Communication from the Commission - The Growth and Jobs Strategy and the Reform of European cohesion policy - Fourth progress report on cohesion {SEC(2006) 726)
Date: 2006-06-12
Institutions: European Commission
Subjects: EU regional policy, economic and social cohesion, economic growth, enlargement of the Union, labour market, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.6.2006 
COM(2006) 281 final 

COMMUNICATION FROM THE COMMISSION 

The Growth and Jobs Strategy and the Reform of European cohesion policy 
Fourth progress report on cohesion 

{SEC(2006) 726) 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

Economic And Social Disparities In The Enlarged Eu................................................ 3 

Growth – still slow but expected to pick up................................................................. 3 

Disparities .................................................................................................................... 4 

1.2.1.  GDP – new MS grow faster but convergence still a long term perspective ................ 4 

1.2.2.  Employment – 24 million new jobs needed to reach 70% target................................. 4 

1.3. 

Trends in disparities ..................................................................................................... 4 

1.3.1.  Disparities between Objectives… ................................................................................ 4 

1.3.2.  …and within each objective......................................................................................... 5 

1.3.3.  Contribution of R&D and ICT to sustainable growth.................................................. 6 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

Recent developments in EU cohesion policy............................................................... 7 

Budget execution 2005 – record levels of commitments ............................................. 7 

Community Strategic Guidelines for Cohesion 2007-2013 ......................................... 7 

“Cohesion Policy and cities: the urban contribution to growth and jobs in the 
regions” ........................................................................................................................ 7 

Cohesion policy at the heart of the Growth and Jobs strategy..................................... 8 

Resources: summary of European Council conclusions of December 2005 ............... 9 

Innovations in the new cohesion policy programmes ................................................ 10 

2.6.1. 

JASPERS ................................................................................................................... 10 

2.6.2. 

JEREMIE ................................................................................................................... 10 

2.6.3. 

JESSICA .................................................................................................................... 11 

2.6.4.  Modernisation of public services ............................................................................... 11 

2.7. 

Rural Development Strategic Guidelines and the European Fisheries Fund ............. 11 

EN 

2 

   EN 

 
COMMUNICATION FROM THE COMMISSION 

The Growth and Jobs Strategy and the Reform of European cohesion policy 
Fourth progress report on cohesion 

Introduction 

In  terms  of  the  development  of  EU  cohesion  policy,  the  period  since  the  publication  of  the 
Third Progress Report in spring 2005 was an important one for three principal reasons. First, 
after  the  historic  enlargement  in  May  2004,  the  implementation  of  cohesion  programmes  in 
the new Member States gathered pace in 2005 and the results are now in the first full year of 
implementation.  Second,  there  were  major  advances  in  preparing  for  the  2007-2013 
programming period. In particular, the Inter-Institutional Agreement signed on 17 May 2006 
by  Parliament,  Council  and  Commission  on  the  Financial  Perspectives  for  2007-2013 
provided  the  basis  for  Member  States  and  regions  across  the  EU  to  move  ahead  with  the 
preparation of new programmes. In addition, the Commission adopted several key documents 
to  lay  the  ground  for  this  work  (including  the  draft  Community  Strategic  Guidelines  for 
Cohesion,  the  draft  Community  Strategic  Guidelines  on  Rural  Development  and  Regional 
State  Aid  Guidelines  2007-2013).  Third,  key  policy  decisions  taken  at  the  highest  level  in 
2005 established the central place of cohesion policy in the Union’s growth and jobs agenda 
(the “Lisbon strategy”).  

This  fourth  progress  report  addresses  these  issues.  It  begins  by  setting  the  scene  with  an 
update on trends in, and disparities between, the Member States and regions. This is followed 
by an outline of the key developments in the policy framework including the agreement on the 
resources for cohesion policy for the Financial Perspectives 2007-2013.  

1. 

ECONOMIC AND SOCIAL DISPARITIES IN THE ENLARGED EU 

This section provides a snapshot of social and economic trends and in disparity levels. New 
evidence  is  presented  on  determining  factors  of  disparities  in  GDP,  in  growth  rates  and  in 
employment,  notably  in  relation  to  the  amounts  of  investment  in  R&D  expenditure  and  the 
information society.  

1.1. 

