Proposal for a Council Decision on Community strategic guidelines on cohesion {SEC(2006) 929}
Date: 2006-07-13
Institutions: European Commission
Subjects: EU regional policy, economic and social cohesion, economic growth, labour market, less-favoured region, peripheral region, regional development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.7.2006 
COM(2006) 386 final 

2006/0131 (AVC) 

Proposal for a 

COUNCIL DECISION 

on Community strategic guidelines on cohesion 

{SEC(2006) 929} 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Cohesion Policy in Support of Growth and Jobs: 
Community Strategic Guidelines, 2007-2013 

“Europe  must  renew  the  basis  of  its  competitiveness,  increase  its  growth  potential  and  its 
productivity  and  strengthen  social  cohesion,  placing  the  main  emphasis  on  knowledge, 
innovation and the optimisation of human capital. 

To achieve these objectives, the Union must mobilise all appropriate national and Community 
resources  –  including  the  cohesion  policy  –  in  the  Strategy’s  three  dimensions  (economic, 
social  and  environmental)  so  as  better  to  tap  into  their  synergies  in  a  general  context  of 
sustainable development”1. 

1. 

INTRODUCTION 

The Fourth Progress Report on Cohesion2 confirmed that the enlargement of the Union to 25 
Member States, later to 27 or more, presents an unprecedented opportunity to reinforce both 
economic competitiveness and the internal cohesion in Europe. While enlargement represents 
a substantial widening of regional disparities in the European Union, the report noted at the 
same time that some of the poorest parts of the new Member States have some of the highest 
growth rates.  

In  meeting  the  objectives  set  out  in  the  Treaty3,  and  in  particular  that  of  fostering  real 
economic convergence, the actions supported with the limited resources available to cohesion 
policy  should  be  concentrated  on  promoting  sustainable  growth4,  competitiveness  and 
employment as set out in the renewed Lisbon strategy.  

Clearly  also,  macroeconomic  stability  and  structural  reforms  are  a  precondition  for  the 
success  of  cohesion  policy  along  with  a  range  of  other  conditions  which  favour  investment 
(including  effective  implementation  of  the  Single  Market,  administrative  reforms,  good 
governance, a business-friendly climate, and the availability of a highly skilled workforce)5. 

These  are  also  the  ideas  that  underpin  the  new  legislative  framework  for  the  reform  of 
cohesion policy for the period 2007-2013. 

In  effect,  the  new  framework  seeks  improvements  in  two  main  areas.  First,  the  strategic 
dimension of cohesion policy is strengthened to ensure  that Community priorities are better 
integrated  into  national,  regional,  and  local  development  programmes.  Second,  efforts  are 
reinforced to ensure greater ownership of cohesion policy on the ground. This is reflected in 
the  provisions  for  an  ongoing  dialogue  in  the  partnerships  involving  the  Commission,  the 

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Presidency conclusions, European Council, March 2005. 
“The Growth and Jobs Strategy and the Reform of European cohesion policy - Fourth progress report 
on cohesion”. COM (2006) 281, 12.06.2006. 
Article  158  of  the  Treaty  states  that,  in  order  to  strengthen  its  economic  and  social  cohesion,  the 
Community shall aim at reducing disparities between the levels of development of the various regions 
and the backwardness of the least favoured regions or islands, including rural areas. 
In line with the Göteborg Strategy adopted by the European Council in 2001 and updated by the June 
2006 European Council . 
“The EU Economy: 2004 Review”. COM(2004) 723, 26.10.2004. 

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Member  States,  the  regions  and  cities,  and  in  a  clearer  and  more  decentralised  sharing  of 
responsibilities in areas such as financial management and control.  

