Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation establishing a Cohesion Fund (COM(2004) 494 final — 2004/0166 (AVC))
Date: 2005-04-06
Institutions: European Economic and Social Committee
Subjects: Cohesion Fund, accession to the European Union, economic and social cohesion, sustainable development

C 255/88

EN

Official Journal of the European Union

14.10.2005

Opinion of the European Economic and Social Committee on the Proposal for a Council Regu-
lation establishing a Cohesion Fund

(COM(2004) 494 final — 2004/0166 (AVC))

(2005/C 255/17)

On 1 December 2004 the Council decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the abovementioned communi-
cation.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 18 March 2005. The rappor-
teur was Mr Francisco João Silva.

At its 416th plenary session, held on 6-7 April 2005 (meeting of 6 April), the European Economic and
Social Committee adopted the following opinion by 121 votes with 10 abstentions.

1. Introduction — the origin and key aims of the Cohe-

sion Fund

1.1
As provided for in the Maastricht Treaty, the Cohesion
Fund was set up in 1993 as a ‘cohesion financial instrument’
and formally given the status of a Community ‘Fund’ under
Regulation 1164/94 of 16 May 1994 (1) — amended in the
meantime by Regulations 1264/99 and 1265/99, both dated
21 June 1999 (2).

1.2
The Cohesion Fund was established to assist Member
States whose Gross National Product was below 90 % of the
Community average — this percentage was assessed on a
three-yearly basis after the 1999 amendment — which meant
that from the outset only four Member States were eligible for
assistance: the three countries arriving with the second wave of
EU enlargement — Spain, Greece and Portugal — and Ireland.

1.3
Under Regulation 1164/94, the Cohesion Fund helped
consolidate economic and social cohesion in the Community,
providing support for projects in the following areas:

— the environment;

— trans-European networks and transport infrastructures; and

— preparatory studies and technical support measures relating

to eligible projects.

Still with reference to transport

2.3
there
have not been similar improvements in the modernisation of
railway transport and the density of railway network coverage
in the four cohesion countries, which stands at 55 % of the EU
average.

infrastructure,

It has also been noted that investments in transport
2.4
infrastructure made with Cohesion Fund support are a key
factor in making the beneficiary regions attractive, giving a
boost to economic activity, with all
that
entails, such as productivity gains and growth in the real
income of the local population.

the benefits that

2.5
Recent studies point to the fact that the contribution of
the Structural Funds in general, and of the Cohesion Fund
more particularly, can also have a positive effect by attracting
businesses with a major R & D component to the regions
concerned, which cannot fail to provide a stimulus to sustained
growth throughout Europe.

2.6
The increase in per capita GDP in these four Member
States between 1994 and 2001 — on average 3 % in real terms
— was more than 1 % higher than the average annual increase
in the rest of the EU (4).

2. The impact of the Cohesion Fund from its creation to

the present time

3. The new proposal for a Council Regulation applying to
the Cohesion Fund, submitted by the Commission in
2004 — General comments

The contribution of the Structural Funds, especially the
2.1
Cohesion Fund,
is both visible and quantifiable in terms of
progress in achieving the ‘convergence’ objective in the four
Member States benefiting from the Funds to date.

For example,

2.2
‘the density of the motorway network in
these four countries increased from 20 % below the Com-
munity average in 1991 to 10 % above in 2001’ (3).

(1) OJ L 130 of 25.5.1994, p. 1
(2) OJ L 161 of 26.6.1999, p. 57
(3) Commission Communication on the ‘Third report on economic and

social cohesion’ COM(2004) 107 final

3.1
The 1 May 2004 enlargement of the European Union
from 15 to 25 Member States (the total number of members
being set to rise to 27 in the near future, with Bulgaria and
Romania being two countries which will also receive Cohesion
Fund support) calls for serious discussion about the importance
— in both qualitative terms (priority selection) and quantitative
terms (the money allocated to Community funds) — of the
methods used to attain the three key objectives of the Struc-
‘regional competitiveness and
tural Funds:
employment’ and ‘European territorial cooperation’.

‘convergence’,

(4) Idem

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3.2
Such a discussion is all the more urgent given that the
simultaneous accession of 10 new Member States, with a GDP
lower than the EU 15 average, has given rise to greater chal-
lenges for our efforts to achieve the ‘convergence’ objective, for
which purpose the Cohesion Fund is being deployed, together
with the ERDF and ESF.

4.2
The EESC thus has reservations as to the value of the
first-time application of the ‘n + 2’ rule to the Cohesion Fund;
these concerns are referred to generally in the EESC opinion on
the proposal for a Council Regulation laying down the general
provisions applying to the Structural Funds (5).

is

the

Hence

Commission

around
3.3
EUR 264,000 million (78 % of the total budget for European
development programmes) into the ‘convergence’ objective; of
this amount, around EUR 63,000 is earmarked for the Cohe-
sion Fund, which constitutes a significant increase over the
Fund's budget for 2000 — 2006: EUR 18,000 million.

channelling

3.4 With this in mind, the EESC assesses the Commission
initiative positively in preparation for new Structural Funds
rules and regulations for 2007 — 2013, providing a new legal
framework for European cohesion policy.

In the time frame envisaged for the current revision of
3.5
the rules on the Structural Funds, the latest statistics would
indicate that Greece, Portugal, the 10 new Member States from
the recent enlargement and, as soon as they join, Bulgaria and
Romania will benefit from the Cohesion Fund.