Growth – still slow but expected to pick up 

In  2005,  the  Union’s  economy  was  characterised  by  continued  low  growth  by  historical 
standards.  Between  2000  and  2004,  GDP  growth  in  the  EU’s  25  Member  States  averaged 
little  more  than  1½%  per  year.  There  is  considerable  variation  across  the  EU,  with  the 
strongest performances found mainly among the least prosperous Member States, in particular 
the  Baltic  states  and  Slovakia,  but  also  in  Greece  and  Ireland,  as  well  as  the  accession 
countries of Romania and Bulgaria. The lowest growth rates were found in several relatively 
prosperous Member States including Germany, Denmark, Italy, the Netherlands and Portugal, 
as well as Malta, all of which had growth of less than 1% per year.  

The European Commission’s forecasts envisage a pick-up of growth to more than 2% across 
the EU between 2005 and 2007. Growth is expected to exceed 3% per year in 16 of the 25 
Member States, as well as in Romania and Bulgaria. Growth is not expected to exceed 2% by 

EN 

3 

   EN 

 
much  –  if  at  all  –  in  Germany,  Italy,  France,  Belgium,  the  Netherlands,  Austria,  Denmark, 
Portugal and Malta. These countries account for over half the total population in the EU27.  

1.2. 

Disparities 

1.2.1.  GDP – new MS grow faster but convergence still a long term perspective 

The relatively rapid growth in the thirteen cohesion countries compared to most of the EU15 
countries (3.6 % per year against a EU15 average of 2.2 % per year, measured over the period 
1995-2005) suggests that income convergence has occurred; yet, the size of the income gap 
means that it will be many years before the group as a whole achieves substantial narrowing 
of the gaps. However, some of the new Member States have already reached the level of the 
least  wealthy  EU-15  countries  and  similarly,  per  capita  income  levels  in  Spain  continue  to 
converge on those in Italy and Germany..  

1.2.2.  Employment – 24 million new jobs needed to reach 70% target 

In 2004, EU employment grew by 0.6%. The average overall employment rate1 increased by 
0.4 percentage points to 63.3% (64.7% in EU15 and 56.0% in EU10). The EU still falls short 
of the Lisbon employment rate target of 70% that is to be reached by 2010, despite the fact 
that  there  have  been  relatively  high  rates  of  employment  growth.  Between  1998  and  2004, 
almost 10 million additional jobs were created in the EU25 (slightly less in the EU27, due to 
substantial employment losses in Romania). Just over half of this job growth occurred in the 
1998-2000 period, while job growth between 2000 and 2004 led to the creation of 4½ million 
jobs.  The  most  recent  years  have  also  seen  a  tailing  off  of  the  trend  towards  job  losses  in 
Poland, Germany and Romania, which have contributed adversely to the performance of the 
EU27 since 2000 – in these three countries, total employment fell by almost 1½ million in the 
2000-2004 period. 

In order to reach the 70% employment target, 24 million additional jobs would be needed in 
the EU27 – an increase of almost 12% on current employment levels. For the new Member 
States plus Romania and Bulgaria, due to the persistence of low employment rates in most of 
the large countries, in particular Poland and Bulgaria, the overall increase required is almost 
25% of current employment levels.  

1.3. 

Trends in disparities 

The following is an examination of the situation and trends with regard to the different groups 
and regions to be targeted by cohesion policy for the period 2007-2013 in accordance with the 
proposals  of  the  Commission  of  July  2004  retained  in  the  agreement  between  the  Member 
States in the European Council of December 2005. 

1.3.1.  Disparities between Objectives… 

The new Convergence objective for 2007-2013 (regions where GDP per head is less than 75% 
of  the  EU  average,  2000-2002)  applies  to  100  regions,  including  16  granted  transitional 
‘phasing-out’  status2  –  accounting  for  just  over  35%  of  the  EU27  population.  The  new 

1 
2 

As a percentage of the population aged 15-64.  
Regions  where  per  capita  GDP  would  have  been  below  75%  of  the  EU15  average  (the  so-called 
statistical effect of enlargement). 

EN 

4 

   EN 

 
                                                 
Regional Competitiveness and Employment (RCE) objective applies in principle to the rest of 
the  Union,  or  to  155  regions  with  61%  of  EU27  population,  while  another  13  regions  are 
classified as ‘phasing-in’3 (almost 4% of population).  