The  Community  Strategic  Guidelines  form  the  basis  for  preparing  national  strategies,  or 
national  strategic  reference  frameworks,  and,  in  a  second  stage,  the  individual  operational 
programmes. They are based on the following objectives and principles: 

•  cohesion policy has become a key instrument at Community level to deliver the renewed 
Lisbon strategy for growth and jobs as defined by the integrated guidelines for growth and 
jobs; 

•  the new framework for cohesion policy in 2007-2013 is based on both the concentration of 
financial  resources  on  the  least  developed  regions  and  a  strong  thematic  concentration 
within the new programmes on the renewed growth and jobs agenda;  

•  the  financial  instruments  at  the  disposal  of  cohesion  policy  are  the  Structural  Funds  (the 
ERDF and the ESF) and the Cohesion Fund. It should be noted in this context, that in the 
guidelines  that  follow,  there  is,  intentionally,  no  analysis  by  Fund.  The  question  of  the 
appropriate  instrument  under  each  heading  is  a  matter  for  the  programming  phase  and 
depends on the nature of the planned expenditures (infrastructure, productive investment, 
human resource development, etc); 

•  the Guidelines concern only the part of national and regional investments co-financed by 

the Structural Funds and the Cohesion fund;  

•  the  Guidelines  need  to  be  read  alongside  the  legislative  framework.  The  latter  define  the 
purpose  and  the  scope  of  assistance  of  each  Fund,  while  the  Community  Strategic 
Guidelines seek to identify within that scope those areas where cohesion policy can most 
effectively  contribute  to  the  realisation  of  Community  priorities,  particularly  those  of  the 
renewed Lisbon Growth and Jobs Strategy; 

•  within the Guidelines, governance is a transversal element underpinning all actions in the 
interest  of  better  and  more  efficient  management  of  cohesion  policy  programmes  and 
improving the quality of public policy-making. 

•  within  the  new  framework  for  cohesion  policy  in  2007-2013,  the  territorial  dimension  is 
equally  seen  as  a  transversal  element  requiring  that  particular  attention  be  paid  to  the 
impact  of  programmes  in  terms  of  promoting  balanced  sustainable  development  and 
exploiting the opportunities in cities, rural areas and areas with natural handicaps. 

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2. 

COHESION, GROWTH, JOBS 

2.1. 

The renewed Lisbon agenda 

In 2005, the Commission proposed a new Partnership for Growth and Jobs6 to the European 
Council  of  March  2005.  The  Council  confirmed  the  policy  objectives  set  out  by  the 
Commission and underlined the need to re-launch the Lisbon Strategy.  

This  renewed  effort  requires  that  “the  Union  must  mobilise  all  appropriate  national  and 
Community  resources  –  including  cohesion  policy”7.  In  addition,  it  concluded  that  greater 
ownership of the Lisbon objectives on the ground was necessary, involving regional and local 
actors and social partners. This is of particular importance in areas where greater proximity is 
essential,  such  as  in  innovation  and  the  knowledge  economy,  employment,  human  capital, 
entrepreneurship,  support  for  small  and  medium-sized  enterprises  (SMEs)  or  access  to  risk 
capital financing.  

To  carry  the  work  forward,  Integrated  Guidelines  for  the  Growth  and  Jobs  agenda  were 
developed  in  order  to  assist  Member  States  in  developing  national  reform  programmes8. 
Under  the  new  governance  cycle  for  the  Growth  and  Jobs  Strategy,  Member  States  had  to 
submit  National  Reform  Programmes  in  2005 followed  by  the  Commission’s  assessment  of 
these national strategies in the form of the Annual Progress Report adopted in January 20069. 

The first Annual Progress Report (APR) made several recommendations relevant to cohesion 
policy. First, it recommended that Member States ensure that Community cohesion and rural 
development  investment  is  targeted  towards  supporting  the  Lisbon  Strategy  in  general.  In 
other  words,  the  objectives  of  cohesion  policy  should  be  streamlined  with  the  National 
Reform  Programmes.  In  particular,  the  APR  recommended  that  in  the  context  of  the  next 
generation of 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,  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  APR  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 address the 4  priority  actions:  1) investing  more  in  knowledge 
and  innovation;  2)  unlocking  business  potential;  particularly  of  SMEs;  3)  responding  to 
globalisation  and  ageing;  and  4)  moving  towards  an  efficient  and  integrated  EU  energy 
policy.  The  Spring  European  Council  2006  confirmed  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  (NSRFs).  It 
also identified specific priorities within the Integrated Guidelines for Growth and Jobs, which 

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Communication to the Spring European Council “Working Together for growth and jobs – a new start 
for the Lisbon Strategy”. COM(2005) 24, 2.2.2005. 
Presidency conclusions, European Council, March 2005. 
Presidency conclusions, European Council, March 2005. 
COM (2006) 30 of 25.1.2006 

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concern  investment  in  knowledge  and  innovation;  business  potential,  especially  of  SMEs; 
employment; and energy policy. 

