the Structural Funds 2003.
Date: 2004-10-28
Institutions: European Commission
Subjects: Community budget, Structural Funds, activity report, implementation of the budget, structural expenditure

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2004 
COM(2004) 721 final 

. 

REPORT FROM THE COMMISSION 

15th ANNUAL REPORT ON THE IMPLEMENTATION OF 
THE STRUCTURAL FUNDS 

2003. 

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TABLE OF CONTENTS 

1. 

2. 

Simplification............................................................................................................... 3 

Assessment................................................................................................................... 3 

2.1. 

Implementation of the budget ...................................................................................... 3 

2.1.1.  Commitments ............................................................................................................... 3 

2.1.2.  Payments ...................................................................................................................... 3 

2.2. 

Implementation of programmes ................................................................................... 4 

2.2.1.  Objective 1 ................................................................................................................... 5 

2.2.2.  Objective 2 ................................................................................................................... 5 

2.2.3.  Objective 3 ................................................................................................................... 6 

2.3. 

Contribution of the Structural Funds to the Lisbon and Göteborg Strategy ................ 6 

3. 

4. 

Programming in the new Member States ..................................................................... 6 

Consistency and coordination ...................................................................................... 7 

4.1. 

Consistency with the other Community policies ......................................................... 7 

4.1.1.  Competition.................................................................................................................. 7 

4.1.2.  Environment................................................................................................................. 7 

4.1.3. 

Internal market ............................................................................................................. 7 

4.1.4.  Transport ...................................................................................................................... 7 

4.2. 

Coordination of instruments......................................................................................... 8 

4.2.1.  The Structural Funds and the Cohesion Fund .............................................................. 8 

4.2.2.  The Structural Funds and the EIB/EIF......................................................................... 8 

5. 

6. 

7. 

Evaluation .................................................................................................................... 9 

Inspections.................................................................................................................... 9 

Opinions of the Committees....................................................................................... 11 

The  information  set  out  in  this  report  is  presented  in  greater  detail  in  the  Commission 
technical document (Annex I attached). 

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This report is presented in accordance with Article 45(2) of Regulation (EC) No 1260/1999 
laying down general provisions on the Structural Funds. It is the fifteenth annual report on the 
implementation of the Structural Funds, covering activities during 2003.  

1. 

SIMPLIFICATION 

Following the work begun in 2001 and 2002, 2003 saw the introduction of a number 
of  measures  to  simplify  implementation  of  the  programmes  financed  by  the 
Structural  Funds.  On  25  April  the  Commission  adopted  a  Communication  “on  the 
simplification,  clarification,  coordination  and  flexible  management  of  the  structural 
policies 2000-06” (C(2003) 1255). The Commission worked in partnership with the 
national  administrations  to  prepare  this  Communication  so  that  they  could  decide 
together on improvements which might be made to the management of the structural 
policies.  

After  the  adoption  of  this  communication,  some  of  the  measures  in  the 
“simplification  package”  already  had  a  clear  impact  in  2003.  These  included  the 
measures on amending programmes, inspections, result and impact indicators and the 
performance  reserve.  As  a  result,  several  Member  States  simplified  their  output, 
result and impact indicators and simplified their lists of indicators used to allocate the 
performance reserve.  

2. 

ASSESSMENT 

2.1. 

Implementation of the budget 

2.1.1.  Commitments 

The  2003  commitment  profile  reflected  the  normal  annual  instalment  level 
corresponding  to  the  Berlin  profile.  Commitments  made  totalled  €31  109  million, 
practically 100% of the total available appropriations. 

2.1.2.  Payments 

In 2003 implementation of payments reached the highest level ever for the Structural 
Funds, amounting to €26.2 billion. Significant progress in budgetary implementation 
was achieved across all Objectives and programming periods.  The under-utilisation 
of payments appropriations that used to be a distinctive feature of the implementation 
of  the  Structural  Funds  took  a  very  significant  turn  for  the  better  in  2003  with  the 
overall level of under-utilisation falling from 29% in 2002 to 11%, mainly due to the 
good progress of the programmes on the ground.  

In 2003 the payment outturn totalled €26 243 million, or 89% of the budget, leaving 
€3  311  million  unused  of  which  the  bulk  (73%  of  the  total)  was  due  to  the  earlier 
programmes.  The  comparable  outturn  in  2002  was  71%.  Of  the  payment 
appropriations  available  for  the  2000-06  programmes  96%  was  used,  a  significant 
departure  from  past  under-implementation  and  indeed  the  major  highlight  of 
implementation in 2003.  

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For  the  2000-06  programmes,  Member  States  are  invited  to  group  their  payment 
applications in three batches over the year. The pattern of actual payments shows that 
this procedure has been followed in a less than smooth way.  

Overall  budget  implementation  was  best  for  Objective  1  (95%).  The  Peace 
programme consumed only 48% of its appropriations in 2003 due to delays caused 
by  the  negotiation  of  a  new  decision  and  corresponding  programme  complement. 
The  implementation  of  Objective  2  showed a  substantial  improvement  (91%  of  the 
available appropriations instead of 48% in 2002). The Community Initiatives are still 
lagging behind with an implementation rate of only 48%.  

Compared  to  2002,  there  was  also  a  significant  improvement  in  the  closure  of  the 
1994-99 programmes, even if it was not possible to clear most of the old outstanding 
commitments  for  the  earlier  programmes  in  2003  as  planned.  At  the  end  of  2003 
these  commitments  stood  at  €9.2  billion, 59% below the figure at the end of 2002. 
However  budgetary  payment  commitments  were  revised  downwards  by  €5 000 
million following adoption of an amending budget in 2003. Closure payments were 
lower than planned because the bulk of the final payment claims was received only 
just before the final deadline of 31 March 2003. This led to an extreme concentration 
of  payment  claims  and  many  closure  packages  did  not  include  all  the  required 
supporting  documentation. 
from  old  outstanding 
commitments for the 1994-99 programmes amounted to €2 848 million. 

In  2003  decommitments 

In terms of Objectives, Objective 1 and 2 programme implementation stands out as 
excellent.  This  is  to  be  contrasted  with  the  considerably  lower  implementation  in 
both the former Objective 5(a)/FIFG non-Objective 1 programmes and, especially, in 
the  Community  Initiatives,  which  continue to lag behind the implementation of the 
main programmes considerably. For the earlier period programmes, implementation 
of Objective 3 and the Community Initiatives remained very poor. 

During 2003, a number of transfers were proposed by the Commission and accepted 
by  the  budgetary  authority.  There  were  no  transfers  of  commitment  appropriations. 
However, transfers of payment appropriations were comparatively large. The transfer 
out  of  the  Interreg  Community  Initiative  accounted  for  66%  of  its  initial  payments 
budget,  again  illustrating  its  poor  budget  implementation  in  2003.  The  transfer  of 
payment  appropriations  out  of  the  Equal  Community  Initiative  was  also  significant 
(38%  of  its  initial  budget).  The  transfer  to  the  Financial  Instrument  for  Fisheries 
Guidance  (FIFG)  –  Objective  1  was  almost  46%  of  its  initial  budget.  ERDF 
Objective  1  received  the  highest  transfer  amount,  €1.5  billion,  or  17%  of  its  initial 
budget. Part of this amount, €515.4 million, was funded by transfers from outside the 
Structural  Funds.  However,  most  transfers  were  made  between  the  different 
Structural Funds budget lines. 

2.2. 

Implementation of programmes 

Overall,  taking  all  Objectives  and  Funds  together,  assistance1  from  the  Structural 
Funds  was  divided  equally  over  the  three  main  categories:  basic  infrastructure,  the 

1 

The analysis of programming is based on the breakdown of programme complements by sector while 
the analysis of implementation relates to certified expenditure notified by the Member States. 

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productive  environment  and  human  resources.  An  analysis  by  sectors  shows, 
however, that two sectors which together account for over a quarter of programming 
for  2000-06:  “Transport  infrastructure”  (15%)  and  “Aid  to  SMEs  and  craft  firms” 
(11%)  dominate.  By  contrast,  sectors  such  as  “Positive  action  for  women  on  the 
labour market” and “Telecommunications infrastructure and the information society” 
accounted  for  only  2%  and  3%  of  the  amounts  programmed  respectively.  These 
differences  may  be  explained,  at  least  in  part,  by  the  large  variations  in  cost  per 
project from one sector to another or by the very nature of the projects. 

These  relative  priorities  also  appear  in  the  rates  of  implementation  (certified 
expenditure  compared  with  amounts  in  the  programme  complements):  the  sectors 
with  the  largest  funding,  such  as  “Transport”,  have  higher  implementation  rates 
while in those less well funded, such as “Telecommunications infrastructure and the 
information society”, implementation is slowest. Here too the nature of the projects 
may  go  some  way  to  explaining  these  differences.  It  is  nevertheless  true  that  the 
sector  concerned  with  the  information  society  suffers  from  a  combination  of  a  low 
profile and considerable difficulties in implementation. This is particularly worrying 
at  a  time  when  competitiveness  and  growth,  with  which  the  information  and 
communication  technologies  are  closely  associated,  are  becoming  a  priority  for 
cohesion policy. 

2.2.1.  Objective 1 

Programming  under  Objective  1  gave  clear  priority  to  basic  infrastructure  (41%  of 
the  funds  allocated).  It  should  be  noted  that  this  category  is  also  the  one  with  the 
highest rate of programme implementation (28%). This is mainly because transport 
infrastructure alone accounts for 20% of Objective 1 and has an implementation rate 
of almost 35%. 

Apart from transport infrastructure, two other sectors had implementation rates above 
30%: “Aid to small firms” and “Aid to large firms” (31%). 

Two  sectors  in  the  “Basic  infrastructure”  category  (Social  infrastructure  and  public 
health:  29%;  and  Environmental  infrastructure:  25%)  and  two  in  the  “Productive 
environment”  category  (R&D  and  innovation:  28%;  and  Forestry:  26%)  had 
implementation rates lying between 25 and 30%. 

2.2.2.  Objective 2 

Objective 2 has a somewhat different programming profile from that of Objective 1. 
The  leading  category  is  no  longer  basic  infrastructure  but  the  productive 
the  financial  resources 
environment,  which  alone  accounts  for  over  half 
programmed. 

In  sectoral  terms,  there  was  a  clear  concentration  of  resources  with  two-thirds  of 
finance  concentrated  in  four  sectors:  aid  to  small  firms,  the  improvement  and 
restoration of sites, R&D and innovation and tourism. The sector “Aid to SMEs and 
craft firms” alone accounted for one-third of programming. 

Since  the  programming  of  Objective  2  began  later  than  that  of  Objective  1,  its 
implementation rate might be expected to be lower. This is far from being the case. 

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In terms of the rate of implementation of programmes, Objective 2, at 24%, is at the 
same level as Objective 1. 

In terms of sectors, “Social infrastructure and public health” has the highest rate of 
implementation  (36%)  but  accounts  for  only  a  small  percentage  (1%)  of  the 
Objective  as  a  whole.  By  contrast,  the  second  sector,  “Aid  to  SMEs”,  with  an 
implementation rate of 32%, is considerably more significant because it accounts for 
one-third of the Objective. 

Two  other  sectors  have  significantly  above-average  (28%)  implementation  rates. 
These  are  R&D-innovation  (10%  of  Objective  2)  and  environmental  infrastructure. 
The implementation rate for transport infrastructure is the slowest (15%). 

2.2.3.  Objective 3 

Recently  there  has  been  a  move  towards  more  balanced  ESF  assistance  across  the 
different  employment  guidelines,  in  line  with  the  renewed  European  Employment 
Strategy and the Employment Recommendations. The ESF has played a significant 
role in the implementation of the EES and the National Action Plans at both national 
and  regional  level  in  the  Member  States  with  a  substantial  percentage  of  overall 
public expenditure going to employment policies. 

2.3. 

Contribution of the Structural Funds to the Lisbon and Göteborg Strategy 

The main links between the Structural Funds as a financial instrument and the Lisbon 
Strategy  is  that  the  Structural  Funds  part-finance  investment  in  areas  which  are 
priorities  under  the  Strategy  and  stimulate  the  development  of  decentralised 
frameworks  for  delivering  these  policies.  This  latter  contribution  of  the  Structural 
Funds to the Lisbon priorities will become more significant following enlargement of 
the EU. 

In the guidelines for the mid-term review from August 2003, the Commission asked 
Member States to dedicate special attention to Lisbon and Göteborg priorities in the 
forthcoming mid-term review of Structural Fund assistance. 

3. 

PROGRAMMING IN THE NEW MEMBER STATES 

2003  also  saw  the  programming  of  the  €16  billion  allocated  from  the  Structural 
Funds  to  the  applicant  countries  which  became  members  of  the  Union  on  1  May 
2004.  All  the  negotiations  continued  and  were  concluded  during  2003,  so  that  the 
strategic programming documents could be finalised in December 2003. Meeting the 
deadline  of  31  December  2003  was  an  essential  condition  for  the  eligibility  of 
expenditure from 1 January 2004, in accordance with the Act of Accession.  

Of the 41 (NUTS 2) regions concerned, 38 are eligible under Objective 1 and three 
(Prague, Bratislava and South Cyprus) under Objective 2. in view of the short time 
available  (May  2004  –  December  2006)  for  completion  of  the  programmes,  during 
the  negotiations  the  Commission  paid  particular  attention  to  the  mechanisms  for 
implementing  the  programmes.  This  followed  the  considerable  effort  made  by  the 
Union in the past to improve the administrative capacity of the new Member States. 

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4. 

CONSISTENCY AND COORDINATION 

4.1. 

Consistency with the other Community policies  

4.1.1.  Competition 

Regulation  (EC)  No  1260/1999  states  that  assistance  approved  by  the  Commission 
must include all the elements required for the ex-ante assessment of the compatibility 
of  state  aids  with  the  common  market.  Accordingly,  during  2003  the  Commission 
paid  particular  attention  to  assessing  the  compatibility  with  the  Treaty  of  the 
measures  in  the  operational  programmes  and  single  programming  documents  on 
assistance  from  the  Funds  in  the  new  Member  States  in  2004-06  and  on  the 
assessment  of  certain  major  projects  eligible  under  Articles  25  and  26  of  the 
Regulation. 

4.1.2.  Environment 

Programming  for  2000-06  includes  some  €25  billion  for  measures  for  the 
environment in the broadest sense. This is 13% of the €196 billion in the programme 
complements.  It  is  interesting  to  note  that  the  rate  of  implementation  of  the 
environmental measures is higher than the general average for the Funds (20%). This 
is particularly true of expenditure on strictly environmental infrastructure (25%). 

In  the  past,  the  start  of  certain  measures  was  delayed  or  blocked  in  some  Member 
States  by  the  lack  of  an  environmental  legal  framework  which  complied  with  the 
legislation  in  force.  This  situation  continued  in  2003  even  though  improvements 
could  be  noted  in,  for  example,  the  area  of  solid  waste.  However,  it  is  still 
unsatisfactory  in  other  sectors,  such  as  the  treatment  of  urban  waste  water  and 
implementation of the nitrates Directive and Directive 85/337/EEC, as amended, on 
evaluation of the environmental impact. 

4.1.3. 

Internal market 

To  ensure  that  public  procurement  procedures  comply  with  Community  rules,  the 
Commission  is  encouraging  the  adoption  of  measures  such  as  training  for  staff 
involved in the award of these contracts and the production of guides to this process. 
The Commission is also ensuring that the procedures for awarding contracts comply 
with Community law. During 2003 it considered more than 430 cases of potentially 
poor  transposition  or  application  of  the  relevant  Community  Directives.  Specific 
cases  may  be  considered  either  as  a  result  of  complaints  or  at  the  Commission’s 
initiative,  particularly  following  the  audits  carried  out  regularly  as  part  of  the 
inspection of part-financed projects. 

4.1.4.  Transport 

In  2003,  the  Commission  took  117  decisions  on  the  financing  of  TENs-Transport 
projects  totalling  €626.6  million  and  13  TENs-Energy  projects  totalling  €18.64 
million. 

In  its  Communication  of  23  April  2003  (COM(2003)  132),  the  Commission 
examined the infrastructure situation in the trans-European network and its financing 
and  showed  the  need  to  implement  a  set  of  measures,  including  support  for 

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public/private  partnerships.  It  also  continued  the  process  of  amending  the  TENs 
Financial  Regulation  to  allow  an  increase  in  the  ceiling  for  the  part-financing  rate 
from 10% to 20% for certain sections of the transport projects of European interest. 

The revision of the Guidelines for the development of the TENs-Transport projects 
continued  during  2003.  Based  on  the  recommendations  of  the  High-Level  Group, 
consisting  of  current  and  future  Member  State  representatives  and  the  EIB,  and  on 
the  results  of  the  public  consultation,  the  Commission  brought  forward  a  new 
proposal2 that added new projects to the list of priority projects and brings to 30 the 
total  of  projects  on  major  transport  axes  and  put  forward  improved  tools  for 
coordination between Member States, in particular for cross-border projects. 

4.2. 

Coordination of instruments 

4.2.1.  The Structural Funds and the Cohesion Fund 

The  main  instrument  for  coordinating  assistance  from  the  Cohesion  Fund  and  the 
Structural  Funds  is  the  strategic  reference  framework  (SRF).  Decisions  to  finance 
projects  under  the  Cohesion  Fund  are  checked  to  avoid  double  financing  with 
programmes  adopted  under  the  Structural  Funds.  In  2003  the  candidate  countries, 
which  are  all  eligible  under  the  Cohesion  Fund,  began  preparation  of  their  SRFs, 
alongside their programmes under the Structural Funds. 

It  should  be  noted  that  because  of  its  level  of  per  capita  GNP  Ireland  ceased  to  be 
eligible under the Cohesion Fund from 1 January 2004. 

During  2003,  two  information  meetings  were  held  with  the  Member  States  and  the 
the 
candidate  countries,  coordinated  with  meetings  of 
Development  and  Conversion  of  Regions,  to  increase  consistency  between  these 
financial instruments still further. 

the  Committee  for 

4.2.2.  The Structural Funds and the EIB/EIF 

The main Commission initiatives in 2003 were the growth initiative and the quick- 
start projects, which, in conjunction with the innovation initiative 2010 and research 
and development, were of common interest and the subject of cooperation meetings. 

In 2003, the European Investment Bank lent a total of €42.3 billion. Lending in the 
ten accession countries ran to a record €4.6 billion and in the Mediterranean partner 
countries  (including  Turkey)  to  €2.1  billion.  Within  the  EU-15  countries,  €16.3 
billion was made available for projects in eligible regions in the form of individual 
loans and an estimated €6.5 billion as credit lines to partner banks (for the financing 
of  SME  ventures  and  smaller-scale  public  investment).  Including  the  accession 
loans, 
countries,  regional  development  projects  attracted  €27.3  billion 

in 

2 

COM(2003)  564  final:  Proposal  for  a  Decision  of  the  European  Parliament  and  of  the  Council 
amending  the  amended  proposal  for  a  Decision  of  the  European  Parliament  and  of  the  Council 
amending Decision 1692/96/EC on Community guidelines for the development of the trans-European 
transport  network.  This  proposal  resulted  in  the  adoption  of  Decision  No  884/2004  of  the  European 
Parliament  and  of  the  Council  of  29  April  2004  amending  Decision  No  1692/96/EC  on  Community 
guidelines for the development of the trans-European transport network, OJ L 167, 30.4.2004, p. 1. 

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corresponding  to  70%  of  the  EIB’s  total  lending  in  EU-15  and  the  future  Member 
States in 2003. 

Within  the  EIB  group,  the  European  Investment  Fund  (EIF)  now  has  exclusive 
responsibility  for  all  venture  capital  and  guarantee  operations  for  small  businesses 
and for venture capital (Community resources and EIB/EIF resources). It focussed its 
activity  on  early-stage  financing,  the  high-tech  sector  and  the  knowledge-based 
society.  The  EIF  took  stakes  worth  €135  million  in  venture  capital  funds  and 
provided a total of €2.2 billion in guarantees for SME financing. 