The Convergence regions (including those in phasing-out) are characterised by low levels of 
GDP  and  employment,  as  well  as  high  unemployment.  Their  total  share  in  EU27  GDP  in 
2002 is only 12½% compared to a 35% population share. Although current average growth in 
these regions is above the average EU level, the rate is, in general, insufficient to attain the 
EU average in terms of the level of GDP per head in the near future. 

The  RCE  regions  collectively  have  relatively  high  GDP  levels;  however,  growth  remains 
weak  in  many  regions,  and  employment  rates  fall  well  short  of  the  70%  target  in  most  of 
them. Similarly, unemployment rates are relatively low, but still at almost 7% for the group as 
a  whole.  Growth  performance  is  better  in  the  regions  phasing-in,  reflecting  the  successful 
move  out  of  their  current  priority  Objective  1  status.  Nevertheless,  GDP  and  employment 
levels still lag behind those in the other RCE regions, while unemployment is higher. These 
averages suggest that real needs persist throughout the EU requiring continued investment, in 
order to raise growth potential in line with the Lisbon objectives. 

1.3.2.  …and within each objective 

There are wide regional variations across the EU in growth rate; in the Convergence objective 
regions,  for  example,  growth  averaged  2.6%  per  year  between  1995  and  2002,  yet  in  16  of 
these regions it was less than 1%, while in 15 others it exceeded 5%.  

GDP levels also indicate widely differing regional situations within each objective. Under the 
Convergence  objective,  there  are  several  regions  with  GDP  per  head  (in  PPS  terms)  below 
25% of the EU average in 2002, all in Romania and Bulgaria (these two currently account for 
the  12  least  prosperous  regions).  At  the  same  time,  there  are  nine  regions  covered  by  the 
phasing-out  provisions,  where  GDP  per  head  is  over  80%  of  the  EU25  average.  Under  the 
RCE  objective  (including  phasing-in  regions),  8  regions  have  GDP  per  head  below  85%  of 
the EU25 figure, while in 7 others it is more than 150% of this.  

The employment rate in regions covered by the RCE objective is 10 percentage points higher 
then in Convergence regions. Large gaps in employment rates can be found between regions 
within each objective. Thus in the Convergence regions, over 25 million persons live in high 
employment regions, while another 27 million live in low employment regions, with the gap 
between the low and high employment regions exceeding 10 percentage points. Overall, the 
70%  employment  rate  target  is  achieved  in  only  two  regions  in  the  Convergence  objective, 
Cornwall in the UK and Centro in Portugal. 

In RCE regions, the average employment rate is higher, at 66.7%, but here also employment 
rates differ by 10 percentage points or more between high and low employment regions. The 
70% employment rate objective is met in 49 RCE regions. 

Since the publication of the Third progress report on cohesion4, there has been little change in 
the  summary  measures  of  regional  disparity  levels.  This  is  unsurprising  since  the  major 

3 

4 

Regions currently eligible for Objective 1 not fulfilling the criteria for the Convergence objective even 
when the statistical effect of enlargement is taken into account. 
COM (2005) 192 of 17.5.2005 

EN 

5 

   EN 

 
                                                 
macroeconomic indicators rarely change in a major way in such a short period of time. Using 
figures  for  the  EU27  (as  opposed  to  EU25,  which  were  used  in  the  Third  progress  report) 
shows  that  in  2002  the  10%  of  EU27  population  living  in  the  most  prosperous  regions 
accounted for over 19% of total GDP for the EU27, compared to only 1.5% for the 10% of 
population living in the least wealthy regions. If GDP in PPS is considered - the most wealthy 
10% account for just over 15% of GDP in these terms while the share for the least wealthy 
10% is over 3%. In these PPS terms, the ratio between the top and bottom 10% in terms of 
GDP  is  5:1.  The  PPS  adjustment  is  important.  Unadjusted  for  relative  prices,  the  ratio  (in 
euros) is 12,5:1. 