2.2. 

The contribution of cohesion policy to growth and jobs 

Cohesion policy already contributes to the Lisbon strategy. Independent evaluations show that 
the  policy  has  had  a  substantial  macro-economic  impact,  especially  in  the  less-developed 
regions, with multiplier effects on the EU as a whole10. By mobilising the potential for growth 
that exists in all regions, cohesion policy has improved the geographical balance of economic 
development and raised the potential rate of growth in the Union as a whole. If the EU is to 
achieve  its  Lisbon  targets,  all  regions  –  especially  those  where  the  potential  for  higher 
productivity and employment is greatest – have their part to play.  

In  addition,  cohesion  policy  contributes  to  strengthening  economic  and  political  integration 
through,  for  example,  developing  infrastructure  networks  and  access  to  services  of  general 
interest, raising the skills of the Community’s citizens, enhancing the accessibility of remote 
regions and promoting cooperation.  

Cohesion  policy  in  future  can  continue  to  make  a  significant  contribution  to  the  Lisbon 
priorities by placing greater emphasis on: 

–  Investing in areas of high growth potential. High returns are available on investments in 
regions with the potential to catch up rapidly with the rest of the EU, but where domestic 
funds may be insufficient to pursue all available opportunities. 

–  Investing  in  the  drivers  of  growth  and  employment.  Cohesion  policy  is  focused  on 
investments  in  human  and  physical  capital  that  are  critical  to  growth  and  employment 
potential,  including  physical  and  ICT  infrastructure,  research  capacity  and  innovation, 
education and training and adaptability of workers. 

–  Supporting  the  implementation  of  coherent  strategies  over  the  medium  to  longer 
term.  Cohesion  policy  is  the  only  policy  to  provide  a  stable  seven-year  framework  of 
investment.  

–  Developing  synergies  and  complementarities  with  other  Community  policies. 
Cohesion  policy  acts  as  a  powerful  lever  for  the  implementation  of  other  Community 
policies.  For  example,  Trans  European  Network  projects  are  financed  directly  by  the 
Cohesion Fund in the cohesion countries, leading to substantial gains in accessibility to the 
rest  of  Europe;  compliance  with  the  environmental  acquis  and  with  the  broader  aims  of 
sustainable  development  is  strongly  supported  by  cohesion  policy;  RTD  policy  and  its 
concerns  with,  in  particular,  research  infrastructures  and  the  development  of  human 
resources in research is also supported by cohesion policy, as are Community innovation 
and SME policies and actions. 

–  Mobilising additional resources. Activities co-financed by cohesion policy secure a high 
degree of additionality for EU funds, in particular by shifting resources for investment to 
areas  where  expenditure  can  have  the  greatest  impact  and  added  value.  They  leverage 
additional  national  resources,  both  public  and  private,  for  use  in  coherent  national  and 
regional development strategies. Each euro spent at the EU level by cohesion policy leads 

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See Third Cohesion Report, p. 149. 

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to further expenditure, averaging 0.9 euros, in less developed regions (current Objective 1) 
and 3 euros in regions undergoing restructuring (current Objective 2).  

–  Improving  governance.  The  unique  delivery  system  for  cohesion  programmes  favours 
improvements  in  institutional  capabilities  in  policy  design  and  implementation;  the 
dissemination  of  an  evaluation  culture;  public–private  partnership  arrangements; 
transparency; regional and cross-border cooperation; and the exchange of best practices. It 
also  contributes  to  better  governance  at  all  levels  by  improving  responsibility  and 
ownership of the Lisbon strategy at sub-national level and by exploiting synergies between 
different levels of governance. 