5. 

EVALUATION 

Mid-term evaluation of programmes for 2000-06 

Article 42 of Regulation (EC) No 1260/1999 requires the Member States to submit a 
mid-term  evaluation  report  to  the  Commission  by  31  December  2003  which  the 
Commission  was  required  to  examine  for  quality  and  relevance.  The  Commission 
cooperated on this process with the managing authorities. 

The main issues raised in relation to the draft reports examined included the need for 
some  degree  of  fieldwork,  the  need  for  clear  presentation  of  physical  and  financial 
data and clear, evidence-based conclusions and practical recommendations. The draft 
and final reports which were submitted before year-end were clearly much improved 
in quality compared to previous evaluations. The annual report for 2004 will give a 
full analysis of the results of the evaluations.  

Evaluation of the programmes and Community Initiatives for 1994-99 

Two  studies  demonstrated  the  significant  positive  impact  of  assistance  from  the 
Structural Funds in the regions eligible under Objectives 1 and 2. These studies also 
showed  that  greater  support  could  be  given  to  R&D  activities  in  the  Objective  1 
regions and to measures linked to the Lisbon strategy in the Objective 2 areas. 

Mid-term verification of the principle of additionality 

The  principle  of  additionality  prevents  Community  funds  from  replacing  eligible 
national public expenditure in the same areas of assistance. Article 11 of Regulation 
(EC) No 1260/1999 requires the Commission to verify compliance with this principle 
half-way through the 2000-06 programming period. This verification showed that the 
principle of additionality had been complied with in eight Member States (BE, ES, 
FI,  EL,  NL,  PT,  AT,  SE),  while  three  others  (DE,  IT,  IE)  had  not  respected  it. 
However,  following  a  case-by-case  analysis,  the  Commission  did  not  consider  it 
necessary  to  revise  downwards  the  expenditure  objective  for  the  remainder  of  the 
programming  period  since  these  Member  States  still  had  time  to  make  up  their 
backlogs. Two Member States (FR, UK) did not provide the information required for 
verification by the deadline. 

6. 

INSPECTIONS 

OLAF 

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OLAF’s  enquiries  in  2003  included  13  operational  missions  in  the  Member  States. 
Six of these entailed on-the-spot inspections and verifications by the Commission to 
protect  the  financial  interests  of  the  Community  against  frauds  and  other 
irregularities.  The  other  seven  were  to  provide  assistance  either  to  national 
administrative authorities or to the judicial authorities. 

Eight missions concerned the ESF, four relating to cases opened in 2003 and four to 
enquiries  begun  in  earlier  years.  Three  concerned  the  ERDF  and  dealt  with  cases 
opened in 2000, 2002 and 2003. One concerning the EAGGF Guidance Section and 
one the FIFG related to cases opened in 2003. The enquiries revealed false invoices 
and false declarations in the absence of supporting documents. 

In addition, for 2003, the Member States notified the Commission, under Regulation 
(EC)  No  1681/1994,  of  2  439  cases  of  irregularities  involving  a  total  of 
€340 173 487.  Compared  with  2002,  both  the  number  of  cases  of  irregularities 
notified  and  the  amounts  involved  were  smaller,  at  about  half  the  levels  of  the 
previous year. 

ERDF 

There were two priorities for inspection work in 2003. The first was to examine the 
“statements of assurance” drawn up under Article 8 of Regulation (EC) No 2064/97 
when the ERDF programmes for 1994-99 were closed. This involved 744 statements, 
almost  half  the  programmes,  and  resulted  in  the  rejection  of  229,  either  because 
additional  checks  were  required  or  because  further  information  was  needed.  The 
second priority was the audit of expenditure declared by the Member States for the 
1994-99 programmes. This entailed the audit of a sample of programmes selected in 
the Member States and a check on the conformity and eligibility of the expenditure 
declared by the Member State through checks on a representative number of projects. 
To  that  end,  36  audit  missions  were  carried  out  on  17  programmes  in  12  Member 
States.  

EAGGF 

As  in  the  case  of  the  ERDF,  inspection  work  concentrated  on  the  “statements  of 
assurance”. 360 of the 381 statements were examined and 226 accepted. The second 
priority was examination of the management and control systems established by the 
Member States for the 2000-06 programming period. By the end of 2003 the systems 
for 100 of the 144 programmes had been analysed. On-the-spot audits of 33 of these 
100 programmes were carried out. 

ESF 

2003  was  marked  by  the  modernisation  of  the  ESF’s  audit  procedures,  particularly 
through  the  establishment  of  a  multiannual  audit  strategy  based  on  quantified  risk 
analysis and the start of work related to enlargement (technical missions to approve 
systems in the new Member States). 34 audit missions were carried out in the 2000-
06  programming  period,  which  allowed  the  practical  evaluation  on  the  spot  of  the 
descriptions  of  systems  submitted  by  the  Member  States  under  Article  5  of 
Regulation (EC) No 438/2001 to continue. Three audits concerning the closure of the 
1994-99 period were also carried out. 

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FISH 

A  total  of  14  audit  missions  were  carried  out  in  2003.  Eight  concerned  only  the 
closure  of  1994-99  programmes  in  seven  Member  States,  three  concerned  only  the 
verification  of  management  and  control  systems  of  2000-06  programmes  in  two 
Member  States,  and  three  combined  closure  and  verification  of  systems  in  two 
Member  States.  The  financial  volume  of  programmes  audited  concerning  closure 
amounted  to  €1.114  million  and  that  concerning  management  and  control  systems 
verification  amounts  to  €814  million.  In  total,  58  structural  projects  undertaken  in 
both  programming  periods  were  audited  in  2003  representing  an  amount  of  €18.2 
million. A total of €1 million of Community aid was found non-eligible and a still-to-
be determined amount should be deducted when closing the programmes of the two 
Member States. 

7. 

OPINIONS OF THE COMMITTEES 

Committee for the Development and Conversion of Regions (CDCR) 

In its role as a Management Committee, the two main matters dealt by the CDCR in 
2003 concerned eligibility (amendment of Regulation (EC) No 1685/20003) and the 
interpretation  of  the  rule  on  automatic  decommitments,  particularly  the  exceptions 
listed in Article 31 of Regulation (EC) No 1260/1999.  

ESF Committee 

During  2003,  the  ESF  Committee  worked  on  the  revision  of  Regulation  (EC)  No 
1685/2003 on eligibility. It also monitored the impact of the European Employment 
Strategy on the implementation of the ESF. 

3 

Commission  Regulation  (EC)  No  1685/2000  laying  down  detailed  rules  for  the  implementation  of 
Council Regulation (EC) No 1260/1999 as regards eligibility of expenditure of operations co-financed 
by the Structural Funds, OJ L 193, 29.7.2000 p. 39. 

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Committee for Agricultural Structures and Rural Development (STAR) 

The  STAR  Committee  met  nine  times  in  2003.  It  gave  favourable  opinions  on  38 
rural development plans under Article 44(2) of Regulation (EC) No 1257/1999 and 
on 14 amendments to rural development plans under Article 4 of Regulation (EC) No 
1268/1999. 

Committee for Fisheries and Aquaculture 

The  Committee  was  consulted  on  five  occasions  in  2003  on  a  variety  of  subjects, 
including the revision of Regulation (EC) No 1685/2000. 

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TECHNICAL ANNEX TO THE 15TH ANNUAL REPORT ON IMPLEMENTATION OF 
STRUCTURAL FUNDS (2003) 

Annex 1 – a general analysis of activity 

TABLE OF CONTENTS 

1. 

2. 

Introduction................................................................................................................ 15 

Assessment................................................................................................................. 16 

2.1. 

Budgetary implementation ......................................................................................... 16 

2.1.1.  General overview ....................................................................................................... 16 

2.1.2. 

Implementation in commitments ............................................................................... 17 

2.1.3. 

Implementation in payments ...................................................................................... 19 

2.1.4.  End-of-year concentration.......................................................................................... 28 

2.1.5. 

Implementation by Member States ............................................................................ 29 

2.2. 

Programme implementation ....................................................................................... 32 

2.2.1.  Objective 1 ................................................................................................................. 35 

2.2.2.  Objective 2 ................................................................................................................. 39 

2.2.3.  Objective 3 ................................................................................................................. 43 

2.2.4.  FIFG outside Objective 1 regions .............................................................................. 45 

2.2.5.  Community Initiatives and innovative actions........................................................... 46 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

Programming in the new Member States ................................................................... 49 

Background and main milestones .............................................................................. 49 

State of play of programme negotiations ................................................................... 50 

Consistency and coordination .................................................................................... 51 

Consistency with other Community policies ............................................................. 51 

Coordination of instruments....................................................................................... 59 

4.2.1.  The Structural Funds and the Cohesion Fund ............................................................ 59 

4.2.2.  The Structural Funds and the EIB/EIF....................................................................... 60 

5. 

Evaluation .................................................................................................................. 61 

5.1. 

Mid-term evaluation................................................................................................... 61 

5.1.1.  The evaluation process............................................................................................... 61 

5.1.2.  Performance reserve................................................................................................... 62 

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5.2. 

5.3. 

Other evaluations ....................................................................................................... 63 

Other evaluation work................................................................................................ 65 

5.3.1.  Cost-benefit analysis .................................................................................................. 65 

5.3.2.  Methodological guides and tools ............................................................................... 65 

5.3.3.  Conference on evaluation........................................................................................... 65 

5.3.4.  Mid-term verification of the additionality principle .................................................. 66 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

Controls ...................................................................................................................... 67 

Opinions of the committees ....................................................................................... 70 

Committee on the Development and Conversion of the Regions .............................. 70 

ESF Committee .......................................................................................................... 71 

Committee on Agricultural Structures and Rural Development ................................ 71 

Advisory Committee on Fisheries and Aquaculture .................................................. 72 

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ANNEX 1 – A GENERAL ANALYSIS OF ACTIVITY 

1. 

INTRODUCTION 

2003  was  marked  by  an  acceleration  in  the  implementation  of  the  programmes,  with 
significant  progress  made  across  them  all.  In  all,  96%  of  payment  appropriations 
available  in  2003  for  the  programmes  of  the  2000-06  generation  were  used,  up  from 
91% the previous year. 

Simplification 

Following the work begun in 2001 and 2002, 2003 saw the introduction of a number of 
measures  to  simplify  implementation  of  the  programmes  financed  by  the  Structural 
Funds. The Commission wished to respond positively to the Member States’ request to 
ease  the  procedures  and  to  facilitate  the  management  and  implementation  of  the 
appropriations.  To  this  end,  it  decided  to  enter  into  dialogue  with  the  national 
administrations through the Structural Funds Committees, with a view to identifying the 
extent  and  nature  of  the  problems  that  needed  solving.  This  work  resulted  in  the 
Commission  proposals  put  to  the  Member  States  in  September  2002  in  a  document 
entitled “Note on the simplification, clarification, coordination and flexible management 
of the structural policies 2000-06”. This document was discussed thoroughly in Brussels 
on  7  October  2002,  when  Mr  Barnier,  Ms  Diamantopoulou  and  Mr  Fischler  met  the 
Ministers  responsible  for  regional  policy  in  the  15  Member  States.  Following  this 
meeting,  the  Commission  worked  in  partnership  with  the  national  administrations  in 
order to decide together on the improvements that could be made to the management of 
the  structural  policies.  As  a  result  of  this  work,  on  24  April  2003  the  Commission 
adopted  the  “Communication  on  the  simplification,  clarification,  coordination  and 
flexible management of the structural policies 2000-06” (C(2003) 1255).  

Following adoption of this Communication, the impact of some of the measures in the 
“simplification  package”  was  already  clear  in  2003.  These  included  the  measures  on 
amending  programmes,  inspections,  result  and  impact  indicators  and  the  performance 
reserve. Some Member States thus simplified their output, result and impact indicators 
(Italy  and  Greece  in  particular),  by  reducing  their  number  and  focussing  on  the  most 
important ones. In the case of the allocation of the performance reserve, some Member 
States  (Greece,  Belgium,  Finland,  Spain  and  Portugal)  used  to  good  advantage  the 
measures  in  the  communication  to  simplify  the  list  of  indicators  chosen  for  allocating 
the reserve.  

The quantitative impact of the simplification measures on the mid-term review and the 
allocation  of  the  performance  reserve  can  be  measured  only  in  2004,  however,  when 
those two particular tasks will have been completed. While it is too early to gauge the 
quantitative  impact  of  this  simplification,  the  qualitative  impact  of  a  more  flexible 
decision-making process and the appreciable reduction in the time needed to amend the 
programmes  and  programme  complements  has  had  a  beneficial  effect  on  programme 
implementation by lessening the administrative burden on the authorities managing the 
programmes part-financed by the Structural Funds.  

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2. 

ASSESSMENT 

2.1. 

Budgetary implementation 

2.1.1.  General overview 

As Chart 1 shows, the commitment appropriations entered in the budget for 2003 are in 
line  with  the  consolidation  of  the  Structural  Fund  allocations  as  determined  by  the 
Berlin European Council.  

Chart 1: Commitment and payment appropriations entered in the budget4 from 1994 to 2003 
(€ million) 

40.000
35.000
30.000
25.000
20.000
15.000
10.000
5.000
0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Commitments Rebudgetisation Payments

Chart 2 shows the actual implementation of commitments and payments (including the 
amounts carried forward) each year from 1994 to 2003. 

Chart 2: Commitments and payments (all types of appropriations from 1994 to 2003 
(€ million) 

40000

35000

30000

25000

20000

15000

10000

5000

0

commitments

payments

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

4 

Including all transfers during the year but excluding amounts carried over. 

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While  the  commitment  profile  of  2000  and  2001  was  skewed  by  the  delays  in  the 
adoption of the new programmes at the beginning of the 2000-06 programming period, 
in  2002  and  2003  the  commitments  were  back  to  the  normal  annual  instalment  level 
corresponding to the Berlin profile.  

Those delays (in the adoption of the programmes), as well as the slower than anticipated 
closure  of  the  programmes  of  the  pre-2000  period,  were  behind  the  low  level  of 
payments in 2001 and 2002 (around €20 billion). However, in 2003 the implementation 
of payments reached the highest level ever for the Structural Funds, amounting to €26.2 
billion.  This  reflects  some  progress  in  the  closure  of  the  pre-2000  programmes,  but 
essentially is due to good implementation of the 2000-06 programmes.  

Annex 4 contains a detailed table of outturn in commitments and payments. 

2.1.2. 

Implementation in commitments 

the  commitment  appropriations 

totalled 
In  2003 
€31 129 million, i.e. 91% of the appropriations for structural operations and 32% of the 
budget. On top of these budget appropriations, carryovers of €1 million brought the total 
appropriations available to €31 130 million.  

the  Structural  Funds 

for 

Table 1 gives details of the appropriations available by Objective and by Fund, making 
a distinction between the appropriations entered in the budget and those carried over.  

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Table 1: Appropriations available in 2003 (including any transfers) 

ANNUAL APPROPRIATION 

CARRYOVERS 

TOTAL

EAGGF  FIFG  ERDF  ESF 

TOTAL EAGGF FIFG ERDF  ESF  TOTAL   

Objective 1 

2.755 

392  13.426  4.895

21.468   

Peace5 

9 

1 

70 

29

109   

Objective 2 

Objective 3 

FIFG 
(outside 
Objective 
1) 

3.284 

368

3.652   

3.719

3.719   

172 

172   

CI 

354 

1.003 

510

1.866

0   

M & TA 

2 

4 

92 

45

143   

TOTAL 

3.120 

569  17.875  9.566

31.129

0

0

1 

1 

0 

0

0

0

0

0

0

1

1

21.468

109

3.652

3.719

172

1.867

143

31.130

The  appropriations  available  increased  slightly  relative  to  2002,  when  the  available 
appropriations  totalled  €30  868  million.  As  for  the  carryover  of  appropriations,  the 
pattern of 2003 is back to normal (the carryovers of the preceding years, €8 226 million 
from  2000  to  2001,  and  €172  million  from  2001  to  2002,  were  due  to  delays  in  the 
adoption of programmes in the first years of the 2000-06 programming period). 

Table 2 gives details of implementation by Fund and by Objective. Commitments made 
total €31 109 million, practically 100% of the total available appropriations, as would 
be expected under the essentially automatic commitment procedures6; only €21 million 
in  appropriations  was  not  committed  eventually.  All  appropriations  carried  over  were 
committed. 

This  very  high  rate  of  utilisation  reflects  the  fact  that  the  vast  majority  of  the 
programmes  for  the  new  period  were  adopted  before  the  end  of  2001.  Small  amounts 
under the Community Initiatives, innovative measures and technical assistance were not 
committed either in 2002 or 2003. Some €314 million in under-used appropriations in 
innovative measures was carried forward to 2004.  

5 
6 

Peace is an Objective 1 programme in the United Kingdom 
Each of the annual instalments entered in the financing tables for the programmes is committed at the start 
of the year with no requirement beyond the initial Commission decision. Therefore, after adoption of the 
programmes, total or near-total utilisation of commitments is to be expected 

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Table 2: Implementation of the commitments in 2003 

ANNUAL APPROPRIATION 

CARRYOVERS 

TOTA
L 

EAGG
F 

FIFG  ERDF  ESF 

TOTAL EAGGF

FIF
G 

ERDF  ESF  TOTAL   

Objective 1 

2.755 

392  13.426  4.895

21.468   

Peace 

9 

1 

70 

29

109   

Objective 2 

Objective 3 

FIFG 
(outside 
Objective 1) 

3.284 

368

3.652   

3.719

3.719   

172 

172   

CI 

347 

1.003 

504

1.854

0   

M & TA 

1 

3 

92 

39

135   

TOTAL 

3.112 

568  17.875  9.554

31.108

0

0

1 

1 

0 

0

0

0

0

0

0

1

1

21.468

109

3.652

3.719

172

1.854

136

31.109

% 

100% 

100
% 

100% 

100
%

100%

100%   

100% 

100%

100%

The automatic commitment rules do not apply in practice to Chapter B2-16 (Innovative 
measures and technical assistance), where new decisions are taken each year. That said, 
the  utilisation  rate  for  these  instruments  was  again  very  good,  even  if  it  has  slightly 
decreased when compared with the two previous years  (96%  in 2001, nearly 100% in 
2002 and 94.5% in 2003).  

2.1.3. 

Implementation in payments 

a) Overview 

The storyline of the 2003 budget implementation is best illustrated by Chart 3. It shows 
that  the  under-utilisation  of  payments,  which  used  to  be  one  of  the  most  distinctive 
features  of  Structural  Funds  implementation  both  in  absolute  amounts  and  in  relative 
terms,  has  taken  a  very  significant  turn  for  the  better  in  2003.  The  overall  level  of 
under-utilisation  has  fallen  to  11%  from  last  year's  29%7.  While  this  is  due  in  part  to 
more  pro-active  budget  management,  it  is  also  a  direct  consequence  of  the  good 
progress of the programmes on the ground. This is suggested by the headline increase in 
the absolute amount of payments: €26 243 million8, up from €20 312 million in 2003, 
an increase of almost 30%. 

7 

8 

This  trend  is  similar  to  the  one  in  the  earlier  programming  period,  where  the  first  two  years  (1994  and 
1995) were also marked by substantial under-utilisation, especially when measured in relative terms 
Over €1 billion in acceptable payment claims were received after 31 October in 2003 and only paid out in 
2004  –  these  are  not  accounted  for  here.  While  the  Commission  endeavours  to  settle  payment  claims 

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Chart 3: Under-utilisation of payment appropriations from 1994 to 2003 

(Left-hand scale: absolute amounts in million, and right-hand scale: relative rate) 

10.000

8.000

6.000

4.000

2.000

0

35%
30%
25%
20%
15%
10%
5%
0%

Rate of under-utilisation

Under-utilisation

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Table  3  shows  the  payment  appropriations  available  by  Chapter  and  by  Fund  (all 
appropriations together). A distinction is made between appropriations for payments on 
programmes in the current period 2000-06 and payment appropriations for programmes 
from earlier periods. The appropriations available totalled €29 554 million9. 