1.3.3.  Contribution of R&D and ICT to sustainable growth 

R&D is one of the key factors in determining a region’s innovative capacity. While not every 
region can have a major R&D capacity, the concentration of high levels of R&D expenditure 
in  a  fairly  limited  number  of  EU  regions  raises  concern.  Estimates  of  R&D  expenditure  by 
region5 suggest that 35 regions have R&D intensities exceeding the Lisbon target for an EU-
wide average of 3% of GDP. These 35 regions account for 46% of total R&D expenditure in 
the EU27 – which is twice their share in GDP. At the higher end, R&D expenditure is 7% of 
GDP in Braunschweig (DE), and it exceeds 4% in another 12 regions.  

The  concentration  of  activity  in  this  field  inevitably  means  that  in  many  regions,  there  is 
practically no expenditure on R&D at all – in 47 regions R&D expenditure is below 0.5% of 
GDP.  Collectively,  these  47  regions  account  for  approximately  0,5%  of  total  R&D 
expenditure in the EU27 (their GDP share is 3,5%).  

ICT access is also recognised as an important driver for developing the knowledge economy. 
Across  the  EU  as  a  whole,  almost  half  of  all  households  had  internet  access  in  2005.  A 
comparison  of  the  figures  shows  that  there  are  marked  differences  between  Member  States, 
with penetration rates exceeding 70% in the Netherlands, Denmark and Sweden, while they 
are  around  20%  in  Lithuania,  the  Czech  Republic,  Hungary,  Slovakia,  and  Greece. 
Penetration  rates  are  also  generally  much  lower  among  the  new  Member  States,  with  the 
notable exceptions of Slovenia (48%) and Latvia (42%).  

In  today’s  Objective  1  regions,  only  around  one-third  of  all  households  have  access  to  the 
internet.  For  these  regions,  internet  access  is  lower  compared  to  other  regions  in  the  same 
Member  State;  the  gap  is  particularly  evident  in  Spain,  Belgium  and  Italy.  However, 
differences  are  more  marked  between  Member  States  than  within  them  –  in  Objective  1 
regions in Sweden, the UK or Germany internet access is greater than for EU households as a 
whole,  and  well  above  the  access  in  non-Objective  1  regions  in  Italy,  for  example.  Thus,  a 
territorial broadband gap continues to persist in internet use, in broadband coverage, there is a 
90% availability in EU15 urban households compared to 60% of the rural population. 

5 

There  are  some  measurement  difficulties  with  this  data,  so  national  level  data  has  been  used  for 
Sweden, Belgium and Ireland, NUTS level 1 for the UK, while there is no data for Malta. 

EN 

6 

   EN 

 
                                                 
2. 

RECENT DEVELOPMENTS IN EU COHESION POLICY  

2.1. 

Budget execution 2005 – record levels of commitments  

In 2005, € 27,1 billion was committed under the ERDF, Cohesion Fund, and the pre-accession 
fund designated for candidate countries (ISPA), with commitments totalling €11.2 billion for 
the  ESF,  the  highest  figures  ever  committed  in  one  year  under  cohesion  policy.  Overall  in 
2005, € 16,9 billion was paid under the ERDF and € 3 billion under Cohesion Fund and ISPA 
together. For the ESF, payments amounted to a further €11.2 billion. 

For  the  four  Structural  Funds,  Cohesion  Fund  and  ISPA  taken  together,  payments  made  in 
2005  reached  more  than  €  33  billion.  In  terms  of  execution,  for  the  initial  period  of 
programming  after  accession,  the  new  Member  States  have  been  in  a  situation  which  is 
broadly  similar  to  that  faced  by  the  old  Member  States  in  the  start-up  phase  of  the 
programming period 2000-2006. 

2.2. 

Community Strategic Guidelines for Cohesion 2007-2013 

As a first step in launching the discussion on the priorities for the new generation of cohesion 
policy  programmes,  the  Commission  published  on  6  July  2005  draft  document  entitled 
“Cohesion  Policy  in  Support  of  Growth  and  Jobs:  Community  Strategic  Guidelines,  2007-
2013”6. 

The  draft  Guidelines  set  out  a  framework  for  the  new  programmes  to  be  supported  by  the 
European  Regional  Development  Fund  (ERDF),  the  European  Social  Fund  (ESF)  and  the 
Cohesion  Fund.  The  key  test  for  cohesion  policy  programmes  in  future  will  be  their 
contribution to growth and jobs in line with the renewed Lisbon agenda. The draft Guidelines 
reflect the role of cohesion policy as the main instrument at EU level in the realisation of the 
EU’s ambition to become a) a more attractive place to invest and work in; b) an area of high 
growth,  competitiveness  and  innovation;  c)  a  place  of  full  employment  and  higher 
productivity with more and better jobs. 