–  Promoting an integrated approach to territorial cohesion. Cohesion policy can help to 
create  sustainable  communities,  by  ensuring  that  economic,  social  and  environmental 
issues are tackled through integrated strategies for renewal, regeneration and development 
in both urban and rural areas. 

–  Bringing the Lisbon agenda closer to EU citizens. Cohesion policy has enabled the EU 
agenda  to  become  more  visible  and  comprehensible  to  its  citizens.  Aligning  the  Lisbon 
priorities to cohesion policy will increase the legitimacy of the Growth and Jobs strategy 
and engage citizens more closely in achieving its aims. 

Cohesion policy should maintain a balanced approach in pursuit of the objectives of "growth" 
and  "employment"  and  contribute  to  a  balanced  economic,  social  and  sustainable 
development.  The  following  section  sets  out  the  key  aspects  of  the  new  framework  for 
cohesion policy, 2007-2013, in the light of the different ways it can contribute to the Lisbon 
agenda. 

3. 

THE FRAMEWORK FOR COHESION POLICY 2007-2013 

3.1. 

Concentration 

In this section, the new framework for cohesion policy is discussed in relation to the need for 
thematic  and  geographical  concentration.  Since  the  concentration  of  resources  is  also  a 
process issue, the governance dimension is also discussed. 

Growth  in  economic  output  is  essentially  composed  of  two  drivers:  employment  and 
productivity  growth.  They  are  intimately  related  and  must  be  boosted  simultaneously  to 
achieve maximum impact. In order to promote under the national and regional development 
programmes,  2007-2013,  a  sustainable  development  path  and  strengthen  competitiveness  in 
the knowledge-based economy, it is essential to concentrate resources on basic infrastructures, 
human  capital,  and  research  and  innovation,  including  access  to  and  strategic  use  of 
information and communication technologies (ICTs). Both tangible and intangible assets are 
required. 

The policy mix in order for a Member State or region to achieve an appropriate combination 
of investments for growth depends on its specific characteristics, the structure of its economic 
activity  and  the  nature  and  extent  of  its  structural  deficits,  and  its  potential  areas  of 
comparative advantage. The policy mix inevitably evolves over time, bringing a change in the 
type  of  policies  and  instruments  used.  Each  Member  State  and  region  has  to  find  the  right 

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policy  mix  for  its  own  development  path  in  the  light  of  its  particular  economic,  social, 
environmental, cultural and institutional conditions.  

However, while the mix may vary according to context, concentration will be ensured at the 
level of programmes and projects by primarily including those elements that can contribute to 
the  Growth  and  Jobs  Strategy.  This  will  be  the  governing  principle  which  the  Commission 
will bring to bear when negotiating the different national and regional programmes. 

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Earmarking of Lisbon expenditure 

In  agreeing  a  financial  perspective  for  2007-2013,  the  Member  States  also  decided  that  a 
certain proportion of the resources for the next generation of programmes should be reserved 
for investment in areas directly linked to the growth and jobs agenda including the specific list 
of  earmarked  categories  of  expenditure.  "Earmarking"  in  this  way  was  subsequently 
confirmed  in  the  draft  Regulation.  The  draft  Regulation  sets  earmarking  targets  at  60%  of 
expenditure  for  the  Convergence  objective  and  75%  of  expenditure  for  the  Regional 
competitiveness  and  Employment  objective,  applied  as  an  average  over  the  entire 
programming  period  of  all  Member  States  of  the  Union  as  constituted  before  1  May  2004. 
While targets for each Member State will take account of the starting point based on data for 
2000-2006, the objective is that all Member States concerned should achieve the earmarking 
target as an average over the period. Although the new Member States and acceding countries 
are  not  covered  by  earmarking,  they  are  also  encouraged  to  set  targets  and  increase  their 
efforts relative to the baseline situation in the 2000-2006 period. The earmarking targets will 
be  applied  in  a  flexible  way,  taking  into  account  specific  national  circumstances  and  the 
priorities identified in the National Reform Programme. 