9 

received  after  31  October  before  the  end  of  the  year,  this  is  not  always  possible.  Article  32(3)(f)  of 
Regulation  (EC)  No  1260/1999  requires  Member  States  to  present  their  interim  payment  claims  to  the 
Commission  in  batches  three  times  a  year,  the  last  application  being presented no  later  than 31  October. 
Member States are also requested to include any payment claims to be presented after the 31 October of 
any year in their payment forecasts for the following year 
The appropriations in the initial budget amounted to €33 688 million (of this amount, €3 254 million for the 
payment  of  earlier  programmes  had  been  carried  over  from  2002).  Over  the  year,  a  net  transfer  of 
appropriations  reinforced  the  Structural  Funds  budget  by  €866  million.  Unavoidable  delays  in  settling 
many  of  the  final  payment  claims  for  the  earlier  programmes,  the  bulk  of  which  were  received,  often 
incomplete, just before the final deadline of 31 March 2003, led to deducting from the budget, in amending 
budget No 6, €5 billion of the associated appropriations. 

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Table  3:  Payment  appropriations  available  (all  appropriations  together  and  including 
transfers)10 

NEW PROGRAMMES 

EAGGF 

FIFG 

ERDF 

ESF 

TOTAL 

OLD PROGRAMMES  TOTAL 

Objective 1 

2.167

430 

10.513

3.739

16.849

3.091 

19.940

Peace 

13

1 

78

3

95

95

Objective 2 

Objective 3 

FIFG 
(outside 
Objective 
1) 

CI 

M & TA 

TOTAL 

2.569

253

2.822

1.128 

3.950

2.925

2.925

138 

146   

264

243

3

3 

70

36

138

653

113

502 

3.427

156 

293

1.032 

1.686

49 

162

2.329

572 

13.494

7.199

23.595

5.959 

29.554

The  outturn  (see  table  4  below)  is  €26  243  million,  or  89%,  leaving  €3  311  million 
unused, most of which involves earlier programmes (all Objectives combined). In fact, 
the  amount  unused  in  the  earlier  programmes  (€2  431)  accounts  for  73%  of  the  total 
surplus11.  Seen  another  way,  this  means  that  96%  of  the  payment  appropriations 
available for the 2000-06 programmes was used, which is a significant departure from 
the  under-implementation  of  recent  years,  and  indeed  the  major  highlight  of 
implementation in 2003. 

Overall budget implementation was best for Objective 1 (95%). The implementation of 
Objective 2 shows quite an improvement - to 91% of the available appropriations (48% 
in  2002).  The  Community  Initiatives  are  still  lagging  behind,  with  an  implementation 
rate of only 48%.  

Relative  to  2002,  the  2003  performance  improvement  extended  beyond  the  2000-06 
programmes. There was also a significant improvement in the payments for the earlier 
programmes, which increased from €1 174 million to €3 528 million. However, it has 
not  been  possible  to  clear  most  of  the  outstanding  commitments  for  the  earlier 
programmes in 2003, as had been planned. This was because the bulk of the associated 
final payment claims was received just before the final deadline of 31 March 2003, and 
this extreme concentration of payment claims, together with the fact that many of them 

10 

11 

Most of the "completion of earlier programmes" lines and the Peace line are shared between a number of 
Funds,  with  no  specific  budget  appropriation  voted  by  the  budgetary  authority  for  the  different  Funds; 
hence their inclusion in the table as an aggregate figure 
An amount of €61 million of unused appropriations in the earlier programmes was carried forward to 2004. 

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did not include all the required supporting documentation, slowed down the payments 
procedure. Thus the Commission was unable to pay in 2003 all the final payment claims 
received  for  the  earlier  programmes,  and  €5  billion  of  the  associated  payment 
appropriations was deducted from the budget in Amending Budget No 6. It is expected 
that the outstanding commitments for these programmes will be cleared in 2004, save 
for the small amounts associated with cases undergoing legal proceedings. 

b) Analysis by Objective and by Fund 

Table  4  gives  a  breakdown  of  outturn  by  Objective  and  by  Fund.  The  rates  of 
implementation  relative  to  available  appropriations  are  shown  in  the  last  column  and 
row. 

Table 4: Payments in 2003 

NEW PROGRAMMES 

EAGGF 

FIFG  ERDF 

ESF 

TOTAL 

OLD PROGRAMMES  TOTAL

% 

Objective 1 

2.167

401 

10.512

3.693

16.773

2.166  18.939

95,0%

Peace 

Objective 2 

Objective 3 

FIFG 
(outside 
Objective 
1) 

87 

CI 

88   

243

162

M & TA 

2

2 

70

26

44

2

46

46

48,4%

2.569

233

2.802

785 

3.587

90,8%

2.415

2.415

133,5 

2.548

74,4%

87

492

99

89 

176

60,1%

309 

801

47,5%

46 

145

89,5%

TOTAL 

2.257

490 

13.438

6.531

22.715

3.528  26.243   

% 

97% 86% 

100% 91%

96%

59% 

89%   

Significant  progress  in  budgetary  implementation  was  achieved  in  2003,  across  all 
Objectives  and  programming  periods.  The  overall  implementation  rate  across  all 
programmes  (89%)  was  considerably  higher  than  in  2002,  when  it  stood  at  71%.  The 
new  programmes  reached  an  implementation  rate  of  96%,  although  the  Peace 
programme,  where  no  payments  were  made  last  year,  consumed  only  48%  of  its 
appropriations  in  2003  due  to  delays  caused  by  the  negotiation  of  a  new  decision  and 
corresponding programme complement. 

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Table 5, comparing payment rates in 2002 and 2003, illustrates this situation clearly. 

Table 5: Comparison of payment rates in 2002 and 2003 

O bjective 1
O bjective 2
O bjective 3
E x-obj 5a/ 
F IF G
(out. O bj. 1)
C I
IM  &  T A
TO TAL

2002
old

new

to tal

2003
old

new

to tal

18%
15%
0%

33%
12%
56%
16%

96%
77%
84%

54%
52%
91%
91%

82%
48%
72%

41%
25%
76%
71%

70%
70%
27%

57%
30%
94%
59%

99%
99%
83%

63%
75%
88%
96%

95%
91%
74%

60%
48%
90%
89%  

In terms of Objectives, programme implementation for Objectives 1 and 2 stands out as 
excellent.  This  is  to  be  contrasted  with  the  considerably  lower  implementation  of  the 
programmes  under  former  Objective  5(a)/FIFG  (outside  Objective  1)  and  the 
Community Initiatives, which lag considerably behind the implementation of the main 
programmes.  The  implementation  of  programmes  from  earlier  periods  has  remained 
very poor in the case of Objective 3 and the Community Initiatives. 

Chart  4  compares  utilisation  by  Fund  in  2002  and  2003,  including  that  relating  to  the 
“completion  of  old  programmes”  lines.  The  ERDF  is  still  the  best  at  implementation, 
but there were significant improvements across all Funds.  

Chart 4: Utilisation rate by Fund in 2002 and 2003 

TOTAL

ESF

ERDF

FIFG

EAGGF

PEACE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002

2003

c) Analysis of under-utilisation in 2003  

The  under-utilisation  in  2003  was  mainly  due  to  the  earlier  programmes.  Table  6 
summarises  the  outturn.  Budgetary  implementation  issues  clearly  differ  between  the 
programmes  of  the  earlier  periods  and  those  of  the  current  period,  so  justifying  a 
separate analysis. 

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Table 6: Payments on old and new programmes 

Old programmes
New programmes
Total

Appropriations
available

Outturn

%

5.959
23.595
29.554

3.528
22.715
26.243

59%
96%
89%  

(*) Appropriations available are after transfers and Amending Budgets in the course of the year 

Payments on old programmes 

Only €3 528 million was paid out of €11 023 million of payment appropriations initially 
available. The actual payments for the year were quite low, particularly given that the 
appropriations available corresponded to the amounts Member States had forecast they 
would claim before the final deadline for the presentation of final  payment claims for 
this programming period.  

The reasons for the low outturn are twofold. First, the bulk of the final payments claims 
were received just before the final deadline of 31 March 2003. Second, many payment 
claims  lacked  the  required  supporting  documentation.  This  slowed  down  considerably 
the  final  payments  and  closure  of  the  programmes.  The  Commission  reacted  quickly, 
proposing  in  the  autumn  an  amending  budget  to  return  to  the  budget  €5  billion  in 
payment  appropriations  that  could  not  be  used  in  2003  (eventually  adopted  by  the 
budgetary  authority  in  December  as  Amending  Budget  No  6).  Decommitments  of 
outstanding commitments amounted to €2 848 million (the 1994-99 rules had no "n+2" 
or similar clause, meaning that the bulk of decommitments associated with unexecuted 
programmes  occurs  at  the  end  of  the  programming  period,  at  the  closure  of  the 
programmes).  Thus  the  outstanding  commitments  at  the  end  of  2003  stood  at  €9.2 
billion,  59%  below  the  level  of  outstanding  commitments  at  the  end  of  2002  (€15.6 
billion). 

The  Commission  now  expects  to  clear  the  bulk  of  these  outstanding  commitments  in 
2004,  either  through  final  payments  or  decommitments.  This  will  necessitate  a 
significant  increase  in  the  relevant  appropriations  in  the  2004  budget,  originally 
intended only for programmes undergoing legal proceedings.  

Payments on programmes for the 2000-06 period 

From  an  allocation  of  €23.6 billion,  €22.7  billion,  i.e.  96%  of  the  appropriations 
available, were paid. In 2002, only some €400 million of the total payments made were 
payments  on  account  (for  programmes  whose  adoption  was  delayed  to  late  2001  or 
2002).  In  2003,  the  payments  on  account  amounted  to  €17.9  million.  All  of  these 
payments  were  made  to  Community  Initiative  programmes  (Interreg,  Urban  and 
Leader+).  

The  implementation  of  new  programmes  on  the  ground  has  continued  to  pick  up 
strongly in 2003. That said, the budgetary implementation of payments is still lagging 
behind  original  expectations  for  the  programmes  in  this  period.  This  is  illustrated  in 
Table  7,  which  compares  actual  implementation  with  the  assumptions  implicit  in  the 
original  financial  perspective.  At  the  end  of  2003,  accumulated  payments  are  trailing 
initial expectations by around €20 billion. 

EN 

24 

   EN 

 
The  “backlog”  of  payments  in  relation  to  the  estimates  contained  in  the  financial 
perspective  has  again  increased  in  2003.  However,  the  annual  increase  of  the  backlog 
has been lower than in the two preceding years. 

Table 7: Comparison between assumptions in financial perspective, budgets and budget 
outturn 

€ billion
Financial Perspectives
-of which, payments on account
-of which, reimbursements
Outturn
-of which, payments on account
-of which, reimbursements
Differences vis-à-vis FP
-of which, payments on account
-of which, reimbursements

2000

2001

2002

2003

TOTAL

9,2
8,0
1,2
5,9
5,9
0,0
-3,3
-2,1
-1,2

19,6
6,0
13,6
14,7
7,7
7,0
-4,9
1,7
-6,6

25,6
0,0
25,6
19,2
0,4
18,8
-6,4
0,4
-6,8

27,6
0,0
27,6
22,7
0,0
22,7
-4,9
0,0
-4,9

82,0
14,0
68,0
62,5
14,0
48,5
-19,5
0,0
-19,5  

The schedules on which the financial perspective and the first budgets were based have 
not been able to account fully for the time lags caused by the new payments rules. In the 
current programming period, after the initial payment on account, interim payments are 
based on the reimbursement of actual expenditure on the ground. However, programmes 
have taken off at a slower rate than originally anticipated, which is probably linked to 
the trough in the economic cycle that started in 2001.  

This led the Commission, with the support of the budgetary authority, to revise payment 
appropriations  downward  to  accommodate  the  slower  than  expected  progress  of  the 
programmes in the new period. Table 7A illustrates this point. 

Table 7A – Differences between (original) Financial Perspective and Budgets 

b i l l i o n   €

2 0 0 1

2 0 0 2

2 0 0 3

F P
B u d g e t s

1 9 , 6
2 1

2 5 , 6
2 1 , 1

2 7 , 6
2 3 , 6

2 0 0 4
3 0 , 2
2 6 , 3

Budget  2001  was  the  only  one  above  the  financial  perspective  assumption.  However, 
this  was  entirely  due  to  the  initial  delays  in  the  adoption  of  many  programmes,  and 
consequently  in  the  disbursement  of  substantial  payments  on  account  in  2001  rather 
than in 2000. The total payment on account for the new period is some €14 billion, of 
which only €5.9 billion was paid in 2000. This left payments on account of €8.1 billion 
for  2001.  Deducting  this  from  the  budget,  the  budget  for  interim  payments 
(disbursements)  was  already  lower  than  the  one  implicit  in  the  original  financial 
perspective (€12.9 billion against €13.6 billion).  

The  relaxation  of  the  macro-economic  constraints  will  probably  mean  that  the 
forthcoming  period  will  be  marked  by  better  financial  implementation  of  the 
programmes.  This  expectation  has  already  been  reflected,  to  some  extent,  in  the  2004 
budget. The Preliminary Draft Budget for 2005 should confirm this trend. 

EN 

25 

   EN 

 
 
2003 was also the first (real12) year of application of the N+2 rule on decommitments.  

d) Transfers made in 2003 

A  few  transfers  were  proposed  by  the  Commission  in  2003  and  accepted  by  the 
in  commitment 
table  8).  There  were  no 
budgetary  authority  (see 
appropriations, but relatively significant transfers of payment appropriations were made.  

transfers 

12 

We say "real" because the advance payments made in 2000 and 2001 cancelled out to a significant extent 
the practical impact of the rule at the end of 2002 

EN 

26 

   EN 

 
                                                 
Table 8: Transfers between the Structural Funds in 2003 

Transfers 2003 in the Structural Funds
In Euro

Budgetary Autority transfers (decision)

Commitment 
appropriation

% of 
initial budget

Payment
appropriation

% of 
initial budget

To/From

Innovative measures & technical assistance

B2-164

-189.051

-0,22%

Financial Instrument for Fisheries Guidance 
(FIFG) - Obj. 1
European Regional Development Fund 
(ERDF) - Obj. 1
European Social Fund (ESF) - Obj. 1
European Social Fund (ESF) - Obj. 2
Community initiative - Interreg III
Community Initiative - Equal
Cohesion Fund

Other transfers
European Regional Development Fund 
(ERDF) - Obj. 1

B2-101

B2-102
B2-103
B2-111
B2-1410
B2-142
B2-300
TOTAL

B2-102

-15.420.000

European Social Fund (ESF) - Obj.2

B2-111

-699.500

IM & TA (ESF)

B2-1630

-1.422.265

European Social Fund (ESF) - Obj.2

B2-111

-631.968

IM & TA (ERDF)

IM & TA (ERDF)

-34.435

B2-162

B2-164

%

-0,11

-0,18

-3,02

-0,16

-0,04

135.400.000

45,91%

1.500.000.000
-200.000.000
-50.000.000
-370.000.000
-150.000.000
-350.000.000
0

16,64%
-5,19%
-16,53%
-65,69%
-38,15%
-13,21%

%

-10.000.000

-15,7

IM & TA (ESF)

B2-1630

-218.201

-0,46

IM & TA (ERDF)

B2-164

-10.000.000

-24,1

IM & TA (EAGGF)

B2-160

-3.400.000

European Social Fund (ESF) - Obj.1

B2-103

-16.499.378

European Social Fund (ESF) - Obj2

B2-111

-14.927.919

-68,7

-0,34

-3,88

IM & TA (ERDF)

B2-164

-102.900

-0,2

European Social Fund (ESF) - Obj.1

B2-103

89.000.000

2

European Social Fund (ESF) - Obj.2

B2-111

-255.530

-0,07

To : B2-602 : 
Completion of other 
regional measures

From Internal Policies 
(340 Meur) and from 
External Actions 
(175.4 Meur)

To: Obj1/ESF 
+0,31%
To: Obj2/ERDF 
+0,02%
To: IM & TA (Earlier 
progr)
To: Obj2/ERDF 
+0,02%
To: IM & TA (Earlier 
progr)
To: IM & TA (ERDF) 
+19,9%
To: IM & TA (Earlier 
progr) 
To: IM & TA/ERDF 
+19,9%
To: IM & TA (ERDF) 
+3,9%
To: Obj1/ERDF 
+0,12%
To: Obj2/ERDF 
+0,46%
To: IM & TA (ERDF) 
+0,2%
From: PEACE/ESF 
45.000.000
Earlier programmes 
Obj1 44.000.000
To: Obj2/ERDF 
+0,01%

EN 

27 

   EN 

 
 
The  transfer  from  the  Interreg  Community  Initiative  accounts  for  66%  of  its  initial 
payments budget, which again illustrates its poor budget implementation in 2003. The 
transfer of payment appropriations from the Equal Community Initiative was also quite 
significant (38% of its initial budget).  

The  transfer  to  the  Financial  Instrument  for  Fisheries  Guidance  (FIFG)  –  Objective  1 
was  almost  46%  of  its  initial  budget.  ERDF  Objective  1  received  the  highest  transfer 
amount, €1.5 billion representing 17% of its initial budget. Part of this amount, €515.4 
million, was funded by transfers from outside the Structural Funds (Internal Policies and 
External Actions). However, most transfers were made between the different Structural 
Funds budget lines.  

The Commission also made some transfers within Structural Funds budget chapters (see 
Table  8).  These  reflect  inevitable  but  relatively  minor  budget  adjustments  during  the 
year.  

2.1.4.  End-of-year concentration 

Structural Funds implementation is typically concentrated at the end of the budget year. 
As  regards  commitments,  this  concentration  has  virtually  disappeared  in  the  2000-06 
programming period. Indeed, under the Structural Funds Regulation for the new period, 
commitments are made by 30 April each year, i.e. almost automatically after the annual 
instalments decided for each adopted programme. As regards payments, improvements 
are still needed. 

Chart 5  illustrates  the  point.  It  shows  that  the  end-of-year  concentration  for 
commitments did disappear. However, it also shows that the concentration in payments 
has not changed much since 1996. From 2002 to 2003 there was even a slight increase 
in the clustering of payments in December.  

Chart 5: Concentration of commitment and payment appropriations in December (percentage 
implemented in December) 

70%
60%
50%
40%
30%
20%
10%
0%

Commitment

Payment

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

The  monthly  implementation  pattern  in  Chart  6  offers  a  more  comprehensive  view. 
Again,  that  chart  illustrates  clearly  that  commitments  are  now  made  in  the  first  four 
months of the year.  

As  for  payments,  the  chart  shows  the  obvious  concentration  in  the  last  months  of  the 
year  –  half  of  the  payments  are  made  after  August  and  over  one-quarter  are  made  in 

EN 

28 

   EN 

 
 
December.  For  the  2000-06  programmes,  Member States  are  invited  to  group  their 
payment applications in three batches over the year with the last application to be sent, 
in accordance with Article 32(3) of Regulation (EC) No 1260/1999, by 31 October each 
year. The pattern of actual payments suggests that this procedure has been followed in a 
less than smooth way13. A more regular batching of payment claims is desirable in the 
interests of a more efficient payments profile.  

Chart 6: Monthly implementation pattern in 2003 (€ million) 

40.000

35.000

30.000

O
R
U
E
o
M

i

25.000

20.000

15.000

10.000

5.000

0

janv-03

févr-03

mars-03

avr-03

mai-03

juin-03

juil-03

août-03

sept-03

oct-03

nov-03

déc-03

available commitments

implementation commitments

available payments

implementation payments

2.1.5. 