Following  the  adoption  of  the  draft  Guidelines,  the  Commission  launched  a  public 
consultation in July 2005 to gather views on the priorities for the new generation of cohesion 
policy  programmes.  The  results  of  the  consultation  exercise  will  help  to  shape  the  final 
version  of  the  Guidelines  to  be  communicated  by  the  Commission  to  the  Council  after  the 
new  regulations  are  adopted  in  2006  and  in  the  light  of  the  opinion  of  the  European 
Parliament, as well as those of the Committee of the Regions and the Economic and Social 
Committee. 

2.3. 

“Cohesion  Policy  and  cities:  the  urban  contribution  to  growth  and  jobs  in  the 
regions” 

As  a  complement  to  the  Community  Strategic  Guidelines  for  Cohesion,  2007-2013,  the 
Commission  will  present  a  Communication  in  2006  in  the  key  field  of  the  contribution  of 
urban  areas  to  growth  and  jobs  in  the  regions  This  document  will  serve  as  a  reference  for 
Member States and regions in drawing up their National Strategic Reference Frameworks for 

6 

COM (2005) 299 of 5.7.2005 

EN 

7 

   EN 

 
                                                 
cohesion  policy  and  the  resulting  operational  programmes.  A  Commission  staff  working 
paper on the contribution of urban areas to growth and jobs was published on 23 November 
2005 (see Table 4 in annex).  

attractiveness,  or 

While recognising that many competencies are held at the national or regional level, there is 
much that cities can do, particularly when their capacity for action is reinforced by European 
programmes. The guidelines for various priority areas on which cities can take action include 
improving 
entrepreneurship, 
employability  and  the  growth  of  the  knowledge  economy;  community  development  and 
reducing disparities between neighbourhoods and social groups, improving local security and 
crime  prevention.  Cities  concentrate  not  only  opportunities  but  also  challenges  and  account 
must be taken of the specific problems facing urban areas. The development of an effective 
partnership is also essential, bringing on board actors at all levels to address these challenges. 

readiness’,  promoting 

‘investment 

2.4. 

Cohesion policy at the heart of the Growth and Jobs strategy 

With  the  relaunch  of  the  Lisbon  strategy,  cohesion  policy  has  been  recognized  as  a  key 
instrument at the Community level contributing to the implementation of the growth and jobs 
strategy – not just because it represents one third of the Community budget, but also because 
strategies designed at local and regional levels must also form an integral part of the effort to 
promote  growth  and  jobs.  The  role  of  SMEs,  the  need  to  meet  local  skill  demands,  the 
importance  of  clusters,  the  need  for  local  innovation  centres  is  such  that  in  many  cases 
strategies  also  have  to  be  built  from  below,  at  the  regional  and  local  levels.  Moreover,  this 
applies not only to the economic agenda but also to the broader effort to involve citizens who, 
through the partnership and multilevel governance arrangements under which cohesion policy 
is  managed,  have  the  chance  to  become  directly  involved  in  the  Union's  growth  and  jobs 
strategy.  

This approach is grounded both in the priorities contained in the draft Community Strategic 
Guidelines, 2007-2013, and in the proposal that quantitative expenditure targets for the next 
generation  of  cohesion  policy  programmes  should  be  set  so  that  a  certain  percentage  of  the 
funds  will  be  used  for  purposes  clearly  linked  to  the  Growth  and  Jobs  Strategy 
(“earmarking”). In accordance with the conclusions of the December 2005 European Council, 
the 15 Member States before the latest enlargement will show the way by adopting ambitious 
earmarking targets (for the Convergence and the Regional Competitiveness and Employment 
objectives the targets equate to 60% and 75% of total spending, respectively). New MS have 
the possibility to adopt earmarking targets on a voluntary basis. The draft regulations require 
reporting on the achievements regarding the earmarking targets.  

As  part  of  the  new  governance  cycle  of  the  Growth  and  Jobs  Strategy  Member  States 
submitted their National Reform Programmes in autumn 2005 followed by the Commission’s 
assessment of these national strategies in the form of the Annual Progress Report adopted in 
January 20067. 