Timing is also an issue with regard to cohesion policy in Member States where transfers from 
the Union take on a macroeconomic dimension. In the short term, these transfers may create 
inflationary pressure in some sectors (for example in the construction sector) and may affect 
the current account (for example as a result of imports of capital equipment), while significant 
amounts  will  have  to  be  provided  for  in  national  public  budgets  in  order  to  co-finance 
transfers from the EU. It is therefore important that Member States and regions organise their 
investment programmes in such a way as to address the supply-side bottlenecks and increase 
productivity in order to offset the demand-side pressures on the nominal economy. 

Account  also  needs  to  be  taken  of  other  Community  policy  priorities,  first  because  of  their 
potential  to  contribute  to  growth  and  jobs  within  the  framework  of  cohesion  policy 
programmes and, second, in order to foster synergies with other EU policies on the ground. 

3.2. 

Convergence  

For  regions  and  Member  States  eligible  for  cohesion  policy  support  under  the  new 
Convergence objective, the key objective will be to stimulate growth potential to maintain and 
achieve  high  growth  rates.  This  objective  should  be  seen  in  the  light  of  the  unprecedented 
increase in disparities within the enlarged Union and the long-term nature of the efforts that 
will be needed to reduce them.  

The strategies for 2007-2013 should focus on the investments and collective services which 
are required to increase long-term competitiveness, job creation and sustainable development. 
Basic infrastructures and services will need to be created, upgraded and expanded in order to 
open  up  regional  and  local  economies,  set  up  an  effective  business  support  framework  and 
exploit  the  opportunities  afforded  by  the  Single  Market.  Moreover,  substantial  efforts  are 
required  to  expand  investment  in  human  capital;  increase  access  to  employment;  strengthen 
social inclusion; and introduce and implement reform in education and training systems.  

Along  with  efforts  directed  at  basic  infrastructure,  action  is  required  to  modernise  and 
restructure the productive capacity of regions by providing services to enterprises, particularly 

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SMEs;  by  improving  access  to  finance;  by  promoting  RTD  and  innovation;  by  developing 
human resources; and by promoting the penetration, dissemination and take-up of ICTs. 

The strengthening of institutional capacities and the institutional order is essential to design 
and deliver effective policies. 

3.3. 

Regional competitiveness and employment 

The  need  for  concentration  on  a  limited  number  of  key  priorities,  and  in  particular  on 
research, innovation, accessibility and job creation, is compelling under this objective in order 
to  ensure  best  use  of  limited  financial  resources.  To  ensure  a  smooth  adaptation  following 
economic change and restructuring, investment in human capital can play an important role. 

The aim of the new regional competitiveness and employment objective is to anticipate and 
promote  economic  change  by  improving  the  competitiveness  and  attractiveness  of  EU 
regions and cities through investments in the knowledge economy, entrepreneurship, research, 
university-enterprise cooperation and innovation;  access  to  transport  and  telecommunication 
infrastructure,  energy,  and  health;  environment  and  risk  prevention;  supporting  the 
adaptability  of  workers  and  enterprises;  reinforcing  participation  in  the  labour  market;  and 
promoting social inclusion and sustainable communities. 

Account needs to be taken of different needs. Industrial regions take different forms. Many 
are characterised by the presence of large manufacturing firms, high population densities and 
high economic growth rates while others combine modern industry, especially SMEs, and a 
relatively rapidly growing service sector. Both types of region may, however, be confronted 
by pockets of deep-seated urban decline and poverty, by congestion, environmental pressure 
and  ill-health,  having  to  respond  to  the  challenges  of  globalisation  and  the  need  to  adapt  to 
accelerating economic change. At the other end of the scale, many industrial regions are only 
just beginning to adapt to change, and the run-down of the industrial base has not been offset 
to a sufficient degree by new activities.  

Meanwhile, in areas characterised by low population density, economic development is often 
driven by small firms, but the challenges facing them are similar. The low population density 
makes  it  more  difficult  to  respond  to  the  challenges  and  the  socio-economic  situation  has 
therefore not changed over the past decade. 

There is a wide variation in the economic situation of rural areas. Some have good links to 
urban  centres  and,  with  agriculture  continuing  to  play  a  significant  role,  are  experiencing 
increasing  economic  diversification  and  the  growth  of  activities  in  the  service  sector,  for 
example tourism. Other more remote rural areas have to contend with a highly dispersed and 
ageing  population,  poor  technical  and  social  infrastructures,  inadequate  services,  and  weak 
links with the rest of the economy. 