Implementation by Member States 

Chart 7  shows  the  commitments  and  payments  made  in  2003  by  Member State  (all 
appropriations combined). 

Because of the cross-border nature of some operations for which there is often a single 
accounting commitment per programme (Interreg, Peace, Border regions), commitments 
and payments in these operations cannot be allocated to a specific Member State in the 
accounts,  hence  the  existence  of  the  “other”  column  in  the  chart.  Certain  technical 
assistance operations are similarly not attributable to a Member State.  

For  Spain  and  Portugal,  and  to  a  lesser  extent,  Austria  and  Sweden,  the  volume  of 
payments  in  2003  nearly  exceeded  the  volume  of  commitments,  with  a  corresponding 
absolute  decrease  in  outstanding  commitments.  For  Finland,  payments  were  equal  to 
new commitments. It is interesting to note that it was the first time, after the beginning 
of the 2000-06 programming period, that outstanding commitments decreased for some 

13 

Indeed,  in  many  cases  the  Commission  has  received  payment  claims  of  quite  significant  amounts  after 
October (which it has striven to pay as quickly as possible) 

EN 

29 

   EN 

 
 
 
                                                 
Member  States,  which  confirms  previous  observations  that  implementation  in  2003 
improved significantly over previous years.  

Chart 7: Commitments and payments in 2003 by Member State 

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

O
R
U
E

o

i

M

0

commit. 2003

paym. 2003

ES

6.924

7.225

D

4.569

3.791

I

4.707

4.539

GR

3.898

1.868

P

2.939

3.464

UK

2.464

1.343

F

2.408

1.970

IRL

495

432

Other °)

815

184

FIN

321

321

B

344

115

NL

492

209

AUT

267

291

SWE

326

389

DK

126

96

L

15

6

Chart 8,  which  shows  total  commitments  and  payments  from  the  beginning  of  the 
2000-06  period,  provides  a  more  realistic  picture  of  the  current  relative  weight  of  the 
different Member States in the Structural Funds. 

EN 

30 

   EN 

 
 
 
Chart 8: Commitments and payments from 2000 to 2003 by Member State 
(€ million)

O
R
U
E

o

i

M

28.000

26.000

24.000

22.000

20.000

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

commit. 2000to2003

paym. 2000to2003

ES

26.931

23.918

D

17.833

14.524

I

GR

P

UK

17.469

14.085

10.932

12.653

10.447

8.221

9.764

6.659

F

9.538

7.141

IRL

2.431

2.056

Other °)

2.643

1.268

FIN

1.211

1.161

B

1.260

900

NL

1.808

962

AUT

1.051

933

SWE

1.276

988

DK

495

322

L

53

31

Looking at payments, Spain has by far the largest share, accounting for one quarter of 
total payments. Spain, Germany, Italy, Portugal and Greece, the five biggest shares in 
order of rank, absorb three quarters of all payments. 

While this information is undoubtedly useful, it cannot be used to analyse the relative 
performances  of  individual  Member States  in  the  implementation  of  the  Structural 
Funds  programmes.  The  annual  amount  of  commitments  and  payments  for  a  given 
Member State depends directly on the share of that Member State in the Structural Fund 
allocations or the outstanding commitments. The analysis of the relative performance in 
implementation  should  therefore  be  made  by  reference  to  the  country’s  allocation14 
(though  the  difference,  in  relative  terms,  between  commitments  and  payments  also 
suggests how effective Member States have been in implementing the programmes on 
the ground15). 

14 
15 

See the section of the report dedicated to the 2000-06 programming period for this analysis 
Note  however  that  payments  include  all  payments,  including  those  for  the  programmes  from  previous 
periods,  while  most  commitments  are  for  the  2000-06  programmes.  Thus  the  relative  gap  between 
commitments and payments is only a rough yardstick of effectiveness. 

EN 

31 

   EN 

 
 
 
                                                 
2.2. 

Programme implementation 

The  main  areas  of  assistance  and  the  contribution  of  the  Structural  Funds  to  the 
Lisbon and Gothenburg Strategy 

The  European  Council  held  in  Lisbon  on  23-24  March  2000  defined  a  new  strategic 
objective  for  the  European  Union  in  the  coming  decade  of  becoming  “the  most 
competitive  and  dynamic  knowledge-based  economy  in  the  world,  capable  of 
sustainable economic growth with more and better jobs and greater social cohesion”. In 
June  2001,  the  European  Council  adopted  in  Gothenburg  a  sustainable  development 
strategy for the EU. The sustainable development strategy is a response to the political 
commitments of the Lisbon strategy to achieve sustainable development.  

In  the  long  term  the  Lisbon  Strategy  and  the  Structural  Funds  have  converging 
objectives. Growth and greater economic and social cohesion are in fact two sides of the 
same coin. The main link between the Structural Funds as a financial instrument and the 
Lisbon  Strategy  is  that  the  Structural  Funds  provide  joint  financing  of  investments  in 
areas  which  are  priorities  of  the  Lisbon  Strategy.  In  addition,  the  Structural  Funds 
provide  a  decentralised  framework  for  delivering  these  policies.  In  this  regard  they 
stimulate the development of institutional and administrative capacities at the regional 
and national level, which also contributes to the achievement of the Lisbon targets. This 
important contribution of the Structural Funds to the Lisbon priorities will become more 
apparent after EU enlargement.  

Structural  Funds  assistance  has  been  codified  into  identifiable  sectors16.  These  sectors 
are grouped into three major categories, each of which accounts for about a third of all 
Structural Funds programming. The breakdown below has been established on the basis 
of the programme complements: 

Basic Infrastructure  33.1% 

Productive Environment 

32.6% 

Human Resources  31.5% 

to which must be added 

Technical assistance and innovative measures (2.8%). 

In the chart below the share for each sector (and for all Objectives) is calculated on the 
basis of the funding allocated to all the programme complements.  

16 

The assistance is codified at measure level. A  measure involving two different sectors will be given two 
different codes corresponding to those two sectors. Each code is allocated a percentage corresponding to its 
share of the budget allocated to the measure. This codification provides an initial indication of the relative 
importance of the various areas of Structural Funds assistance. It does not offer a complete view, however, 
since a measure classified under one sector can also be beneficial to another. For example, the building of 
multi-modal  transport  infrastructure  is  classed  under  ‘transport  infrastructure’  but  also  benefits  the 
environment. 

EN 

32 

   EN 

 
                                                 
Structural Funds – breakdown of assistance by sector

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 
17. Tourism 
18. RTD and innovation 

4%

6%

1%

1%

2%

3%

5%

11%

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

9%

5%

8%

7%

2%

1%

3%

3%

5%

6%

15% 

0% 

5%

10%

15% 

20%

The  chart  shows  that  the  Structural  Funds  mostly  assist  transport  infrastructure  and 
SMEs, these two sectors being the only ones to exceed 10% of the funding allocated to 
all  the  programme  complements.  Next  come  seven  sectors  whose  allocations  range 
between 5% and 10% of the total: rural development, planning and rehabilitation, all of 
the ‘human resources’ sectors (with the exception of positive actions for women on the 
labour market) and environmental infrastructure.  

An  analysis  of  certified  expenditure  on  31  December  2003  (excluding  Objective  3) 
showed  appreciable  differences  in  the  pace  of  implementation  between  the  various 
sectors of assistance. For all the Structural Funds (not counting Objective 3), certified 
expenditure  on  31  December  2003  accounted  on  average  for  23%  of  the  amounts 
programmed  for  2000-06.  The  implementation  rate  was  27%  for  Basic  Infrastructure, 
24% for Productive Environment and 16% for Human Resources.  

By  assistance  sector,  implementation  rates  ranged  from  2%  for  fisheries  to  34%  for 
transport  infrastructure.  Two  sectors  achieved  implementation  rates  above  30%: 
transport  infrastructure  (34%)  and  assistance  to  large  businesses  (31%).  None  of  the 
Human  Resources  sectors  had  reached 
the  20%  mark.  Telecommunications 
infrastructure and the information society was the only sector under Basic Infrastructure 
to fail to reach the 20% mark. 

EN 

33 

   EN 

 
 
Structural Funds (excluding Objective 3) – Implementation rate by sector 

1. Productive Environment 
2. Human Resources 
3. Basic Infrastructure 

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 
17. Tourism 
18. RTD and innovation 

2%

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

24% 

27% 

27% 

16%

16%

20%

31% 

28% 

23%

26% 

15%

15%

19%

13%

13%

13%

20%

20%

25% 

34% 

29% 

30% 

35% 

40%

0% 

5%

10%

15%

20%

25%

These different rates of implementation obviously have an impact on the relative share 
of each sector: rapid implementation sectors, i.e. those above the average for the Funds, 
are able to improve their relative standing in the total, while the others see their relative 
share  decline.  The  above  chart  shows  the  gap  between  the  relative  shares  at  the 
programming  stage  (all  programme  complements  other  than  Objective  3)  and  the 
relative shares of certified expenditure on 31 December 2003 (excluding Objective 3).  

The  relative  shares  enjoying  the  biggest  increases  are  transport  infrastructure  and 
assistance  to  SMEs.  Transport  infrastructure  has  increased  by  almost  8  percentage 
points  and,  with  25%  of  certified  expenditure,  occupies  pole  position  in  terms  of 
Structural  Funds  spending.  Assistance  to  SMEs  and  the  craft  sector  has  also 
strengthened its hold on second place, with a relative share rising from 12.5% to 14.5%. 
Matters are more complicated in the case of the sectors that can be directly linked to the 
Lisbon  and  Gothenburg  objectives:  while  RDT  and  environmental  infrastructure  have 
both improved their relative standings, the same cannot be said for telecommunications 
or the information society. 

EN 

34 

   EN 

 
Structural Funds (excluding Objective 3) - Evolution of relative shares by sector

P
e
r
c
e
n
t
a
g
e

p
o
i
n
t
s

8

6

4

2

0

-2

-4

-6

-8

34. Environmental infrastructure 
23. Educational & vocational training 
2. Human Resources
33. Energy infrastructures 
24. Workforce flexibility
17. Tourism
11. Agriculture
22. Social inclusion
1. Productive Environment
25. Positive actions for women
3. Basic Infrastructure
16. Assisting SMEs & craft sector
12. Forestry
18. RTD and innovation
14. Fisheries
13. Rural development
32. Telecom.& information society
21. Labour market policy
35. Planning and rehabilitation
15. Assisting large business org.
36. Social infrastructure and public health
31. Transport infrastructure

In  the  August  2003  guidelines  for  the  mid-term  review  of  the  Structural  Funds 
programmes,  the  Commission  asked  Member  States  to  pay  special  attention  to  the 
Lisbon  and  Gothenburg  priorities  in  the  forthcoming  mid-term  review  of  Structural 
Funds assistance. The re-programming of the Structural Funds is a potential opportunity 
to  consolidate  the  Community  contribution  to  this  strategic  objective,  particularly 
through the joint financing of investments aimed at improving employment, economic 
and  social  cohesion  and  the  competitiveness  of  the  Union’s  various  regions.  This  aim 
could be pursued by adapting the programming documents so as to put more emphasis 
on  competitiveness  factors  such  as  accessibility,  the  knowledge  society,  innovation, 
research  and  development,  the  environment,  employment,  social  integration  and 
life-long  education  and  training,  especially  in  a  context  of  economic  and  social 
restructuring resulting from technological changes and a process of economic catch-up 
in the Union.  

2.2.1.  Objective 1 

Programming 

Objective 1 is less well balanced by category than the Structural Funds as a whole. The 
Basic  Infrastructure  category  predominates,  accounting  for  41%,  while  Human 
Resources accounts for 23% of the entire Objective.  

Transport  infrastructure  alone  accounts  for  20%  of  Objective  1.  The  second  sector  is 
assistance to SMEs (10% of the total). Next come four (4) sectors whose relative share 
is  around  7%:  training,  active  labour  market  policies,  rural  development  and 
environmental infrastructure. The sectors with the smallest budgets are fisheries, with a 
relative  share  below  1%  of  the  entire  Objective,  positive  actions  in  favour  of  women 
and energy infrastructure, each with a relative share of just above 1%.  

EN 

35 

   EN 

 
 
 
The  chart  “Objective  1  –  Programming:  breakdown  by  sector”  compares  the  share  of 
each category and sector relative to all the programme complements for Objective 1. 

Objective 1 - Programming: breakdown by sector 

1. Productive Environment 
2. Human Resources 
3. Basic Infrastructure 

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 
17. Tourism 
18. RTD and innovation 

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

0% 

5%

10%

15%

20%

25%

30% 

35% 

40%

45%

Implementation 

In terms of the pace of programme implementation (the amount of expenditure certified 
as against the amount indicated in the programme complements), Objective 1’s rate of 
24% places it slightly above the Structural Funds average (23%). 

Structural Funds Objective 1 

Productive environment 24% 

Human resources 

16% 

Basic infrastructure 

27% 

25% 

17% 

28% 

The main Objective 1 category, i.e. Basic Infrastructure (41% of the entire Objective) 
also  enjoys  the  fastest  implementation  rate  (28%).  This  is  mainly  because  transport 
infrastructure alone accounts for 20% of Objective 1 and has an implementation rate of 
almost 35%.  

Apart  from  transport  infrastructure,  two  other  sectors  had  implementation  rates  above 
30%: “aid to small firms” and “aid to large firms” (31%).  

EN 

36 

   EN 

 
 
 
Two sectors in the Basic Infrastructure category enjoy implementation rates of between 
infrastructure  and  public  health:  29%;  environmental 
25%  and  30%  (social 
infrastructure:  25%),  as  do  two  sectors  in  the  Productive  Environment  category  (RTD 
and innovation: 28%; forestry: 26%). At nearly 20%, the leading sector under Human 
Resources is “education and vocational training”. 

Objective 1 – Implementation rate by sector

1. Productive Environment 
2. Human Resources 
3. Basic Infrastructure 

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 
17. Tourism 
18. RTD and innovation 

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

0% 

5%

10%

15%

20%

25% 

30% 

35%

These  differences  in  implementation  rates  obviously  have  an  impact  on  the  relative 
shares  of  the  categories  in  Objective  1  as  a  whole.  Thus,  Human  Resources,  which 
accounted for 23% of all programming under this Objective, accounts for no more than 
16% of the expenditure actually incurred and the relative shares of all the sectors in this 
category have fallen. In contrast, the relative share of the Basic Infrastructure category 
has risen from 41% to 47%. 

This  increase  in  the  standing  of  Basic  Infrastructure  is  due  exclusively  to  transport 
infrastructure, whose share in terms of implementation is 43% higher than programmed. 
Of the four other sectors in this category, the increase in the two growth sectors (social 
infrastructure  and  environmental  infrastructure)  is  not  enough  to  offset  the  fall  of  the 
two in decline.  

The situation is more balanced in the other growth category (Productive Environment). 
Two  sectors  stand  out  in  this  category:  assistance  to  SMEs,  whose  relative  share 
increases from 9.5% in the programming to 12.1% in implementation, and agriculture, 
whose share falls back from 5% in the programming to 3.3% in actual implementation. 

EN 

37 

   EN 

 
 
Objective 1 - Development of relative shares

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Activity in 2003 was built around three priorities: programme monitoring, the mid-term 
evaluation  and  allocation  of  the  performance  reserve,  and  application  of  the  N+2 
(automatic decommitment) rule  

As  all  the  programming  work  has  been  completed,  programme  management  has  now 
reached cruising speed. As a result, except in a few minor cases, it has been possible to 
avoid automatic decommitments under Article 31 of Regulation (EC) No 1260/1999.  

In some cases programming had to be adjusted to take account either of special items 
linked  to  programme  implementation  (e.g.  infrastructure  programmes  associated  with 
the preparations for the Olympic Games in Athens in 2004) or exceptional events such 
as the floods in Germany or the fires in Portugal. 

Debates  on  future  cohesion  policy  also  took  place  in  many  cases  in  the  Monitoring 
Committees or at the annual meetings.  

ESF 

ESF  activities  in  Objective  1  regions  continued  satisfactorily  in  2003,  focussing 
principally  on  supporting  measures  to  promote  human  capital  development  in  these 
regions in line with the European Employment Strategy. 

EN 

38 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIFG 

2003 was the first year of implementation of the reformed CFP, as adopted in December 
2002. Some programmes were amended as a result, to take account of the CFP reform. 
The  Commission  has  committed  the  fourth  tranche  for  the  37  programmes  of  the 
Objective  1  regions,  amounting  to  EUR  391.7  million.  Payments  were  especially 
significant  in  2003,  reaching  EUR  401.2  million.  Of  particular  note  is  the  Spanish 
programme’s very high level of spending, given the use of FIFG funding to counter the 
effects of the Prestige disaster.  

2.2.2.  Objective 2 

Programming 

Objective  2  has  a  somewhat  different  programming  profile  from  that  of  Objective  1. 
The leading category is no longer Basic Infrastructure but the Productive Environment, 
which alone accounts for over half the financial resources programmed. 

Objective 1 Objective 2 

Productive environment 24% 

Human resources 

23% 

Basic infrastructure 

41% 

57% 

11% 

28% 

There is a clear concentration of resources at sector level. Two-thirds of the financing is 
concentrated  in  four  sectors:  assisting  SMEs,  planning  and  rehabilitation,  RTD  and 
innovation and tourism. The sector “assisting SMEs and craft sector” alone accounted 
for one-third of the programming. 

EN 

39 

   EN 

 
 
Objective 2 – Breakdown of Structural Funds assistance, by sector 

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 
17. Tourism 
18. RTD and innovation 

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

0% 

5%

10%

15%

20%

25% 

30% 

35%

Implementation 

Since  the  programming  of  Objective  2  began  later  than  that  of  Objective  1,  its 
implementation rate might be expected to be slower. This is far from being the case. In 
terms of the pace of programme implementation (the amount of expenditure certified as 
against  the  amount  indicated  in  the  programme  complements),  Objective  2’s  rate  of 
24%  places  it  squarely  on  the  same  level  as  Objective  1.  There  is  some  slippage 
between the categories however, although the discrepancies are less marked overall: 

Objective 1 Objective 2 

Productive environment 25% 

Human resources 

17% 

Basic infrastructure 

28% 

26% 

21% 

25% 

In  terms  of  sectors,  “social  infrastructure  and  public  health”  has  the  highest  rate  of 
implementation (36%) but accounts for only a small percentage (1%) of the Objective 
as  a  whole.  By  contrast,  the  second  sector,  “assistance  to  SMEs”,  with  an 

EN 

40 

   EN 

 
 
implementation rate of 32%, is much more significant because it accounts for one-third 
of the Objective.  

Two other sectors have significantly above-average (28%) implementation rates. These 
are  RTD  and  innovation  (10%  of  Objective  2)  and  environmental  infrastructure.  The 
implementation rate for transport infrastructure is the slowest (15%). 

Objective 2 – Implementation rate by sector

Average 

1. Productive Environment 
2. Human Resources 
3. Basic Infrastructure 

11. Agriculture 
12. Forestry 
13. Rural development 
14. Fisheries 
15. Assisting large business org. 
16. Assisting SMEs & craft sector 

17. Tourism 
18. RTD and innovation 

21. Labour market policy 
22. Social inclusion 
23. Educational & vocational training  
24. Workforce flexibility 
25. Positive actions for woman 

31. Transport infrastructure 
32. Telecom.& information society 
33. Energy infrastructures  
34. Environmental infrastructure  
35. Planning and rehabilitation 
36. Social infrastructure and public health 

0% 

5%

10%

15%

20%

25%

30% 

35% 

40%

Like  Objective  1,  the  different  implementation  rates  affect  the  relative  share  of  the 
sectors  and  categories  within  the  Objective  as  a  whole.  Movements  up  and  down  are 
limited,  however,  since  the  differences  in  implementation  rates  are  less  marked  here 
than in Objective 1.  