The  Annual  Progress  Report  (APR)  made  several  recommendations  relevant  to  cohesion 
policy. First, it recommended that Member States ensure that Community cohesion and rural 
development spending is targeted towards supporting the Lisbon Strategy in general. In other 
words,  cohesion  policy  programmes  should  give  direct  backing  to  the  National  Reform 

7 

COM (2006) 30 of 25.1.2006 

EN 

8 

   EN 

 
                                                 
Programmes.  In  particular,  the  APR  recommended  that  in  the  context  of  the  new  cohesion 
policy programmes, the new Member States should be encouraged to earmark cohesion policy 
resources for measures in pursuit of the Lisbon objectives, as was already agreed for the EU-
15 by the December 2005 European Council. 

Second,  the  APR  highlighted  the  need  for  stronger  efforts  to  develop  coordination 
mechanisms  between  those  responsible  for  the  national  reform  programmes  and  those 
preparing the cohesion policy programmes, for the period 2007-2013. These links would need 
to be established quickly as the preparation of these programmes intensifies, beginning with 
the  adoption  of  the  National  Strategic  Reference  Frameworks.  Third,  the  Annual  Progress 
Report stressed that Member States should take into account the macro-economic impact of 
transfers  from  cohesion  policy  resources.  Finally,  the  APR  recommended  that  the  new 
generation  of  cohesion  policy  programmes  reflect  the  priorities  contained  in  the  National 
Reform Programmes and the 4 priority actions8. 

The  Spring  European  Council  2006  confirmed  many  of  the  APR’s  recommendations  and 
concluded that Member States should take account of the priorities in their National Reform 
Programmes when drawing up their National Strategic Reference Frameworks. 

2.5. 

Resources: summary of European Council conclusions of December 2005 

The  conclusions  of  the  European  Council  in  December  2005  and  the  adoption  of  the  Inter-
institutional agreement on 17 May 2006 pave the way for the EP and the Council to reach an 
agreement  on  the  financial  framework  for  the  Community  budget  2007-2013,  a  key  step 
towards the preparation of the new generation of cohesion policy programmes. As a result, the 
cohesion  policy  budget  for  the  period  2007-2013  would  amount  to  EUR  308  billion 
equivalent  to  0.37%  of  the  GNI  of  the  EU27.  This  represents  a  reduction  of  around  10% 
compared  to  the  Commission's  proposal,  with  the  European  territorial cooperation objective 
and  the  Regional  Competitiveness  and  Employment  objective  (excluding  the  "phasing  in" 
transitional  regime)  contributing  the  most,  with  a  reduction  of  around  -50%  and  -20% 
respectively. This calls for an even greater effort of concentration to ensure the effective and 
efficient use of Community resources.  

The  new  Member  States  would  receive  51.3%  of  total  cohesion  policy  resources.  In  annual 
averages, this corresponds, in absolute terms, to an increase of around 165% of the financial 
resources available compared to the period 2004-2006 (year on year). In terms of maximum 
transfer  to  national  budgets  (capping),  average  transfers  to  the  new  Member  States  would 
represent around 3.5% of their GDP compared to 3.8% in the Commission's proposal. 

The conclusions of the European Council in December, confirmed by the political agreement 
reached on the legislative proposals in May 2006, have also contributed to speeding up work 
on the new regulatory texts, in particular by clarifying the Council's position on a number of 
issues such as the eligibility of non-reimbursable VAT, housing expenditures, maximum co-
financing  rates  and  the  basis  for  calculating  such  rates,  as  well  as  the  application  of  the 
automatic decommitment (N+2) rule. Overall, Member States have tried to obtain maximum 
flexibility  in  the  allocation,  management,  and  control  of  Community  resources.  The  new 

8 

1)  Investing  more  in  knowledge  and  innovation;  2)  Unlocking  the  business  potential,  particularly  of 
SMEs; 3) Responding to globalisation and ageing; and 4) Moving towards an efficient and integrated 
EU energy policy 

EN 

9 

   EN 

 
                                                 
provisions will have to be taken on board while ensuring the financial discipline and thematic, 
financial and geographical concentration defended by the Commission. 

2.6. 