Addressing  this  diversity  of  problems,  and  helping  regions  to  restructure  and  generate  new 
activities  in  accordance  with  the  renewed  Lisbon  agenda,  is  the  challenge  for  the  new 
generation of regional competitiveness and employment programmes.  

Where  the  territory  in  question  is  also  covered  by  the  Cohesion  Fund,  the  Member  States 
should seek to ensure as far as possible that projects supported contribute to the growth and 
jobs agenda. 

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3.4. 

European territorial cooperation 

The aim of the new cooperation objective is to promote stronger integration of the territory 
of  the  Union  in  all  its  dimensions.  In  so  doing,  cohesion  policy  supports  the  balanced  and 
sustainable development of the territory of the Union at the level of its macro-regions and 
reduces 
inter-regional 
through  cross-border, 
cooperation and the exchange of best practices.  

the  “barrier  effects” 

transnational  and 

These  actions  are  based  on  shared  development  strategies  of  the  territories  concerned 
(national, regional, local) and on the networking of the key stakeholders. As such, they have 
an  obvious  European  added  value  which  increases  even  more  in  the  enlarged  and  more 
diversified Union. 

3.5. 

Governance 

Over recent years, the context for cohesion policy has changed in the light of new challenges 
posed  by  globalisation.  Today,  it  is  clear  that  in  an  open,  globalized  economy,  tackling  the 
growth and jobs agenda must be anchored in regional and even local development strategies. 
This  is  the  level  at  where  most  business  networks  are  formed  and  links  established  with 
centres  of  learning  and  technology  and  where  local  knowledge  and  expertise  can  best  be 
mobilised. Also, local and regional authorities and other stakeholders have a range of powers, 
both  regulatory  and  expenditure-based,  for  the  delivery  of  public  policies  which  help  in  the 
realisation of the growth and jobs strategy. 

In the context of cohesion policy, the issue of governance has different dimensions. 

The first concerns a set of characteristics of public organisations related to the performance 
and  the  success  of  public  policies.  For  countries  and  regions,  in  particular  those  eligible 
under the Convergence objective, quality and efficiency in the public sector  are essential in 
order  to  embrace  reforms  and  good  governance,  especially  in  the  economic,  employment, 
social, educational, environmental and judicial fields. This will help not only to improve the 
implementation of EU cohesion policy, but also to raise economic performance overall. 

Strengthening institutional capacities  and  governance where they are  considered to be weak 
should be a key priority in less developed regions. Economic competitiveness and a stronger 
civil  society  depend  not  only  on  effective  infrastructure  networks,  but  also  on  the  non-
discriminatory,  predictable  and  transparent  enforcement  of  the  law;  the  assignment  and 
enforcement of tradable property rights, including intellectual property rights; an open public 
procurement  system;  and  an  administration  which  minimises  the  administrative  burden  on 
economic operators.  

Thus, when developing their national strategies, Member States should systematically analyse 
to  what  extent  a  more  efficient,  accountable  and  transparent  public  administration  can  help 
raise productivity levels. Capacity building for public administrations at national, regional and 
local  level,  to  improve  the  administrative  framework  for  economic  activity,  good  policy 
design  and  implementation,  including  better  lawmaking,  evaluation  and  impact  analysis  of 
policy  proposals,  and  regular  screening  of  delivery  mechanisms,  should  therefore  be 
supported by the Structural Funds. 

The second dimension refers to measures and actions that are specifically needed in order to 
improve  the  capacity  of  Member  States  in  managing  and  implementing  cohesion  policy. 

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Sound and efficient management of the Funds requires appropriate, effective and transparent 
structures  in  central,  regional  and  local  administrations  which  are  able  to  perform  the  tasks 
related  to  the  implementation  of  the  Funds,  such  as  public  procurement,  financial  control, 
monitoring, evaluation, and preventing and combating fraud and corruption. The effective use 
of the Funds is also influenced by the capacities of project holders to develop and implement 
high-quality projects. Where resources are used in an efficient and transparent manner, their 
visibility  in  itself  encourages  private  entrepreneurs  and  social  partners,  and  creates  the 
environment  for  the  former  to  take  their  own  investment  decisions.  Therefore,  action  is 
needed in this field too, and should be backed up by technical assistance. 