The  share  allocated  to  the  Human  Resources  category  has  fallen  relative  to  the  other 
two, the Productive Environment in particular. Unlike Objective 1, the category making 
most headway in relative terms is the Productive Environment, not Basic Infrastructure. 

All of the Human Resources sectors have seen a fall in their relative shares, whereas the 
Productive Environment sectors have all maintained or improved their positions. 

EN 

41 

   EN 

 
 
Objective 2 - Evolution  of relative shares by sector

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In general, the programming of Objective 2 began later than that of Objective 1, with 
the  result  that  programmes  were  late  in  getting  under  way.  In  some  cases,  as  in 
Luxembourg,  the  first  projects  could  not  be  selected  until  2003.  Despite  these  initial 
delays, all the programmes were able to avoid automatic decommitments under the N+2 
rule. 

Although  they  started  late,  most  programmes  were  amended  in  the  course  of  2003. 
While the bulk of amendments were of a technical nature, such as a change in the list of 
State  aid  schemes  or  an  adjustment  to  take  account  of  changes  in  national  legislation, 
some  affected  the  programme  content.  Such  amendments  involved  a  transfer  of 
resources  between  measures,  or  between  priorities,  resulting  in  some  cases  in  a 
reduction in ESF assistance and an increase in ERDF assistance. 

During  the  meetings  of  the  Monitoring  Committees  or  the  annual  meetings,  reference 
was  made  on  several  occasions  to  the  difficulties  encountered  in  implementing  the 
programmes, as a result of either the budgetary constraints of the Member States or the 
slowdown in economic activity. The effect of those difficulties was either an inadequate 
number of project proposals from the private sector or too little part-financing from the 
national governments.  

ESF 

ESF assistance under Objective 2 was generally satisfactory during the year although in 
some Member States there were some transfers of resources from ESF to ERDF due to 
implementation problems for some operational programmes. In the context of the mid-

EN 

42 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
term  review,  it  was  noted  that  in  some  cases,  better  coordination  between  ESF  and 
ERDF activities should be sought. 

2.2.3.  Objective 3 

ESF activities during 2003 focused on the conclusions of the mid-term evaluation and 
the preparation of the mid-term review. To this end a series of national seminars were 
held in each Member State during the autumn, with the aim of bringing together all ESF 
stakeholders in order to take stock of the main achievements to date, assess the priorities 
for  the  second  half  of  the  programming  period,  and  identify  the  challenges  for  future 
ESF  assistance  in  the  framework  of  the  Lisbon  agenda  and  the  revised  European 
Employment  Strategy  (EES).  The  ESF  national  seminars  highlighted  a  general 
agreement  on  the  fact  that  the  added  value  of  ESF  assistance  stems  mainly  from  its 
distinctive  feature:  it  is  the  only  Community  Fund  which,  on  the  one  hand,  provides 
direct support to individuals with a view to their integration in the labour market and, on 
the  other  hand,  underpins  the  European  Employment  Strategy  by  supporting  policies 
aimed  at  achieving  full  employment,  increasing  quality  and  productivity  at  work,  and 
promoting social cohesion. 

The  ESF  has  played  a  significant  role  in  supporting  and  implementing  the  European 
Employment Strategy (EES) in the Member States. The seminars and evaluation reports 
underlined the links and coherence between ESF assistance and the EES: the new policy 
framework  provided  by  the  EES  -  and  translated  into  the  National  Action  Plans  for 
employment (NAPs) - has improved the strategic dimension of the ESF.  

These  links  have  become  increasingly  important  during  the  implementation  of  ESF 
programming:  across  the  EU,  the  ESF  supports  key  policy  initiatives  presented  in  the 
NAPs and the Member States' efforts to implement the Employment Recommendations, 
with a catalyst effect for initiating national policies. As a result of this, the Employment 
Recommendations and the ESF are perceived in some Member States as the main policy 
driver  and  financial  incentive  for  undertaking  changes  to  and  reforms  of  national  and 
regional employment and labour market policies.  

At  the  beginning  of  the  programming  period,  ESF  assistance  focused  on  supporting 
employability,  and  in  particular  on  the  introduction  of  a  preventive  approach  to 
unemployment, on the strengthening of active measures, and on the modernisation and 
improvement  of  public  employment  services.  More  recently,  there  has  been  a  trend 
towards more balanced support across the different employment guidelines, in line with 
the emerging priorities of the renewed EES and the Employment Recommendations.  

In  those  Member  States  where  the  ESF  provides  a  substantial  percentage  of  overall 
public expenditure on employment policies, the Fund has played a significant role in the 
implementation of the EES and the National Action Plans, through active labour market 
policies  (ALMPs)  at  both  national  and  regional  level.  In  some  Member  States,  ESF 
funding  currently  represents  more  than  half  of  the  overall  public  investment  in  areas 
such  as  vocational  training,  and  has  been  an  essential  factor  in  the  modernisation  of 
public employment services and education systems.  

In  those  Member  States  where  the  ESF  represents  a  smaller  percentage  of  overall 
expenditure  on  ALMPs,  it  has  provided  added  value  by  complementing  national 
programmes, particularly by targeting and enhancing support in areas or groups which 

EN 

43 

   EN 

 
experience  a  higher  level  of  labour  market  disadvantage  (e.g.  unemployed  single 
parents,  the  very  long-term  unemployed  or  ethnic  minorities),  and  by  supporting 
activities not covered – or not significantly funded - by national programmes. The ESF 
has  also  helped  promote  innovative  approaches  to  traditional  labour  market  measures, 
mapping out alternative methods to promote employment and support social inclusion.  

In Member States where regions are endowed with genuine power, ESF programming 
has helped make national and regional priorities more consistent through part-financing 
arrangements and the setting-up of a common policy framework.  

Overall,  the  ESF  has  played  an  essential  role  in  implementing  labour  market  and 
employment  policies,  and  in  the  fight  against  social  exclusion  at  regional  and  local 
level. 

The national seminars also generally highlighted the fact that the ESF has contributed to 
enhancing  good  governance  and  promoting  awareness  of  the  EES,  through  its 
decentralised approach towards carrying out the programmes, its emphasis on bottom-
up  comprehensive  partnerships  and  its  contribution  to  the  overall  development  of  the 
institutions and networks involved in implementing employment policy.  

The  increased  synergies  between  the  EES,  the  NAPs  and  ESF  programming  have 
resulted  in  greater  attention  to  performance  and  results,  notably  through  a  clearer 
definition of indicators, and in better monitoring of assistance granted under the Fund. 
However,  while  the  quality  of  ESF  assistance  has  generally  been  enhanced  through 
well-formulated  strategies  and  policy  priorities,  in  some  cases  there  is  still  too  much 
emphasis on absorption and financial implementation, at the expense of a more policy-
driven approach.  

The complexities of the Structural Funds and ESF legal framework and delivery system, 
and the need for clearer and simpler implementing rules, have been strongly underlined 
across the national seminars. Many final beneficiaries have criticised the administrative 
burden  involved  in  obtaining  ESF  subsidies,  which  discourages  promoters  from 
applying  for  such  support.  In  this  context,  the  present  division  of  responsibilities 
between  the  Commission  and  the  Member  States  is  often  mentioned  as  a  source  of 
difficulties in the delivery of the ESF.  

By enhancing the responsibility of all actors in the implementation and programming of 
part-financed  assistance,  the  ESF  has  had  a  positive  effect  in  the  development  and 
forging of partnerships, mostly at local level. Partnership has been widely recognised as 
a  fundamental  contribution  of  the  ESF  and  of  the  Funds  as  a  whole,  and  as  a  key 
condition for the success of interventions. 

The  contribution  of  the  ESF  to  the  dissemination  of  a  programming  and  evaluation 
culture, notably at regional and  local  level, has been acknowledged particularly in the 
Member States benefiting from Objective 1 funding.  

The overall strategy and ESF policy priorities for 2000-06 were adopted in a context of 
greater economic expansion than present conditions allow; however, the general view is 
that  they  remain  valid  and  fully  responsive  to  the  current  economic  downturn. 
Therefore, adjustments rather than radical changes in the policy priorities and specific 
measures selected for the implementation of the strategy are being proposed.  

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Seven  broad  policy  areas  have  emerged  as  those  which  should  receive  increased 
emphasis  between  2004  and  2006  across  the  EU,  to  better  support  the  EES  and  the 
objectives of the Lisbon agenda:  

Throughout the Union, ESF support for skills development and in-house training should 
be intensified and consolidated, taking greater account of the needs of undertakings and 
the  development  of  adequate  human  capital  strategies  within  companies,  in  order  to 
raise  skills  levels  and  productivity,  and  increase  competitiveness.  Using  the  ESF  to 
support schemes which enable enterprises to prepare for and manage change was also 
stressed. 

– 

– 

– 

– 

– 

– 

Greater  attention  will  be  given  to  the  development  of  life-long  learning  policies 
and strategies, for instance by modernising and developing systems of education 
and vocational training, by promoting better links between the educational system 
and the productive sector and by improving upper secondary education. 

Increased  emphasis  on  the  fight  against  discrimination  and  on  providing  greater 
support  to  the  socially  excluded  and  those  facing  greatest  difficulties,  including 
migrants.  Social  entrepreneurship  could  be  an  effective  form  of  support  for  the 
most vulnerable groups. 

Further  efforts  -  notably  in  the  least-developed  areas  -  to  ensure  efficient 
functioning  of  labour  market  institutions  and  improve  the  skills  of  unemployed 
persons, through stronger focus on individualised measures targeted at the needs 
of each beneficiary. 

In line with the Employment Recommendations, particular attention will be paid 
to attracting more people into the labour market, by supporting the integration of 
the  economically  inactive  into  work  and  by  preventing  early  retirement  through 
active ageing policies. 

Enhancing the participation of women in the labour market by facilitating access 
to child-care. 

Fostering  entrepreneurship  by  strengthening  entrepreneurial  skills  and  the 
conditions  for  entrepreneurship.  In  those  Member  States  where  the  ESF 
significantly  supports  research  activities,  there  will  be  emphasis  on  placing 
researchers  in  enterprises  rather  than  awarding  them  traditional  post-graduate 
grants,  wth  a  view  to  encouraging  the  dissemination  of  innovation  and  research 
within companies. 

2.2.4.  FIFG outside Objective 1 regions 

The  Commission  committed  appropriations  totalling  €171.9  million  for  the  fourth 
tranche of the eleven programmes for regions outside Objective 1. The rate of financial 
execution remains low. The mid-term evaluation highlighted certain problems which lie 
at the root of this under-use. The mid-term review must enable this shortcoming to be 
remedied in part and allow more efficient use of FIFG funds. 

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45 

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2.2.5.  Community Initiatives and innovative actions 

Leader 

Leader+  is  aimed  at  encouraging  and  supporting  integrated  pilot  strategies  for  local 
rural development. 

At  the  end  of  2003,  the  procedure  for  selecting  local  action  groups  (LAGs)  was  still 
being finalised in some Member States. Of the 915 LAGs provided for under Leader+, 
845 had already been chosen. The selection of LAGs had been completed in all Member 
States except Italy . 

The first finding which may be made is that there has been some degree of continuity in 
the  territorial  implementation  of  the  Leader  Community  Initiative,  since  most  of  the 
LAGs currently selected were already selected under Leader I and/or Leader II. It may 
also be  noted that 36% of LAGs are entirely or partially on Objective 1 territory. The 
majority of LAGs (61%) have the legal status of a non-profitmaking association. 

The  LAGs  selected  cover  an  area  of  1 399 293  hectares  and  have  a  population  of 
45 792 316.  

"Making the best use of natural and cultural resources" is the most popular theme, alone 
accounting  for  almost  a  third  of  LAG  priorities,  followed  by  "quality  of  life"  (25%), 
then "adding value to local products" (20%) and "new technologies" (11%).  

The national networks are all in place except in Ireland, Luxembourg and Belgium. 

Two meetings of the Leader+ Steering Committee were held in 2003. This Committee, 
which  was  chaired  by  the  Commission,  brought  together  the  representatives  of  the 
national  authorities  and  networks.  It  examined  the  progress  achieved  in  implementing 
the Community Initiative, particularly as regards cooperation.  

At the end of 2003, several Member States submitted their mid-term evaluations. 

The total Community assistance for Leader+ in 2000-06 is €2 105.1 million. For 2003, 
an amount of €346 million was committed. 

Interreg 

The last of the 72 programmes originally provided for were approved in 2003, namely 
the Archimed transnational cooperation programme involving Greece and Italy, and the 
two cross-border cooperation programmes involving Greece and Italy, and Greece and 
Turkey respectively.  

During 2003, negotiations began with a view to approving nine new programmes for the 
new  internal  and  external  frontiers,  and  amending  twenty-three  programmes  (to 
integrate the ten new Member States). They will be adopted during 2004. 

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In  addition,  the  approval  of  the  Commission  Communication  on  paving  the  way  for  a 
New  Neighbourhood  Instrument17  allowed  a  swift  improvement  in  coordination 
between  Interreg  and  external  policy  instruments  (even  for  the  period  2004-06).  The 
Commission  embarked  on  an  in-depth  discussion  on  future  arrangements  for 
cooperation at external frontiers. 

The  practical  implementation  of  the  seventy-two  programmes  adopted  continued  and 
intensified on the ground. The Commission took part in several monitoring and steering 
committee  meetings,  as  provided  for  in  the  Fund  regulations.  It  also  monitored  the 
mid-term evaluation exercise carried out under each of the programmes, as provided for 
in Article 42 of Regulation (EC) No 1260/1999. Most of the reports were submitted to 
the Commission by the managing authorities before the end of 2003. This exercise will 
form  the  basis  of  the  mid-term  review  of  programmes,  which  will  take  place  during 
2004. 

In  2003,  the  Commission  continued  to  close  the  pilot  projects  for  the  period  1994-99 
within the context of Recite (47 projects) and Terra (15 projects). All the projects have 
been closed apart from two Terra and two Recite projects, which will be closed in the 
course of 2004.  

Urban 

Implementation  of  the  Urban  II  programmes  gathered  pace  and  all  70  met  their  N+2 
spending  targets  for  December  2003.  In  fact,  100%  of  the  2003  appropriations  were 
already  committed  and  92%  of  the  2003  payments  budget  implemented  by  the  end  of 
the year. 

In addition, the Urbact programme for exchange of experience between European cities 
started  this  year.  Thirteen  thematic  networks  were  launched  and  another  three  were 
proposed.  They  cover  topics  as  diverse  as  local  economic  development,  citizen 
participation, inclusion of immigrants, inclusion of young people, crime prevention and 
reduction of urban insecurity. 

Finally, a new round of the Urban Audit was launched in cooperation with Eurostat and 
national  statistical  offices.  A  comprehensive  set  of  social  and  economic  indicators 
covering all aspects of urban life is being collected for 258 cities in the EU27. 

Equal 

In  2003,  the  Community  Initiative  Equal  focussed  on  the  continued  execution  of 
Development Partnership (DP) projects on the ground, and identified and capitalised on 
the initial results of the Initiative.  

In  both  its  objectives  and  its  architecture,  the  Equal  Initiative  gives  pride  of  place  to 
capitalising  on  the  innovative  elements  and  their  dissemination  in  employment  and 
training policies. 
In  the  context  of  this  mainstreaming18,  the  European  Thematic  Groups  (ETGs),  in 
partnership  with  the  national  thematic  networks,  pursued  their  task  of  evaluating  the 

17 
18 

Communication COM(2003) 393 " Paving the way for a New Neighbourhood Instrument". 
Mainstreaming = Dissemination and integration into policy-making. 

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most  promising  practices  and  findings,  and  integrating  them  into  policy-making.  The 
ETGs  met  according  to  their  own  schedules  on  numerous  occasions  and  all  held 
concurrent  meetings  in  October  2003  in  Brussels,  when  several  hundred  key  players 
from the grassroots, administrations and world of politics took part. 

From  the  start  of  the  new  session,  the  Commission,  in  partnership  with  the  Member 
States, got down to the task of defining the second call for proposals for Equal (2004) 
on  the  basis  of  the  lessons  learned  from  the  national  and  European  evaluations.  This 
exercise  yielded  a  new  Communication  on  Equal  (COM(2003)  840  of  30  December 
200319).  The  Communication  reviews  some  of  the  early  results  of  Equal,  pointing  to 
promising practices which can already contribute new ways of tackling discrimination 
and inequality on the labour market.  

It  also  sets  the  scene  for  the  second  round  of  Equal,  confirming  the  principles  and 
architecture,  whilst  simplifying  the  administrative  implementation  in  order  to  enhance 
its  effectiveness.  Member  States  are  granted  more  flexibility,  while  the  need  to 
capitalise on and disseminate the benefits and results is reinforced. 

Preparations for including the new Member States in the Equal programme were made 
throughout  2003.  The  programming  documents  (Community  Initiative  Programmes  – 
CIPs)  will  be  adopted  during  the  first  half  of  2004.  The  twenty-five  Member  States20 
will participate in the programme within the context of an enlarged Europe. 

Lastly, in 2003, the Commission closed the Community Initiative Programmes for the 
period 1994-99. 

Innovative actions 

FIFG 

Two  calls  for  proposals  were  published  on  15  May  2003  with  a  deadline  of  11  July 
2003.  Fifty-nine  proposals  were  received,  five  of  which  were  ineligible.  The  54  other 
proposals  were  assessed  and  19  were  chosen  for  Community  funding  totalling 
€1 824 807. 

In addition to innovative aspects connected with socio-economic diversification in areas 
dependent  on  fishing,  enhancement  of  the  value  of  fishery  and  aquaculture  products, 
and  improvement  of  the  image  of  the  industry,  a  special  effort  was  made  in  2004  to 
reinforce  the  role  of  women  in  the  fishing  industry.  Consequently,  seven  of  the  19 
proposals selected were specifically aimed at increasing the standing of women in the 
industry. 

19 

20 

Guidelines  for  the  second  round  (2004-06):  Communication  from  the  Commission  establishing  the 
guidelines for the second round of the Equal Community Initiative concerning transnational cooperation to 
promote new means of combating all forms of discrimination and inequalities in connection with the labour 
market – "Free movement of good ideas". 
But twenty-seven CIPs: Belgium and the United Kingdom each have two CIPs (Flemish-speaking Belgium, 
and French- and German-speaking Belgium; Northern Ireland and Great Britain). 

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48 

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ERDF 

During 2003, a further 13 new ERDF part-financed regional programmes of innovative 
actions were approved, bringing the total number of programmes to date to 139 (out of 
156  eligible  regions).  The  total  ERDF  contribution  to  those  139  programmes  is  €346 
million and their total value is over €1 billion. Regional authorities were encouraged to 
adopt a more strategic approach to promoting innovation at regional level in partnership 
with all the relevant regional actors including the private sector and social partners. The 
objective of the programmes is to boost regional competitiveness by experimenting with 
pilot  projects  under  one  or  more  of  the  following  three  strategic  themes:  regional 
economies  based  on  knowledge  and  technological  innovation,  e-EuropeRegio:  the 
information  society  at  the  service  of  regional  development,  and  regional  identity  and 
sustainable development. Over two-thirds of the regions opted for measures under one 
or both of the first two themes, while just over one-third opted for the third theme. 

3. 

PROGRAMMING IN THE NEW MEMBER STATES 

3.1. 