Innovations in the new cohesion policy programmes 

Over the past year, the Commission has been developing new instruments to assist Member 
States  and  the  regions  to  improve  the  quality  of  projects  while,  at  the  same  time,  making 
Community  financial  resources  work  harder  by  increasing  the  leverage  effect  of  cohesion 
policy.  Accordingly,  for  the  new  programmes,  specific  initiatives  have  been  developed  to 
promote  financial  engineering  for  start-ups  and  micro-enterprises,  combining  technical 
assistance  and  grants,  with  non-grant  instruments  such  as  loans,  equity,  venture  capital  or 
guarantees.  These  actions  will  be  undertaken  through  enhanced  cooperation,  as  agreed 
between  the  Commission  and  the  European  Investment  Bank  Group  and  other  International 
Financial  Institutions  on  financial  engineering  on  the  basis  of  the  Memoranda  of 
Understanding that were signed on 30 May 2006. The added value of cooperation in this field 
includes  providing  additional  loan  resources  for  business  formation  and  development  in  the 
regions of the EU; contributing financial and managerial expertise from specialist institutions 
such  as  the  EIB  Group  and  other  International  Financial  Institutions,  as  well  as  from  the 
financial  sector  in  general;  creating  strong  incentives  for  successful  implementation  by 
beneficiaries  by  combining  grants  with  loans;  and  ensuring  long-term  sustainability  through 
the revolving character of the grant contribution to financial engineering actions. 

2.6.1. 

JASPERS 

JASPERS, “Joint Assistance in Supporting Projects in European Regions”, is a new technical 
assistance  partnership  between  the  Commission,  the  European  Investment  Bank  and  the 
European Bank for Reconstruction and Development. It will be placed at the disposal of the 
Member States to assist with the preparation of large projects which will be supported by the 
Cohesion Fund and the ERDF. This reflects the wide experience of the EIB and the EBRD in 
large  project  preparation,  notably  in  the  transport  and  environmental  sectors.  The  combined 
efforts  of  the  three  institutions  are  intended  to  support  the  successful  implementation  of 
cohesion  policy  in  the  programming  period  2007-2013  by  greatly  increasing  the  resources 
available for project preparation.  

The  main  objective  of  JASPERS  is  to  assist  the  Member  States  in  the  complex  task  of 
preparing quality projects so that they can be approved more quickly for EU support by the 
services  of  the  Commission.  This  will  include  support  for  developing  projects  based  on 
mature  public-private  partnership  arrangements.  JASPERS  will  provide  comprehensive 
assistance for all stages of the project cycle from the initial identification of a project through 
to the Commission decision to grant assistance.  

2.6.2. 

JEREMIE 

In  order  to  improve  access  to  finance  for  business  development,  a  new  initiative  has  been 
established  in  partnership  with  the  European  Investment  Fund  (EIF).  The  initiative,  Joint 
European  Resources  for  Micro  to  Medium  Enterprises  (“JEREMIE”),  began  work  in  2006 
with an evaluation of the gaps in the provision of financial engineering products in Member 
States and regions (such as venture capital funds, loans and guarantees). 

This  will  prepare  the  ground  for  a  second  phase  in  which  the  EIF  or  similar  financial 
institution will support the authorities responsible for cohesion programmes to bridge the gaps 

EN 

10 

   EN 

 
identified. This support will take the form of expert management of resources set aside under 
the programme for developing access to finance, as well as the attraction and accreditation of 
financial  intermediaries  who  would  on-lend  for  business  development.  The  successful 
implementation  of  the  JEREMIE  initiative  will,  however,  require  the  full  support  and 
cooperation of the authorities in the Member States and regions. 

2.6.3. 

JESSICA 

Work  has  begun  on  JESSICA  (Joint  European  Support  for  Sustainable  Investment  in  City 
Areas) as a framework for enhanced cooperation between the Commission and the EIB, the 
CEB  (Council  of  Europe  Development  Bank)  and  other  International  Financial  Institutions 
(IFIs) on financial engineering for sustainable urban development. Its objective is to provide 
the authorities with a ready-made solution to the complex task of financing projects for urban 
renewal and development through the use of revolving funds.  

JESSICA  is  being  put  in  place  in  a  partnership  between  the  Commission,  the  European 
Investment Bank and the Council of Europe Development Bank. 