A related, and highly important, factor determining the effectiveness of cohesion policy is the 
quality  of  the  partnership  between  all  stakeholders,  including  those  at  regional  and  local 
level, in the preparation and implementation of programmes. 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  are  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,  can  become 
directly involved in the Union's growth and  jobs strategy. A strong partnership between the 
Commission  and  the  authorities  in  the  Member  States  is  the  basis  for  defining  a  cohesion 
strategy  that  addresses  Community  priorities  in  a  national  and  regional  setting,  and  its 
implementation through the operational programme.  

Developing  innovative  projects  based  on  partnership,  promoting  civil  participation  in  the 
formulation and implementation of public policies, as well as improving interaction between 
and within the communities can contribute to the creation of human and social capital, leading 
to sustainable employment, growth, competitiveness and social cohesion. In this context, it is 
important  for  the  key  stakeholders  at  national,  regional  and  local  level  to  rally  behind  the 
reform agenda so that resources are genuinely concentrated on promoting growth and jobs 
and  put  in  place  the  necessary  partnership  networks  to  that  effect.  Partnerships,  pacts  and 
initiatives based on the networking of relevant stakeholders, such as social partners and NGOs 
also have a key role to play in the field of employment and labour market inclusiveness.  

Regions  are  encouraged  to  develop  regional  sustainable  development  strategies,  building 
consensus on the objectives to be achieved through regular and systematic dialogue with key 
stakeholders.  Partnership  is  necessary  in  order  to  manage  complexity  successfully  and  is 
essential  to  the  elaboration  and  the  implementation  of  development  strategies.  It  relies  on 
consultation  and  participation  of  stakeholders,  such  as  competent  authorities,  economic  and 
social partners, and representatives of civil society including non-governmental organisations. 
Partnership  provides  a  basis  for  the  mobilisation  of  best  local  knowledge  and  expertise,  for 
openness  and  transparency  in  the  preparation  and  implementation  of  programmes.  This  is 
particularly  important  for  improving  knowledge  and  innovation  and  should  build  on  the 
methods  which  have  been  developed  in  the  past  with  regional  innovation  strategies  and  the 
regional programmes of innovative actions. 

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Public-Private Partnerships 

Public-Private Partnership (PPP) may be an appropriate method of financing investment when 
there is significant scope  for involving the private sector,  especially in areas where it is not 
feasible or appropriate to move away from public ownership or market provision. Apart from 
the financial leverage it provides, public-private partnership at project level also improves the 
quality  of  the  implementation  and  subsequent  management  of  projects.  Member  States  are 
therefore  encouraged  to  opt  for  such  partnerships  where  they  are  available.  The  principal 
benefits of such PPP schemes are that: 

–  the  public  sector  gains  access  to  a  range  of  private  sector  skills  that  should  enable  it  to 

provide a more efficient and cost-effective service 

–  the private sector takes on a range of risks that under traditional public procurement would 

be borne by the public sector 

–  greater  efficiency  can  be  generated  where  a  single  party  is  responsible  for  design, 

construction, management and financing as a part of an integrated package. 

In considering whether to undertake a particular project as a PPP, it is important that certain 
conditions are met before contracting out the provision of goods and services, in particular the 
putting in place of an appropriate legal framework.  

PPP  arrangements  work  best  where  there  is  an  explicit  policy  commitment  by  national 
governments  to  involve  the  private  sector  in  public  sector  projects.  Clear  and  specific 
frameworks  are  needed  for  PPP  in  different  policy  areas;  these  will  vary,  for  example, 
according  to  how  far  costs  can  be  recovered  through  user  charges  and  the  extent  of  social 
objectives.  Different  policy  options  are  available  to  ensure  competition  for  PPPs  without 
unduly limiting the flexibility needed to design innovative and often complex projects11.  