Background and main milestones  

The accession negotiations resulted in a financial allocation for the new Member States 
of  €24.5  billion  for  Structural  Funds  and  Cohesion  Fund  in  the  period  2004-06. 
Two-thirds  of  this  amount  is  earmarked  for  Structural  Funds,  which  corresponds  to 
almost €16 billion. The acceding countries and the European Commission agreed during 
the  accession  negotiations 
the 
implementation of the Structural Funds would be carried out before the end of 2003 in 
order to allow expenditure under the Structural Funds and Cohesion Fund to be eligible 
from 1 January 2004, as provided for in the Act of Accession, once all conditions are 
met. 

the  necessary  preparations  for 

that  most  of 

An  important  element  was  the  timely  agreement  on  funding  programmes,  namely  the 
Community support framework and the related operational programmes, and the single 
programming documents. In this connection, the Commission agreed with the acceding 
countries on a time-schedule which would lead to a preliminary agreement on the main 
programming documents before the end of 2003. It is, however, important to note that 
the formal approval of the documents can take place only when the acceding countries 
become Member States.  

The main milestones agreed were: 

(1) 

spring  2003:  submission  of 
Commission, 

the  draft  programming  documents 

to 

the 

(2) 

summer 2003: opening of the consultations on the programmes, 

(3) 

end  of  2003:  confirmation  of  the  mutual  preliminary  agreement  on  the  content 
and structure of the programming documents by an exchange of letters. 

At the same time as the programming, the administrative and institutional preparations 
had to be conducted by the new Member States on the basis of the agreements reached 
during  the  accession  negotiations.  The  Commission  monitored  very  closely  the 

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49 

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implementation  of  these  negotiation  commitments.  On  16  July  2004,  a  special 
Monitoring Report was communicated (COM(2003) 433), which assessed the progress 
in  implementing  the  negotiation  commitments  and  the  status  of  preparations  for  the 
management  of  the  Structural  and  Cohesion  Funds.  In  this  connection,  the  report 
highlighted  the  progress  made  by  the  acceding  countries,  as  well  as  the  outstanding 
issues still to be tackled. In addition, advice was provided on the necessary steps to be 
taken to ensure that each country would be able to establish a system for the sound and 
efficient  implementation  of  the  Funds.  On  6  October  2003,  a  high-level  meeting  was 
held  in  Brussels  between  the  Commissioner  responsible  for  Regional  Policy  and  the 
relevant Ministers in order to discuss the main points of the report, i.e. enhancement of 
administrative  capacity,  finalisation  of  programmes,  preparation  of  projects  in  good 
time and preparations for sound financial management.  

3.2. 

State of play of programme negotiations 

Of the 41 NUTS II regions in the acceding countries, 38 qualify for Objective 1 support; 
only the regions of Bratislava and Prague, as well as the southern part of the island of 
Cyprus  have  Objective  2  status.  All  Objective 2  areas  and  five  of  the  Objective  1 
countries  have  drafted  single  programming  documents,  while  each  of  the  other  four 
countries  with  Objective  1  regions  has  drawn  up  a  National  Development  Plan  with 
corresponding draft operational programmes.  

The  Commission  received  a  total  of  37  programming  documents,  all  of  which  – 
following the redrafting of two - were declared admissible for consultations. Although 
all  programmes  are  established  at  central  government  level,  larger  countries  also 
submitted an integrated regional programme, to be managed at national level but drawn 
up  in  close  collaboration  with  the  relevant  regional  authorities,  which  will  help  the 
regional  bodies  to  become  increasingly  familiar  with  Structural  Fund  assistance.  The 
objectives  of  promoting  or  maintaining  high  economic  growth  and  creating  new 
employment – in line with the Lisbon and Göteborg objectives – are common to all the 
programmes submitted. 

Consultations  on  the  documents  gradually  got  under  way  with  all  the  countries 
concerned between June and September 2003. Key criteria in the negotiating mandates 
were  that  each  document  should  be  completely  consistent,  other  Community  policies 
should be taken into consideration and complied with, any potential overlap should be 
eradicated and there should be a clear focus on a limited number of priorities. In view of 
the short time available for implementing the programmes (2004-06 instead of 7 years), 
the Commission placed a great deal of emphasis during the consultations on the aspects 
of the programmes concerned with implementation. In particular, it encouraged the new 
Member States to rely as far as possible on existing structures for implementation and to 
limit the scope of assistance where the administrative capacity to carry it out had still to 
be established. All acceding countries agreed that they would submit the first drafts of 
the  programme  complements  during  the  programme  consultations.  The  availability  of 
these first drafts of the programme complements contributed to the timely discussion of 
crucial aspects of implementation. 

As  envisaged,  the  main  programming  documents  were  agreed  upon  before  the  end  of 
2003.  In  December  2003,  the  European  Commission  confirmed  the  preliminary 
conclusion  on  all  Community  support  frameworks  and  on  all  Objective 1  single 
programming  documents.  Further,  almost  all  ERDF  operational  programmes  and 

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50 

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Objective 2 single programming documents were concluded in 2003. Only five ERDF 
programmes and six ESF programmes are to be closed at the beginning of 2004. Four 
EAGGF programmes - for the Czech Republic, Hungary, Slovakia and Poland - are to 
be concluded in the first quarter of 2004, while the pre-accession instrument SAPARD 
provides  for  EAGGF-type  structural  support  until  accession.  There  is  also  an  FIFG 
programme for Cyprus. 

4. 

CONSISTENCY AND COORDINATION 

4.1. 

Consistency with other Community policies 

Competition 

Monitoring of State aid is a competition policy instrument which may, to the extent that 
the Commission pays special attention to the potentially beneficial effects of aid aimed 
at  facilitating  the  economic  development  of  the  least-favoured  regions,  make  an 
effective contribution towards achieving cohesion policy objectives. Since a large part 
of the assistance from the Structural Funds directly benefits individual businesses, it is 
essential to ensure that the Community's regional policy is conducted in full compliance 
with the rules on competition. 

In  this  connection,  Regulation  (EC)  No  1260/1999  states  in  paraticular  that  assistance 
approved  by  the  Commission  must  include  all  the  elements  required  for  the  ex-ante 
assessment  of  the  compatibility  of  state  aid  with  the  common  market.  Accordingly, 
during  2003  the  Commission  paid  particular  attention  to  assessing  the  compatibility 
with the Treaty of the measures in the operational programmes and single programming 
documents involving Fund assistance in the new Member States for the period 2004-06, 
and  to  appraising  certain  major  projects  eligible  under  Articles  25  and  26  of  that 
Regulation. 

In  addition,  the  Commission  carried  out  a  thorough  examination  of  the  guidelines  for 
state  aid  for  regional  purposes,  which  must  be  revised  in  time  to  allow  the  Member 
States to prepare for the period after 2006. Such a revision must clearly take account of 
the  developments  in  Community  cohesion  policy,  as  well  as  national  and  regional 
policies  aimed  at  attaining  the  objectives  laid  down  by  the  Lisbon  and  Göteborg 
European Councils. Consequently, one of the essential objectives of this revision will be 
to  scale  down  state  aid  in  terms  of  both  number  and  size,  but  to  target  it  more 
effectively.  

Finally,  the  Commission  departments  continued  their  discussions  on  the  potential  for 
taking  greater  account  of  the  real  economic  impact  of  certain  types  of  aid  (significant 
impact test).  

Environment 

The European Union undertook to guarantee sustainable  development and to maintain 
the  protection  and  improvement  of  the  environment  at  a  high  level.  This  dual 
requirement  is  taken  into  account  in  the  establishment  and  execution  of  the  Structural 
Funds  both  through  direct  investment  aimed  at  improving  the  environmental 
infrastructure  and  through  the  integration  of  an  environmental  dimension  into  the 

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51 

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different assistance granted. The promotion of a top quality environment forms part of 
the development strategy of many regions, which have for example decided to enhance 
or rehabilitate their territory in order to attract and develop new activities. 

Direct and indirect investment in the environment 

In  their  programming  for  2000-06,  the  regional  and  national  authorities  earmarked  an 
overall  amount  of  approximately  €25  billion  for  measures  for  the  environment  in  the 
broadest sense. This is 13% of the €196 billion in the programme complements. It will 
be  used,  for  example,  to  finance  infrastructure  in  the  field  of  water  supply  and 
treatment, purification of waste water, disposing of and recycling waste, and protecting 
the  soil  and  natural  sites,  but  also  measures  aimed  at  disseminating  environmentally-
friendly technologies or sustainable transport infrastructure. The following graph gives 
a breakdown of the €25 billion among the different types of environmental measures. 

Most  of  those  investments  are  provided  for  in  Objective  1  regions.  It  is  interesting  to 
note  that  the  rate  of  implementation  of  environmental  measures  is  higher  than  the 
general average for the Funds (20%). This is particularly true of expenditure on strictly 
environmental infrastructure (25%). 

Environmental measures

4%

12%

36%

6%

2%

41%

Environmental measures in
agriculture and forestry  4%

Protection of the natural
environment  12%

Environmentally-friendly
technologies  6%

Renew able energy  2%

Environmental infrastructure 
41%

Sustainable transport
infrastructure  36%

Compliance with environmental legislation and policy 

Operations  part-financed  by  the  Funds  must  comply  with  Community  legislation  in 
force,  including  environmental  legislation.  On  account  of  this  fact,  the  part-financing 
and  start-up  of  certain  measures  was  delayed  or  blocked  in  some  Member  States  on 
account  of  the  absence  of  an  environmental  legal  framework  complying  with  the 
legislation  in  force.  In  2003,  this  situation  continued,  although  some  improvements 
were registered in, for example, the area of solid waste, but it is still unsatisfactory in 
other  sectors  such  as  the  treatment  of  urban  waste  water  and  implementation  of  the 
nitrates Directive.  

EN 

52 

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For  the  treatment  of  urban  waste  water,  specific  guidelines  were  proposed  to  the 
Member  States  regarding  applications  for  financial  assistance  in  the  context  of 
infringement proceedings. They concern part-financing applications for facilities which 
are  considered  to  be  useful  but  to  fall  short  of  the  requirements  of  the  Directive,  and 
have been challenged by the Commission.  

In  some  instances,  a  failure  to  comply  with  Directive  85/337/EEC,  as  amended,  on 
evaluation of the environmental impact slowed down the examination of plans for major 
projects  because  the  impact  studies  had  not  been  carried  out  or  were  incomplete. 
However, the obligation to comply with the procedure for evaluating the environmental 
impact  meant  that  heavy  infrastructure  which  was  potentially  harmful  to  the 
environment could go ahead, but with assurances that strict environmental requirements 
would  be  met,  the  competent  environmental  authorities  would  be  consulted  and  the 
general public would be involved.  

Participation of the environmental authorities 

Some  Member  States  have  used  technical  assistance  to  put  in  place  a  network  of 
environmental  experts  who  assume  a  role  alongside  the  management  authorities  as 
environmental  authorities  and  participate  to  a  varying  extent  in  the  management  of 
programmes  and  selection  of  projects.  These  networks  and  task  forces  paraticipate  in 
the management of funds and ensure, at the most appropriate level, that environmental 
considerations are taken into account in the implementation of programmes.  

Mid-term evaluation 

Despite  wide  variations  between  regions,  the  mid-term  evaluation  revealed  that  the 
implementation  of  environmental  measures  had  been  affected  by  start-up  difficulties 
generated  by  difficult  economic  circumstances.  Accordingly,  some  more  innovative 
measures  involving,  for  example,  the  development  of  renewable  energy  or  nature 
protection  were  the  subject  of  commitments  which  fell  far  short  of  the  original 
provisions.  

Structural Fund assistance is helping to attain the objectives set in Göteborg – despite 
the fact that they were scheduled prior to the Göteborg European Council – but much 
remains to be done if those objectives are to be achieved by 2010, particularly in view 
of the slowdown in world economic growth.  

Internal market 

Article 12 of the General Regulation on the Structural Funds (Council Regulation (EC) 
No  1260/1999)  stipulates  that  operations  receiving  Community  funding  must  "be  in 
conformity with the provisions of the Treaty, with instruments adopted under it and with 
Community  policies  and  actions,  including  the  rules  on  [...]  the  award  of  public 
contracts".  Greater  decentralisation  has  been  introduced  into  the  management  of  the 
Structural Funds, increasing the responsibility of the Member States and, in particular, 
of  the  managing  authorities,  for  the  award  of  contracts  financed  by  the  Community 
Funds.  

To  ensure  that  these  procedures  comply  with  Community  rules,  the  Commission 
encourages  the  national  authorities  to  adopt  various  preventive  measures  such  as 

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appropriate training for staff involved in awarding contracts and issuing guide and vade-
mecums on contracting procedures.  

As part of its general tasks, the Commission also ensures that procedures for awarding 
contracts  are  in  keeping  with  Community  law  by  checking  on  the  transposition  of  the 
relevant  Community  Directives  and  by  making  use  of  its  powers  to  intervene  when 
Community law is breached. In this context, the Commission examined more than 430 
cases  in  2003  of  inadequate  transposition  or  potential  misapplication  of  the  relevant 
Community provisions. 

Compliance  is  also  guaranteed  through  monitoring  by  the  Commission  departments, 
either at the programming stage or during spot checks. Such checks may be carried out 
either as a result of complaints or at the Commission's initiative, particularly following 
the audits carried out regularly as part of the inspection of part-financed projects. 

Information Society 

Expenditure  directly  connected  with  the  Information  Society  accounts  for  3%  of  the 
Structural  Funds  (programme  complements)  and  2%  of  expenditure  certified  at  31 
December 2003. Over half of the resources are earmarked for services and applications 
for citizens (35%) and information and communication technologies (26%).  

Overall, measures relating to the Information Society display a rate of execution (13%) 
substantially below the average for the Structural Funds (20%). The rates of execution 
range  between  11%  for  "Services  and  applications  for  citizens  (health,  public 
administration, education)" and 16% for basic infrastructure. 

Telecommunication infrastructure & information society

19 % Services  & ap p licatio ns  
fo r SM Es

2 0 % Bas ic  infras truct ure

3 5% Services  & ap p licatio ns  
fo r citizens

2 6 % Info rmatio n & 
co mmunicatio n techno lo g y

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54 

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Transport 

The following graph shows that, on the basis of the programme complements, 82% of 
the  funds  earmarked  for  transport  infrastructure  are  intended  for  roads  (57%)  and  rail 
25%).  

Transport infrastructure

Multimodal transport 
4%

Urban transport 6%

Ports 6%

Airports 2%

Intelligent systems 0%

Rail 25%

Inland waterway 
transport 0%

Roads 57%

The overall rate of implementation for transport infrastructure measures (34%) is well 
above the average for the Structural Funds (23%). Only inland waterway transport and 
intelligent transport systems show a rate of execution below this average. 

Transport infrastructure 

execution rate 

Road 

Urban transport 

Multimodal transport 

Ports 

Rail 

Airports 

Inland waterway transport 

Intelligent transportsystems  

41% 

36% 

24% 

22% 

22% 

20% 

16% 

6% 

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Trans-European Networks  

Coordination  of  the  budget  for  the  trans-European  transport  and  energy  networks 
(TENs) with the Structural Funds, in particular the ERDF for Objective 1 and 2 regions, 
and  with  the  Cohesion  Fund  is  important  because  these  Community  financial 
instruments take into account the need to link those regions suffering from a structural 
handicap  or  from  their  status  as  islands,  landlocked  areas  or  peripheral  regions  of  the 
Community. 

The TENs Financial Regulation21 does not allow the same phase of a single project to 
be financed by both the TENs budget and other Community financial instruments but, 
in some cases, feasibility studies financed through the TENs budget may be followed by 
support  from  the  ERDF,  Cohesion  Fund  and  the  EIB,  mainly  for  construction  work 
under the same project. Frequently, in the area of transport, the ERDF finances works 
designed  to  give  access  to  the  trans-European  transport  network  whereas  the  actual 
TEN-T network is financed under the TEN budget line and/or the Cohesion Fund. 

in 

investment 

While both transport and energy TEN projects of common interest are financed from the 
TEN  budget  line,  the  Cohesion  Fund  provides  assistance  especially  for  transport 
infrastructure  and  the  ERDF  for  both  transport  and  energy.  Article  2  of  the  ERDF 
Regulation (EC) No 1783/1999) provides, inter alia, that the ERDF is to contribute to 
financing 
the  establishment  and 
infrastructure  contributing 
development  of  trans-European  networks  in  regions  covered  by  Objective  1.  In  this 
connection, the Community also encourages public-private partnerships (PPPs) by, inter 
alia, providing a higher rate of assistance where its aid takes a form other than a cash 
grant. The endorsement of PPPs is also set out in the Commission Communication of 23 
April 2003 (COM(2003) 132). This examines the situation of infrastructure in the trans-
European network and its financing, and shows the need to implement, without delay, a 
set  of  complementary  measures  focussed  on  more  effective  use  of  the  funding 
earmarked for trans-European infrastructure. These measures rest on two major pillars: 

to 

– 

better coordination of public and private financing of the trans-European transport 
network, 

– 

an effective European electronic toll service. 

Furthermore, during 2003, the process of amending the TENs Financial Regulation was 
pursued22 in order to allow the part-financing ceiling to be raised from 10% to 20% for 
certain  aspects  of  transport  projects  of  European  interest,  with  the  aim  of  eliminating 
bottlenecks and/or filling in missing sections, provided that those sections extend across 
borders or natural barriers and contribute to the integration of the internal market in an 
enlarged  Europe,  promote  safety,  ensure  the  interoperability  of  the  national  networks 
and/or substantially help reduce imbalances between modes of transport in such a way 
as to favour the most environmentally-friendly modes. The ceiling was likewise raised 

21 
22 

Council Regulation (EC) No 2236/95 
This process resulted in the adoption of Regulation (EC) No 807/2004 of the European Parliament and of 
the Council of 21 April 2004 amending Council Regulation (EC) No 2236/95 laying down general rules for 
the granting of Community financial aid in the field of trans-European networks, OJ L 143, 30.4.2004, p. 
46. 

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56 

   EN 

 
                                                 
for  priority  projects  in  the  energy  sector  in  order  to  exert  a  leverage  effect  and,  in 
particular, attract private investors. 

During the 2003 exercise, the Commission took 117 decisions on the financing of TEN-
T  projects  totalling  €626.6  million  (€18  million  of  which  was  allocated  to  the  Risk 
Capital Facility) and 13 TEN-E projects totalling €18.64 million. 

The  revision  of  the  Guidelines  for  the  development  of  the  trans-European  transport 
network23 continued during 2003. A high-level Group consisting of current and future 
Member  State  representatives  and  the  EIB  made  its  recommendations  to  the 
Commission concerning new priority projects in the enlarged EU.  

Based on the recommendations of the high-level Group and on the results of the public 
consultation  on  the  report,  the  Commission  brought  forward  a  new  proposal24  on  1 
October 2003 complementing the proposal made in 2001. New projects are added to the 
list  of  priority  projects,  bringing  up  to  thirty  the  total  number  of  projects  on  major 
transport  axes.  Member  States  should  give  priority  to  these  projects  when  requesting 
funding from EU financing instruments. 

In addition to the new list of priority projects, the proposal puts forward improved tools 
for coordinating projects between Member States, particularly cross-border projects, by 
means of the following two mechanisms: 

– 

– 

A  European  Coordinator,  appointed  by  the  Commission,  will  promote  joint 
methods of evaluation, report on the progress of projects and consult operators on 
financing  possibilities.  The  Coordinator  will  cover  in  particular  cross-border 
sections  of  the  thirty  priority  projects  and,  where  necessary,  may  also  cover  the 
entire major axis. 

Declaration of European interest allows the coordinated or even joint evaluation 
of  projects.  If  a  project  suffers  serious  delays  without  adequate  justification,  the 
Commission may take appropriate measures to tackle the problems. 

The  concept  of  the  “Motorways  of  the  sea”,  which  was  launched  in  the  2001  White 
Paper, is another new element of the proposal. It aims at concentrating freight flows on 
a limited number of sea connections to ensure their financial viability and to reduce road 
traffic. The proposal includes the possibility of providing start-up aid for new shipping 
services. 