2.6.4.  Modernisation of public services 

The  draft  ESF  Regulation  for  the  new  programming  period  includes  a  new  specific  priority 
under  the  Convergence  objective  aiming  at  strengthening  institutional  capacity  and  the 
efficiency of public administrations and public services at national, regional and local level. 
The  emphasis  on  this  priority  is  reflected  in  the  Community  Strategic  Guidelines  for 
Cohesion, 2007-2013 as a guideline for action. 

The  main  objective  of  the  priority  is  to  support  the  reform  of  public  administrations  and 
public  services  in  accordance  with  the  objectives  of  the  European  Employment  Strategy  to 
improve  quality  and  productivity  at  work,  and  in  this  context,  improve  efficiency  and 
productivity in public administrations. 

The support provided under the new priority should enable public administrations and public 
services to become strong drivers of competitiveness, development and growth of the Member 
States and regions. Implementation of the new priority should foster comprehensive reform or 
modernisation of the relevant public administrations and public services, by identifying those 
areas where interventions are the most needed and have the highest value-added.  

2.7. 

Rural Development Strategic Guidelines and the European Fisheries Fund 

The Council adopted the new regulation on rural development in September 20059. For 2007-
2013,  EU  rural  development  policy  will  have  three  main  objectives:  improving  the 
competitiveness  of  European  agriculture  and  forestry  by  supporting  restructuring, 
development  and  innovation;  improving  the  environment  and  the  countryside  by  supporting 
land  management;  and  improving  the  quality  of  life  in  rural  areas  and  encouraging 
diversification of economic activity. EU rural development policy will no longer be part of the 
Structural  Funds  but  both  policies  will  work  together  in  supporting  the  economic 
diversification of rural areas. The new rural development policy will be financed by a single 
fund,  the  European  Agricultural  Fund  for  Rural Development  (EAFRD)  which,  in  line  with 

9 

Council  Regulation  No. 1698/2005  of  20  September  2005  on  support  for  rural  development  by  the 
European Agricultural Fund for Rural Development (EAFRD). 

EN 

11 

   EN 

 
                                                 
the  Council  agreement  on  the  Financial  Perspectives  of  December  2005,  will  have  a  total 
funding of € 69.75 billion10 for 2007-2013. 

The Community Strategic Guidelines for Rural Development were adopted in February 2006 
by  Council  Decision.  The  Guidelines  identify  the  areas  important  for  the  realisation  of  EU 
priorities,  in  particular  in  relation  to  the  Göteborg  sustainability  goals  and  to  the  renewed 
Lisbon strategy for growth and jobs.  

Cohesion policy already contributes to rural development through its activities in rural areas. 
During  the  2000-2006  period,  over  €2  billion  of  ERDF  resources  have  been  allocated  to 
measures which deal specifically with agriculture, forestry and promoting the adaptation and 
development of rural areas. This is in addition to the resources devoted to other aspects of the 
productive  environment  and  investment  in  basic  infrastructure  in  rural  areas.  For  the  2007-
2013 period, cohesion policy will continue to support the diversification of rural economies 
through the ERDF. 

An  important  issue  in  both  the  National  Strategic  Plans  and  the  rural  development 
programmes  will  be  to  ensure  complementarity  and  synergy  with  the  National  Strategic 
Reference Frameworks (NSRFs) and Structural Funds programmes to be able to address the 
needs of rural areas in the EU through the creation of employment and the diversification of 
economic  activities.  The  Commission  encourages  Member  States  to  pay  special attention to 
the role of rural areas in implementing the Lisbon objectives and to explore opportunities to 
exploit local potentialities. 

The Commission adopted the draft regulation for the European Fisheries Fund (EFF) in July 
2004. In line with the agreement on the Financial Perspectives of December 2005, the  total 
budget of the EFF will be € 3,849 million for 2007-2013. 

The  Community  Strategic  Guidelines  for  the  EFF,  which  had  been  foreseen  in  the  initial 
proposal,  have  been  included  in  the  EFF  regulation  as  guiding  principles.  These  guiding 
principles  take  into  account  EU  priorities  and  in  particular  the  Lisbon  Growth  and  Jobs 
Strategy.  

10 

Before modulation from the agricultural direct payments. 

EN 

12 

   EN