3.6
As far as the proposed Regulation on the Cohesion
Fund is concerned, designed to replace Council Regulation (EC)
1194/94, the EESC endorses the thrust of the proposal which
aims to bring together in this Regulation only the key objec-
tives and main lines of application and access; all aspects of
making this fund operational — basic principles, definition of
tasks and their division between the Member States and the
Commission, financial management rules, auditing and moni-
toring rules — are to be covered by the General Regulation
applying to all the Structural Funds.

Against this background, the Cohesion Fund will clearly
3.7
provide back-up for steps to refocus Community cohesion
policy on a limited number of selected priorities rooted in
the commitments and strategies set out at Lisbon in 2000
— a more competitive economy based on an approach relying
on knowledge and social cohesion — and those drawn up at
Gothenburg in 2001 — stressing the need for environmental
protection and the establishment of a sustainable development
model.

4. The new proposal for a Council Regulation applying to
the Cohesion Fund, submitted by the Commission in
2004 — Specific comments

4.1 Whilst accepting that the standardisation of Structural
Funds rules and procedures is an appropriate management
measure — for example, one positive step is the guideline
stipulating that Cohesion Fund measures will be able to be
programmed in conjunction with those of the ERDF, which is
an exception to the principle that each programme will be
financed by only one fund — the EESC feels it should be
pointed out that because of this standardisation, certain rules
are being applied to the Cohesion Fund which give rise to
serious misgivings.

One positive sign is that, as set out in Article 1(1), the
4.3
Cohesion Fund now aims to strengthen territorial cohesion as
well as economic and social cohesion, covering regions whose
per capita GDP is below 75 % of the Community average (EU
25).

4.4
The importance of this new aspect is easy to see, given
that the enlargement of the European Union from 15 to 25
countries has not only led to an approximately 12.5 % fall in
average per capita wealth, but has also meant that the percen-
tage of the population living in less developed areas has risen
from 20 % to 25 %.

4.5
In the ten Member States joining the EU in 2004,
around 92 % of the population live in regions where per capita
GDP is lower than 75 % of the Community average (EU 25) (6).

4.6
In the proposed regulation, the measures to strengthen
Community cohesion are part of comprehensive moves to
promote sustainable development.

4.6.1
possible areas for development:

This is illustrated in Article 2(3) which sets out

— energy efficiency and renewable energies, as part of envir-

onmental measures;

— rail, river and sea transport, intermodal transport systems
and clean urban transport, as part of transport measures.

4.7
Although this concern is not expressly mentioned, the
EESC feels that effective deployment of Cohesion Fund money
to invest in measures for improving the use of traditional
energy sources and increasing the share of renewable energy
sources will help reduce cohesion countries' energy depen-
dence;
these countries currently import about 80 % of the
energy they consume, although the 10 enlargement countries
depend much less on the outside for energy supplies.

4.8
However, these examples should not cause us to lose
sight of the fact that promoting sustainable development in
Europe requires cohesion policies to be implemented in rural
areas as a matter of urgency. Hence this sector cannot be kept
outside the scope of the Cohesion Fund without there being a
detrimental effect on the funding still provided by other Struc-
tural Funds for achieving CAP objectives.

(5) CESE 389/2005
(6) Commission Communication on the ‘Third report on economic and

social cohesion’ COM(2004) 107 final

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The EESC, bearing in mind that budgetary consolidation
4.9
is one of
the key pillars of convergence and consolidated
growth for the European economy, does however have some
reservations about possible inflexibility in applying the condi-
tionality provisions on ‘excessive government deficit’ to the
main objectives of the Cohesion Fund, as set out in Article 4
of the proposal in hand.

4.10
Indeed, such inflexibility can have a pernicious
effect on the effective deployment of Cohesion Fund
resources: allocation of
these resources is contingent on
whether an excessive deficit has been eliminated; however, one
of the causes of excessive deficits may be national governments'
efforts to counter economic, social and territorial disparities.

4.11
It should be borne in mind that success in keeping
public deficits within acceptable limits does not mean that the
Member States concerned have also managed to remove
economic, social and territorial disparities.

5. Conclusions and recommendations

5.1
Overall, the EESC welcomes the proposed Council Regu-
lation on the Cohesion Fund, together with the alignment of
the procedures applying to the Cohesion Fund on the general
rules drawn up for the other Structural Funds.

Brussels, 6 April 2005.

5.2
The decision to enlarge the scope of the Cohesion Fund
to include infrastructure development policies which respond
to major environmental concerns — such as funding for ‘clean’
urban transport — is also worth highlighting as positive.

5.3 With a view to achieving the ‘convergence’ objective
more efficiently and more quickly, the EESC recommends that
the Commission work together with Member States to ensure
that their operational programmes secure efficient, harmonised
deployment of ERDF and Cohesion Fund resources so that, in
the Member States receiving aid, national convergence goes
hand in hand with regional convergence.

As part of its analysis of the advantages and potential
5.4
disadvantages of the stability and convergence pact, the EESC
urges the Commission to give due thought to the value of the
conditionality provision on ‘excessive government deficit’
in
relation to the objectives of the Member States receiving aid
from the Cohesion Fund; it should be borne in mind that his
provision must not be applied in such a way as to hamper the
deployment of Cohesion Fund resources for achieving the
‘convergence’ objective.

Lastly, as stated in the opinion on the proposal for a
5.5
Council Regulation laying down the general provisions
applying to the Structural Funds (7), the EESC advocates allo-
cating more resources to the Cohesion Fund, bearing in mind
that the effect of the scheduled increase in resources will be
completely diluted by the increase in the number of Member
States which, following the latest wave of enlargement, will
benefit from this Fund.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(7) Idem footnote 5