Consistency  and  complementarity  :  The  Structural  Funds  and  transport  and 
energy policy 

In September 2001, the Commission adopted its White Paper "The European Transport 
Policy in 2010: time to decide" (COM(2001) 370). In the light of rising congestion and 

23 
24 

Decision No 1692/96/EC 
COM(2003) 564 final: Proposal for a Decision of the European Parliament and of the Council amending 
the amended proposal for a Decision of the European Parliament and of the Council amending Decision No 
1692/96/EC on Community guidelines for the development of the trans-European transport network. This 
proposal resulted in the adoption of Decision 884/2004 of the European Parliament and of the Council of 9 
April 2004 amending Decision No 1692/96/EC on Community guidelines for the development of the trans-
European transport network, OJ L 167, 30.4.2004, p. 1. 

EN 

57 

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external  transport  costs,  the  Commission  advocates  a  change  in  the  orientation  of  the 
Common  Transport  Policy  based  on  re-balancing  the  different  transport  modes  away 
from the growing predominance of road transport. 

The White Paper proposed a programme of about 60 measures, by now well advanced, 
most of which can be grouped along the following lines: 

– 

– 

– 

– 

– 

– 

– 

– 

introduction  of  competition  in  the  railways  through  regulated  opening-up  of  the 
market,  based  on  different  legislative  packages,  the  first  of  which  is  already  in 
force; 

improvement and better enforcement of legislation in the road sector; 

promotion of intermodality, notably through the Marco Polo programme; 

carrying out investments in the TENs for railways and other alternatives to road 
infrastructure,  as  developed  in  the  revision  of  the  TEN  Guidelines  proposed  in 
October 2003; 

the development of the Galileo satellite radio-navigation programme is being led 
by  a  joint  undertaking  and  has  already  gained  widespread  international 
acceptance; 

creation of a Single European Sky25; 

introduction of a fair system of charging for the use of infrastructure, which has 
given  rise  to  a  proposal  for  the  revision  of  the  Eurovignette,  the  proceeds  being 
used to fund projects; 

the  adoption  of  a  number  of  proposals  to  improve  safety  and  security  in  the 
different  modes  of  transport,  fixing  the  objective  of  a  50%  reduction  in  road 
fatalities by 2010, and including the creation of two agencies for maritime and air 
transport. 

The  measures  set  out  in  the  White  Paper  will  allow  a  gradual  decoupling  between 
transport growth and GDP growth as recommended by the Sustainability Strategy of the 
Union, which was adopted by the Göteborg European Council in June 2001. 

To achieve these objectives the Commission will be relying, among other instruments, 
on  the  funding  available  under  the  TEN-T  budget  line,  the  Cohesion  Fund  and  the 
ERDF, and on ISPA for the future Member States. In particular the White Paper stated 
that in  the  new context of sustainable development, Community  part-financing should 
be redirected to give priority to rail, sea and inland waterway transport, as confirmed by 
the recent Initiative for Growth, which proposes accelerating investments in TENs and 
gives priority to railways and other alternatives to road transport. 

25 

The Single European Sky is an initiative aimed at reforming the architecture of European air traffic control 
in order to tackle growing traffic congestion, which is at the root of air transport delays. Under existing air 
traffic control arrangements, which were set in place in the 1960s, each country regulates its own airspace 
without  taking  account  of  transfrontier  traffic  flows.  Those  arrangements  can  no  longer  cope  with  the 
spectacular increase in air transport. 

EN 

58 

   EN 

 
                                                 
In the Green Paper "Towards a European strategy for the security of energy supply"26, 
the  Commission  set  out  an  approach  to  energy  policy  which  is  relevant  to  the 
geopolitical  context,  the  opening-up  and  integration  of  energy  markets  in  Europe,  and 
environmental  and  climate  goals.  Enlargement  and  the  wider  Europe  policy  imply  a 
strengthening and extension of the agenda. The Structural Funds have an important role 
to play, alongside action on networks, effective functioning of markets, and pursuit of 
environmental goals. 

4.2. 

Coordination of instruments 

4.2.1.  The Structural Funds and the Cohesion Fund 

Assistance  granted  under  the  Cohesion  Fund  allows  the  financing  of  transport 
infrastructure  projects  contributing  to  the  implementation  of  trans-European  networks, 
and  of  environment  projects  enabling  the  countries  concerned  to  achieve  progress  in 
attaining  EU  environment  policy  goals.  The  Cohesion  Fund  enables  the  four  eligible 
Member  States  (Spain,  Portugal,  Greece  and  Ireland)  to  sustain  a  major  public 
investment effort in these two fields of common interest, while respecting the targets for 
reducing  budget  deficits  as  set  out  in  the  convergence  programmes  drawn  up  in  the 
context of economic and monetary union. 

The  main  instrument  for  coordinating  assistance  from  the  Cohesion  Fund  and  the 
Structural Funds is the strategic reference framework (SRF). Member States present the 
Commission  with  an  SRF  as  the  logical  consequence  of  the  new  legal  provision 
governing  Cohesion  Fund  operations.  Article  1(2)  of  Regulation  (EC)  No  1265/1999 
stipulates  that  "Member  States  shall  also  provide  the  results  of  the  environmental 
impact assessment in conformity with the Community legislation, and their consistency 
with  a  general  environmental  or  transport  strategy  at  administrative  unit  or  sector 
level". 

The four Member States qualifying for the Cohesion Fund presented their SRFs for the 
environment and transport sectors at the end of 2000. Since then, decisions to finance 
projects  under  the  Cohesion  Fund  have  been  checked  in  order  to  prevent  duplicated 
funding  with  programmes  adopted  under  the  Structural  Funds.  Moreover,  the  SRFs 
promote greater complementarity between the two instruments. 

Thus,  in  certain  cases,  these  reference  frameworks  form  an  integral  part  of  the 
programmes approved under the Structural Funds for 2000-06, reinforcing coordination 
between the Cohesion Fund and Structural Fund assistance. 

In  2003  the  candidate  countries,  which  will  all  be  eligible  under  the  Cohesion  Fund 
from the time of their accession on 1 May 2004, began preparing their SRFs alongside 
their programmes under the Structural Funds. The SRFs will be finalised during the first 
quarter of 2004.  

Moreover,  it  should  be  noted  that  Ireland,  which  has  received  assistance  under  the 
Cohesion Fund since this instrument was set up, ceased to be eligible on 1 January 2004 

26 

COM(2002) 321 final of 26 June 2002. 

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59 

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since  its  level  of  per  capita  GNP  is  now  well  above  the  threshold  of  90%  of  the 
Community average. 

Finally,  two  information  meetings  took  place  with  the  Member  States  (including  the 
candidate countries) during 2003 to coincide with meetings of the CDCR (the Structural 
Funds  committee),  making  it  possible  to  further  strengthen  the  consistency  between 
these financial instruments. 

4.2.2.  The Structural Funds and the EIB/EIF 

Under the terms of the Cooperation Agreement between the Commission and the EIB 
covering  Community  structural  operations  in  2000-06,  a  contact  interface  was  set  up 
between  the  two  bodies.  In  addition  to  the  appraisal  and  part-financing  of  major 
projects,  an  ex-ante  consultation  procedure  has  been  installed  regarding  important 
strategic and policy papers, e.g. "programme lending". 

Regional  Programme  lending  and  its  institutionalisation  had  been  achieved  by  the 
parties concerned. The expansion of Regional Programme lending is a demonstration of 
increased  cooperation  and  closer  cooperation  with  the  EIB.  Regional  Programme 
lending  refers  to  a  specific  type  of  framework  facility  for  supporting  multi-annual 
investment  programmes  managed  by  public  authorities  and  part-financed  by  the 
Structural Funds. This issue will be of great importance to the new Member States and 
remote developing regions.  

Intensive contacts were held in connection with the appraisal of projects. Progress was 
achieved  in  mutual  understanding  and,  to  a  certain  extent,  harmonisation  of  appraisal 
methodology. 

A  joint  DG  REGIO/EIB  Working  Group  investigated  ways  in  which  the  Bank’s 
financing can support and complement the work of the Structural Funds more directly. 
The DG REGIO/EIB Working Group contributed to the preparation of future legislation 
on  structural  assistance.  Further  new  bilateral  meetings  were  held  with  individual 
countries, namely Italy and Germany. The main concerns of the Italian desk related to 
the transport sector and the possibility of the EIB assisting the Italian authorities in the 
field of the public-private partnership. 

The  principal  Commission  initiative  this  year  was  the  growth  initiative  and  the  quick 
start projects, which in conjunction with the 2010 innovation initiative and research and 
development were of common interest and the subject of cooperation meetings. 

In  2003,  the  European  Investment  Bank  lent  a  total  of  €42.3  billion  (€39.6  billion  in 
2002) for projects furthering the European Union’s political objectives. Financing in the 
Member States reached €34.2 billion, while €8.1 billion was made available in non-EU 
countries.  Lending  in  the  ten  Member  States  which  subsequently  joined  the  Union  in 
2004 ran to a record €4.6 billion, and in the Mediterranean Partner Countries (including 
Turkey) to €2.1 billion. 

Within  the  EU-15  countries,  €16.3  billion  was  made  available  for  projects  in  eligible 
regions  in  the  form  of  individual  loans  and  an  estimated  €6.5  billion  in  the  form  of 
credit  lines  ("global  loans")  to  partner  banks  (for  the  financing  of  SME  ventures  and 
smaller-scale  public  investment).  Including  the  future  Member  States,  regional 

EN 

60 

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development projects attracted €27.3 billion in loans, corresponding to 70% of total EIB 
lending in EU-15 and the future Member States in 2003. 

Within  the  EIB  group,  the  European  Investment  Fund  (EIF)  is  now  exclusively  in 
charge  of  all  venture  capital  and  guarantee  operations  for  small  businesses  and  for 
venture  capital  (Community  resources  and  EIB/EIF  resources).  It  focussed  its  activity 
on early-stage financing, the high-tech sector and the knowledge-based society. The EIF 
took  stakes  worth  €135  million  in  venture  capital  funds  and  provided  a  total  of  €2.2 
billion in guarantees for SME financing. 

5. 

EVALUATION 

5.1.  Mid-term evaluation 

Mid-term evaluation is defined by Article 42 of Regulation (EC) No 1260/1999: it is to 
examine,  in  the  light  of  the  ex-ante  evaluation,  the  initial  results  of  the  assistance,  its 
relevance and the extent to which the targets have been attained. It is also to assess the 
use  made  of  financial  resources  and  the  operation  of  monitoring  and  implementation. 
This evaluation is to be carried out under the responsibility of the managing authority, 
in cooperation with the Commission and the Member State. Article 42(2) stipulates that 
the results of the evaluation, carried out by an independent assessor, must be sent to the 
Commission no later than 31 December 2003. 

5.1.1.  The evaluation process 

The  Commission  made  known  its  general  guidelines  on  mid-term  evaluation  from  the 
end of 2000 onwards and worked together with all the managing authorities in 2001 and 
2002. Work was stepped up in 2003: the Commission was represented on most of the 
monitoring committees set up specifically to work on mid-term evaluation. 

Article 42(3)  of  Regulation  (EC)  No 1260/1999  stipulates  that  the  Commission  must 
examine the relevance and quality of mid-term evaluation. Throughout the second half 
of 2003 the Commission accordingly assessed the quality of all the drafts submitted by 
the  managing  authorities;  the  aim  was  to  examine  any  weaknesses  in  those  interim 
reports and to assist the assessors in drawing up the final reports. 

More specifically, the Commission endeavoured to check whether the evaluation reports 
included: 

– 

– 

– 

analysis  and  field  work  not  based  solely  on  the  opinion  of  those  responsible  for 
implementing the programme, 

a  clear  analysis  of  the  financial  data  and  of  the  stage  reached  in  the  programme 
and, for any mid-term targets not achieved, the reasons why and recommendations 
on remedial measures to be taken, 

substantiated conclusions and specific recommendations on what must be done to 
improve programme performance. 

All  the  final  reports  were  sent  to  the  Commission  by  the  31 December 2003  deadline. 
Most  of  them  complied  with  the  three  criteria  above  and  provided  the  basis  for 

EN 

61 

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allocating  the  performance  reserve;  they  will  likewise  form  the  basis  for  any 
reorientation of programmes. 

The 2004 annual report on the implementation of the Structural Funds will examine the 
results of these mid-term evaluations more fully. 

5.1.2.  Performance reserve 

Governed  by  Article 44  of  Regulation  (EC)  No 1260/1999,  allocation  of 
performance reserve comprised two main stages: 

the 

– 

– 

evaluation  by  each  Member State,  before  31 December 2003  and  in  close 
consultation with the Commission, of each programme’s performance based on a 
limited  number  of  monitoring  indicators  (and  their  target  values),  which  must 
reflect the effectiveness, management and financial implementation of assistance, 

allocation of the reserve by the Commission, before 31 March 2004, to the most 
successful programmes or priorities, based on proposals from the Member States. 

The  Commission  presented  a  paper,  which  it  discussed  with  Member States  at  the 
meeting of the CDCR on 28 October 2003, on guiding principles for decisions on the 
allocation of the performance reserve. Nine guiding principles were outlined, the main 
ones  requiring  decisions  on  the  allocation  of  the  reserve  to  be  characterised  by 
transparency, accountability and equity. 

The  workload  relating  to  carrying  out  evaluations  and  allocating  the  performance 
reserve was concentrated in just a few months (late 2003 to early 2004). However, the 
preparatory work - defining the indicators and their target values, establishing a method 
for assessing the success or otherwise of a programme, and setting possible amounts for 
each  operation  –  began  in  2000  with  the  drawing-up  of  operational  programmes  and 
SPDs. 

Right  up  until  Member States  presented  their  final  proposals,  the  Commission  helped 
them  to  devise  transparent  allocation  methods  –  at  both  national  and  regional  level  – 
and  to  ensure  that  the  indicators  and  target  values  chosen  were  relevant.  The 
Commission  also  took  into  account  the  specific  institutional  features  of  certain 
Member States. 

In the 16th report on the implementation of the Structural Funds (2004), the Commission 
will  provide  detailed  information  on  the  allocation  of  the  performance  reserve  finally 
decided, with a breakdown by country and Objective. In addition, a detailed report on 
mid-term  evaluation  and  allocation  of  the  performance  reserve  was  drawn  up  in 
March 2004, for the attention of the Committee on the Development and Conversion of 
the Regions. 

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62 

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5.2. 

Other evaluations 

– 

Ex-post evaluation of Objective 1 (1994-99) 

Launched in November 2001, this study showed that the Structural Funds had a positive 
impact  on  the  GDP  of  European  regions  whose  development  is  lagging  behind.  For 
some  regions,  the  impact  of  Objective 1  programmes  were  quantified  by  econometric 
models. The most significant results were observed in Germany – the GDP of the new 
Länder is estimated to have increased by around 4% – and in Portugal, where GDP in 
1999 was around 4.5% higher than it would have been without Community assistance. 
The  added  value  of  EU  assistance  under  Objective 1  is  also  significant:  developing  a 
partnership  with  the  Member States  and  their  regions,  introducing  a  culture  of 
monitoring and evaluation. However, according to the study, research and development 
activity must be supported more, planning and management of major projects improved, 
and programme evaluation indicators (and their target values) defined realistically. As 
regards  the  2007-13  programming  period,  the  evaluation  highlighted  the  need  to 
strengthen institutional capacity in the new Member States. 

– 

Ex-post evaluation of Objective 2 (1994-99) 

This  evaluation  was  launched  in  December 2001  and  confirmed  the  relevance  of  the 
strategies  adopted  in  the  various  programmes.  However,  it  highlighted  the  need  to 
promote  measures  directly  linked  to  the  Lisbon  Strategy.  It  turns  out  that  the  regions 
which centred their programmes on research, development, innovation and technology 
transfer  are  those  which  have  created  jobs.  Also,  according  to  the  assessors,  the 
Objective 2 management procedures need to be simplified. As for Objective 1, the study 
recommends  strengthening  institutional  capacity  in  the  new  Member States,  including 
by introducing multi-annual programming and promoting partnership. 

– 

Ex-post evaluation of the Interreg II Initiative (1994-99) 

This  evaluation  proved  that  the  strategies  implemented  via  the  various  programmes 
were  appropriate  and  addressed  the  specific  problems  of  border  regions.  The 
programmes’  effectiveness  was  judged  to  be  satisfactory  overall,  particularly  in  the 
sphere of transport and energy networks. Their implementation and management were 
not entirely satisfactory, however: the Commission would have liked them to have been 
drawn  up  and  managed  on  a  genuinely  cross-border  basis  and  in  a  more  integrated 
manner  –  particularly  on  a  financial  level.  The  overall  impact  of  Interreg II  was 
nevertheless  considered  positive.  The  various  programmes  implemented  improved  the 
accessibility of border regions and promoted improved mobility through the investment 
made  in  transport.  Interreg II  also  had  a  beneficial  impact  on  the  production  sector: 
improved  services  for  SMEs,  joint  research  and  development  projects,  better 
cross-border  professional  mobility.  In  their  conclusions,  the  assessors  highlighted  the 
need  to  strengthen  the  means  of  cross-border  cooperation  (which  will  increase  with 
enlargement)  and  to  improve  regulation  of  its  implementation  and  management.  They 
also stressed the need for these cooperation programmes to complement the other forms 
of Community regional assistance. 

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– 

Ex-post evaluation of the Urban I Initiative (1994-99) 

The evaluation covered the 118 programmes launched during the period and examined 
the reasons for their effectiveness: complementarity with assistance under Objectives 1 
and  2,  synergy  between  projects  under  the  same  programme  and  active  partnership 
(particularly on questions of management and implementation). Two weaknesses were 
highlighted:  very  limited  private-sector  participation  and  poor  understanding  of 
Commission documents by those involved in the programmes. In terms of impact, the 
programmes  enabled  the  urban  areas  receiving  assistance  to  be  renovated  and 
modernised,  and  they  also  helped  to  improve  living  conditions  there.  In  some  cases, 
they helped the local authorities to devise an urban strategy. In their recommendations, 
however,  the  assessors  recognised  the  need  to  improve  the  monitoring  and  evaluation 
mechanisms; they also advocated setting up a transnational network among all the cities 
receiving assistance under Urban. 

– 

Study on the effectiveness of the systems for implementing the Structural Funds 

The  assessors  based  their  work  on  case  studies.  In  their  view,  the  problems  of 
ineffectiveness  and  complexity  arising  in  the  implementation  of  the  Structural Funds 
stem  from  the  Member States  and  their  interpretation  of  the  rules.  Programming,  the 
management  mechanisms,  ex-ante  and  mid-term  evaluations,  and  the  allocation  of 
resources on the basis of payments rather than commitments seemed to be satisfactory 
practices. By contrast, the authors of the study considered that the lengthy process for 
approving  programming  documents,  the  quality  and  use  of  information  on  monitoring 
programmes, the complexity of financial flows and the dual accounting applied in some 
regions could impair the effectiveness of Community assistance. The Commission took 
the study’s findings and recommendations into account when drawing up the 3rd report 
on economic and social cohesion. 

– 

Ex-post evaluation of the European Social Fund under Objectives 3, 4 and 1, and 
of the Employment and Adapt Community Initiatives (1994-99) 

This evaluation was launched in September 2002 and is currently being finalised. It is 
based  on  reading  national  evaluation  reports,  national  closure  reports,  and  qualitative 
field work. The interim provisional findings have been sent to the Partnership for ESF 
evaluation and to the ESF Committee. The final reports will be available in 2004. The 
draft final report’s main findings are: 

(i) 

the ESF has supported mainly training initiatives and combined measures 

(ii) 

(iii) 

the  impact  of  the  measures  has  varied  according  to  context,  but  "pathway" 
measures  and  those  focused  on  the  needs  of  individuals  seem  to  be  the  most 
fruitful 

the  ESF  has  also  supported  improvements  in  the  national  systems  relating  to 
training  and  the  job  market.  Overall,  it  can  be  concluded  that  the  ESF  has  also 
contributed  towards  consolidating  a  number  of  political  priorities,  such  as 
promoting equal opportunities helping the labour force to adapt. Partnership-based 
programming and management at various levels has encouraged a long-term view 
of the job market and made it possible to involve the social partners. 

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– 

Evaluation  of  innovative  measures  (Article 6  of  the  ESF  Regulation)  "Local 
employment strategies and innovation" 

This  evaluation  covers  an  Article 6  innovative  measure  aimed  at  developing  local 
employment strategies. Having started work at the beginning of 2003, the assessors will 
have to examine the achievements of the projects and the programme, draw lessons for 
similar  measures  in  future,  and  make  recommendations  to  the  Commission.  The  final 
report will be available in 2006. 

5.3. 

Other evaluation work 

5.3.1.  Cost-benefit analysis 

Article 26  of  Regulation  (EC)  No 1260/1999  requires  Member States  to  notify  major 
projects to the Commission and to provide information on cost-benefit analysis and the 
projects’ impact on employment and the environment. 

In  2003  the  DG  for  Regional  Policy  examined  and  gave  an  opinion  on  161  major 
projects  submitted  to  it,  most  of  which  related  to  the  environment  and  transport.  The 
European Investment Bank (EIB) provided an expert technical appraisal of 45 projects. 

5.3.2.  Methodological guides and tools 

Throughout 2003 DG REGIO put into effect a number of projects which will enable it 
to provide assistance with evaluation. For example, the MEANS package – regarded as 
a real instruction manual for evaluating socio-economic programmes – was updated; the 
complete guide will be available on DG REGIO’s website in the first half of 2004. This 
work  is  being  undertaken  in  close  cooperation  with  the  other  Directorates-General 
responsible for the Structural Funds. 

5.3.3.  Conference on evaluation 

In cooperation with the other Directorates-General responsible for the Structural Funds, 
DG REGIO held a major conference on Structural Funds evaluation in Budapest on 26 
and  27 June 2003.  The  main  subject  discussed  was  the  challenges  of  evaluation  in  an 
enlarged Europe. A total of 474 evaluation professionals took part in the conference and 
29 working papers were presented. 

Over the two days, speakers highlighted: 

– 

– 

– 

– 

the increase in evaluation work and expertise in the Member States, 

the importance of evaluation as an aid to decision-making, 

the  need,  when  evaluating  the  Structural Funds,  to  take  into  account  the 
increasingly  complex  nature  of  the  policies  being  implemented  and  to  help  the 
various parties involved to learn and to take responsibility, 

the time it takes to develop an evaluation culture within regional aid programmes 
(the aim being to improve the quality of the programmes themselves rather than 
just produce quality evaluations), 

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– 

– 

the  need,  when  evaluating  a  programme,  to  include  both  quantitative  and 
qualitative data, 

the  complementary  nature  of  evaluating  and  monitoring  Community  assistance 
programmes. 

5.3.4.  Mid-term verification of the additionality principle 

Among the general principles of the Structural Funds’ operation, additionality makes it 
possible  to  prevent  the  Community  Funds  from  replacing  appropriate  national  public 
expenditure  in  the  same  spheres  of  assistance.  Article 11(3)  of  Regulation  (EC) 
No 1260/1999  requires  the  Commission  to  carry  out  a  mid-term  verification  of 
compliance with the additionality principle in respect of the 2000-06 programmes. 

On completion of that verification, the Commission and the Member States may agree 
to revise the level of structural expenditure to be attained if the economic situation has 
resulted  in  developments  in  public  revenue  or  employment  in  the  Member State 
concerned  significantly  different  from  those  expected  at  the  time  of  the  ex-ante 
verification. 

This  work  was  undertaken  between  August 2003  and  February 2004  in  close 
cooperation with DG ECFIN. The main conclusions which can be drawn are: 

– 

– 

– 

– 

– 

Based on the information available, it appears that the additionality principle was 
complied  with  in  eight  Member States  (Belgium,  Spain,  Finland,  Greece, 
the Netherlands,  Portugal,  Austria  and  Sweden),  enabling  a  high  level  of  public 
investment to be maintained – in some cases higher than initially forecast. 

Three countries did not comply with the additionality principle during the period 
2000-02: Germany, Italy and Ireland. 

As this assessment will be followed up by an ex-post verification in 2005, there is 
still  time  for  public  spending  in  the  latter  three  countries  to  increase  to  a  level 
ensuring compliance with the additionality principle over the programming period 
as a whole. 

For the Member States not complying with the additionality principle – and after a 
case-by-case examination – the Commission nevertheless deemed it necessary to 
lower the expenditure target for the remainder of the programming period. 

Neither  France  nor  the United Kingdom  had  supplied  acceptable  additionality 
assessments by the 31 December 2003 deadline. 

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6. 

CONTROLS 

The Anti-Fraud Office 

In the course of investigations carried out during 2003, the Anti-Fraud Office undertook 
13 operational missions in the Member States regarding structural measures. For six of 
those missions, the Anti-Fraud Office took as its legal basis Regulation (Euratom, EC) 
No 2185/9627  concerning  on-the-spot  checks  and  inspections  carried  out  by  the 
Commission in order to protect the European Communities’ financial  interests against 
fraud and other irregularities. The other seven missions were to assist either the national 
administrative authorities or the judicial authorities. 

It  should  be  pointed  out  that,  as  well  as  carrying  out  operational  investigations  and 
coordinating  them  at  Community  level,  the  Anti-Fraud  Office  provides  all  forms  of 
assistance  in  order  to  facilitate  coordination  of  investigations  launched  by  national 
administrative or judicial authorities. 

Eight missions related to the ESF, of which four covered cases opened in 2003 and four 
concerned  investigations  launched  in  previous  years.  Three  missions  concerned  the 
ERDF and related to cases opened in 2000, 2002 and 2003. One mission concerning the 
EAGGF Guidance Section and one the FIFG related to cases opened in 2003. 

The investigations revealed false invoices and false declarations linked to an absence of 
supporting documents. 

responsible 

Also  during  2003  the  Anti-Fraud  Office  completed  a  joint  audit,  launched  with  the 
the  Structural Funds,  on  Member States’ 
Directorates-General 
implementation of Commission Regulation (EC) No 1681/94 as regards the systems and 
procedures for notifying and following up irregularities, as well as on the application of 
Article 8  of  Regulation  (EC)  No 438/2001.  The  audit’s  conclusions  were  sent  to  the 
Member States and a summary report was sent to the Council, the European Parliament 
and the Court of Auditors. 

for 

In addition, for 2003 the Member States  notified to the Commission under Regulation 
(EC) No 1681/1994 2 439 cases of irregularities involving a total of €340 173 487. 

Compared to 2002, both the number of cases of irregularities notified and the amounts 
involved are lower – representing about half the previous year’s figures28. This may be 
explained by the fact that control work prior to closure of the 1994-99 programmes had 
been  completed  in  relation  to  the  previous  year,  which  was  the  last  year  of  controls 
concerning the same period. 

It  must  also  be  pointed  out  that  Articles 3  and  12  of  Regulation  (EC)  No 1681/94 
require Member States to report to the Commission all cases of irregularities involving 

27 
28 

Regulation (Euratom, EC) No 2185/96 of 11 November 1996 - OJ L 292, 15.11.1996, p. 2. 
14th annual report on the Structural Funds (2002), point 3.2: 4 652 cases involving a total of €604 466 000. 

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€4 000  or  above.  It  should  be  noted  that  Regulation  (EC)  No 1681/94  does  not 
distinguish between fraud29 and other irregularities. 

The  Anti-Fraud  Office’s  involvement  in  the  closure  of  1994-99  programmes,  still  in 
progress, also permitted financial monitoring and application of Article 5 of Regulation 
(EC)  No 1681/94  with  respect  to  a  significant  number  of  cases.  Article 5  requires 
Member States  to  inform  the  Commission,  on  a  case-by-case  basis,  of  the  procedures 
instituted following irregularities notified and of important changes to those procedures. 
Since closure has not been completed, however, it is considered too soon to give data. 

The  Commission  was  not  informed  of  the  action  taken  on  some  cases  notified.  This 
mainly concerns programmes from the first programming period, although a number of 
them have been closed for some time. Nevertheless, since legal proceedings are still in 
progress  at  national  level  for  irregularities,  final  clearance  of  the  amounts  relating  to 
those irregularities must be suspended until the proceedings have been completed. 

ERDF 

As  regards  auditing  ERDF  expenditure,  DG REGIO’s  control  work  for  2003  had  two 
priorities: 

The  first  priority  was  to  examine  the  validity  statements  drawn  up  on  the  basis  of 
Article 8  of  Regulation  (EC)  No 2064/1997  when  ERDF  programmes  are  closed.  In 
those  statements,  an  independent  body  summarises  the  conclusions  of  the  controls 
carried out in previous years and gives its opinion as to the validity of the request for 
final payment as well as the legality and regularity of the operations underlying the final 
declaration of expenditure. This examination covered 744 validity statements at the end 
of 2003,  involving  practically all the programmes in question. A total of 229 of those 
statements  were  not  accepted  on  examination,  either  because  additional  checks  were 
required or because further information proved necessary. 

The  second  priority  was  to  audit  the  expenditure  declared  by  Member States  for  the 
1994-99  programmes.  The  aim  was  to  audit  a  sample  of  programmes  selected  in  the 
Member States  and  check  the  declared  expenditure’s  compliance  and  eligibility  by 
examining  a  representative  number  of  projects.  To  that  end,  17  programmes  in  12 
Member States were the subject of 36 audit missions. 

The remainder of DG REGIO’s ERDF audit effort focused on: 

– 

– 

examining the management and control systems set up by Member States for the 
2000-06 programming period. The follow-up to that investigation, begun in 2002, 
comprised  seven  audit  missions  in  seven  different  Member States.  Those  seven 
audits aimed to record the improvements introduced in response to the comments 
and recommendations made during previous audits; 

examining  the  application  of  Regulation  (EC)  No 1681/94.  Four  audits  were 
carried out. 

29 

For  a  definition  of  “fraud”,  see  Article 1(1)  of  the  Convention  on  the  protection  of  the  European 
Communities’ financial interests. 

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In all, DG REGIO carried out 48 audit missions to Member States in 2003. 

EAGGF 

The  first  priority  was  to  examine  the  validity  statements  drawn  up  on  the  basis  of 
Article 8  of  Regulation  (EC)  No 2064/97  when  EAGGF  programmes  are  closed.  The 
examination  covered  360  of  the  381  validity  statements  at  the  end  of  2003,  involving 
practically all of the programmes in question. On examination, 226 of those statements 
were  accepted.  The  others  were  not  accepted  at  that  stage,  either  because  additional 
checks were required or because further information proved necessary. 

The  second  priority  was  to  examine  the  management  and  control  systems  set  up  by 
Member States  for  the  2000-06  programming  period.  At  the  end  of  2003,  the  systems 
for 100 programmes – out of a total of 144 – had been examined. An on-the-spot audit 
was carried out on 33 programmes out of those 100 examinations. 

ESF 

It must first be pointed out that, besides continuing ESF audit work, 2003 was marked 
by the modernisation of ESF audit procedures (inter alia: introduction of a multi-annual 
ESF  audit  strategy  based  on  quantified  risk  analysis;  introduction  of  the  ESF  audit 
manual as part of the revised manual for all the Structural Funds) and the start of work 
relating to enlargement (launch of technical fact-finding missions to find out about the 
systems  set  up  in  the  10  new  Member States).  The  purpose  of  those  missions  was  to 
obtain  a  brief  on-the-spot  overview  of  the  systems  prior  to  receiving  the  written 
descriptions  which  the  Member States  will  send  in  accordance  with  Article 5  of 
Regulation  (EC)  No 438/2001.  By  the  end  of  2003,  four  missions  covering  five 
countries had been carried out. 

ESF audit work related to evaluating the systems for the 2000-06 programming period 
as part of the 2003-06 ESF audit strategy, which should make it possible – by the end of 
2004  –  to  be  reasonably  sure  about  the  reliability  of  the  management  and  control 
systems  set  up  in  the  Member States.  The  strategy  is  based  on  an  integrated  audit 
concept  and  on  progressively  mutual  auditing  between  the  Member States  and  the 
Commission. 

In  2003,  a  total  of  34  audit  missions  were  carried  out  for  the  2000-06  programming 
period; they can be broken down as follows: 

– 

– 

– 

– 

16 audits of Objective 1 systems 

1 audit of an Objective 2 system 

11 audits of Objective 3 systems 

6 audits of Equal systems. 

The audits carried out made  it  possible to continue practical on-the-spot evaluation of 
the system descriptions submitted by the Member States (Article 5 of Regulation (EC) 
No 438/2001). 

Three audits relating to closure of the 1994-99 period were also carried out. 

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FISHERIES 

The  ex-post  control  department  accorded  priority  to  auditing  systems  for  the 
management and control of FIFG programmes in the 2000-06 period and to the closure 
of 1994-99 programmes. 

A total of 14 audit missions were carried out in 2003. 

Eight  audit  missions  related  only  to  closure  of  1994-99  programmes  in  seven 
Member States;  three  related  only  to  verification  of  management  and  control  systems 
for  2000-06  programmes  in  two  Member States;  and  three  related  to  both  closure  and 
systems  verification  in  two  Member  States.  The  programmes  audited  in  respect  of 
closure involved €1 114 million, and those audited for management and control system 
verification  €814 million.  In 
in  both 
programming periods were audited in 2003, involving €18.2 million. Community aid of 
€1 million  was  found  to  be  non-eligible,  and  an  amount  to  be  determined  will  be 
deducted when closing the programmes of the two Member States concerned. 

total,  58  structural  projects  undertaken 

In  accordance  with  Regulation  (EC)  No 438/2001,  DG FISH  has  completed  the  desk 
check  of  the  management  and  control  systems  set  up  by  Member States  for  all  the 
programmes  for  which  it  is  the  lead  department,  and  by  31 March 2004  it  will  have 
completed  on-the-spot  checks  on  those  systems  in  the  13  Member States  concerned. 
Bilateral  discussions  are  in  progress  with  nine  Member States  to  clarify  a  number  of 
aspects following the desk and/or on-the-spot checks. Examination of the management 
and control systems in four Member States has been completed. 

7. 

OPINIONS OF THE COMMITTEES 

7.1. 

Committee on the Development and Conversion of the Regions 

The  CDCR  acts  as  a  management  committee  when  discussing  the  rules  for 
implementing  Regulation  (EC)  No 1260/1999,  and  as  an  advisory  committee  when 
discussing any other matter. It also provides a forum for information and debate on any 
specific  aspect  of  implementing  the  Structural Funds,  and  particularly  the  European 
Regional Development Fund. In total, some 70 cases were discussed at the 11 meetings 
of  the  CDCR  and  the  five  meetings  of  its  specialist  working  group  on  territorial  and 
urban development matters. 

The CDCR’s management committee work in 2003 featured, in particular, examination 
of  the  proposal  for  amending  Regulation  (EC)  No 1685/200030.  The  CDCR’s  most 
important  discussions  also  included  examining  questions  referred  to  it  on  the 
interpretation  of  the  automatic  decommitment  rule,  and  particularly  the  exceptions 
provided for in Article 31 of Regulation (EC) No 1260/1999. 

30 

Commission  Regulation  (EC)  No 1685/2000  of  28 July 2000  laying  down  detailed  rules  for  the 
implementation  of  Council  Regulation  (EC)  No 1260/1999  as  regards  eligibility  of  expenditure  of 
operations co-financed by the Structural Funds – OJ L 193, 29.7.2000, p. 39. 

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7.2. 

ESF Committee 

The ESF Committee met four times in 2003, and its technical working group six times. 
It  delivered  two  written  opinions.  The  first  was  on  the  amendment  of  Commission 
Regulation  (EC)  No 1685/2000,  with  particular  reference  to  Rules  1,  3  and  7.  Four 
countries  voted  against  the  change  to  Rule  1,  and  two  voted  against  the  changes  to 
Rules 3 and 7. Other countries voted in favour or did not respond. 

At its meeting on 18 June 2003, the Committee adopted an opinion on the Commission 
communication 'The Structural Funds and their coordination with the Cohesion Fund – 
Revised  Indicative  Guidelines'.  The  opinion  stressed  the  need  to  strengthen  aspects 
relating  to  human  resources  development  and  employment  as  an  across-the-board 
priority. It emphasised that partnership is an integral component in the implementation 
of programmes and that the involvement and contribution of the social partners should 
be  recognised  and  strengthened.  The  Committee  also  requested  that  the  text  of  the 
guidelines  should  be  updated  in  order  to  take  account  of  the  recent  revision  of  the 
European Employment Strategy. 

At  its  regular  meetings,  the  Committee  discussed  the  revised  European  Employment 
Strategy’s implications for ESF implementation, as well as reports on evaluation and the 
implementation of Article 6 and Equal. 

7.3. 

Committee on Agricultural Structures and Rural Development 

The STAR Committee (agriculture and rural development) met nine times in 2003 and 
acted as a management committee under the procedure provided for in Article 47(3) of 
Regulation (EC) No 1260/1999 on the following issues: 

– 

– 

– 

– 

Amendment of Commission Regulation (EC) No 2759/1999 regarding SAPARD. 
The Committee gave a favourable opinion. 

Commission  Regulation  (EC)  No 963/2003  amending  Commission  Regulation 
(EC)  No 445/2002  laying  down  detailed  rules  for  the  application  of  Council 
Regulation  (EC)  No 1257/1999  on  support  for  rural  development  from  the 
EAGGF. The Committee gave a favourable opinion. 

Commission  notice  amending  the  notice  to  Member States  of  14 April 2000 
laying down guidelines for the Community  initiative for rural development. The 
Committee gave a favourable opinion. 

Ad  hoc  Regulation  (EC)  No 141/2004  on  implementing  rules  for  specific  rural 
development measures for new Member States. The Committee gave a favourable 
opinion. 

The  Committee  gave  favourable  opinions  on  38  rural  development  plans  under 
Article 44(2)  of  Regulation  (EC)  No 1257/1999  and  on  14  amendments  to  rural 
development plans under Article 4 of Regulation (EC) No 1268/1999. 

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The Committee was also consulted on: 

– 

– 

Evaluation of the systems established by the Member States for the management 
and  control  of  Rural  Development  Programmes  for  2000-06  financed  under  the 
Guidance Fund. 

Revised  Indicative  Guidelines  for  the  Structural  Funds  and  their  Coordination 
with the Cohesion Fund. 

7.4. 

Advisory Committee on Fisheries and Aquaculture 

The Committee was consulted on five occasions in 2003 on the following subjects: 

– 

– 

– 

– 

– 

17 February 2003:  Second  revision  of  Regulation  (EC)  No 1685/2000  governing 
the  eligibility  rules  under  the  Structural  Funds.  The  consultation  took  place  by 
written procedure and resulted in a positive opinion. 

10 April 2003:  Information  on 
the  accompanying  measures  and  financial 
resources  required  by  affected  Member States  to  address  the  socio-economic 
impact of recovery plans, on the 2003 programme for innovative actions, and the 
2003 programme for technical assistance. 

24 June 2003:  Information  on  the  future  of  cohesion  policy,  information  on  the 
impact of the CFP reform on aid to the fleet, consultation on the revised indicative 
guidelines for the Structural Funds in future Member States (favourable opinion). 

29 August 2003:  Revision  of  the  list  of  Objective 2  eligibility  zones.  The 
consultation took place by written procedure and resulted in a positive opinion. 

19 November 2003:  Information  on  the  results  of  the  call  for  proposals  for 
innovative actions in 2003 and the implementation of previous projects under the 
similar call for proposals in 2002. 

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