The EU will support these PPPs by providing finance, via the Structural and Cohesion funds, 
where  the  projects  meet  all  the  necessary  criteria.  For  larger  projects  the  Commission  will 
encourage MS to include assessment of its suitability for a PPP scheme. It is envisaged that 
operational guidance on preparing PPPs could be provided in the technical assistance facility 
developed in cooperation with the European Investment Bank (EIB) and the European Bank 
for  Reconstruction  and  Development  (EBRD)  (the  JASPERS  facility).  The  EIB  and  the 
European Investment Fund (EIF) could provide valuable input in this regard. 

4. 

GUIDELINES FOR COHESION POLICY, 2007-2013 

In light of the above and of the renewed Lisbon strategy for growth and jobs, programmes co-
financed  through  cohesion  policy  should  seek  to  target  resources  on  the  following  three 
priorities12:  

11 

12 

“Public-Private  Partnerships  and  Community  Law  on  Public  Procurement  and  Concessions”. 
COM(2005) 569 final 5.11.2005. 
Communication to the Spring European Council “Working Together for growth and jobs – a new start 
for the Lisbon Strategy”. COM(2005) 24, 2.2.2005. 

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–  improving  the  attractiveness  of  Member  States,  regions  and  cities  by  improving 
accessibility,  ensuring  adequate  quality  and  level  of  services,  and  preserving  the 
environment; 

–  encouraging innovation, entrepreneurship and the growth of the knowledge economy by 
research  and  innovation  capacities,  including  new  information  and  communication 
technologies; and  

–  creating  more  and  better  jobs  by  attracting  more  people  into  employment  or 
entrepreneurial activity, improving adaptability of workers and enterprises and increasing 
investment in human capital. 

In the following sections, key aspects of each of these broad areas are examined with specific 
guidelines  under  each  heading.  Naturally,  not  all  of  these  more  detailed  guidelines  will  be 
relevant  to  all  regions.  The  most  appropriate  mix  of  investments  ultimately  depends  on  the 
analysis  of  the  strengths  and  weaknesses  of  each  Member  State  and  region  and  specific 
national and regional circumstances. The guidelines rather represent a  single framework 
which Member States and regions are invited to use when developing national, regional, 
and  local  programmes,  in  particular  with  a  view  to  assessing  their  contribution  to  the 
objectives  of  the  Union  in  terms  of  cohesion,  growth  and  jobs.  The  Guidelines  are  a 
necessary condition, but not the only condition for achieving the right level of concentration 
on key priorities for  each Member State and region in  accordance with  the renewed Lisbon 
agenda. In taking on board the Lisbon agenda in the new programmes, attention is drawn to 
the following principles: 

First, in line with the re-launch of the Lisbon agenda itself, cohesion policy should focus to a 
greater  extent  on  knowledge,  research  and  innovation,  and  human  capital.  Accordingly, 
the  overall  financial  effort  in  support  of  these  fields  of  action  should  be  significantly 
increased,  as  required  by  the  new  earmarking  provisions.  In  addition,  Member  States  and 
regions should be inspired by best practice where this has delivered visibly positive results in 
terms of growth and jobs. 

Second, Member States and regions should pursue the objective of sustainable development 
and  boost  synergies  between  the  economic,  social  and  environmental  dimensions.  The 
renewed  Lisbon  strategy  for  Growth  and  Jobs  and  the  National  Reform  Programmes 
emphasize 
in  growth,  competitiveness  and  employment. 
Environmental  protection  needs  to  be  taken  into  account  in  preparing  programmes  and 
projects with a view to promoting sustainable development. 

the  role  of  environment 

Third, Member States and regions should pursue the objective of equality between men and 
women at all stages of the preparation and implementation of programmes and projects. This 
may be done through specific actions to promote equality, as well as by taking careful account 
of how other projects and the management of the funds may affect women and men. 

Fourth,  Member  States  should  take  appropriate  steps  to  prevent  any  discrimination  on  the 
basis of gender, race or ethnic  origin, religion or belief, disability, age or sexual orientation 
during the various stages of implementing the Funds. In particular, accessibility for disabled 
persons is one of the criteria to respect in defining operations cofinanced by the Funds and to 
take into account during the various stages of implementation. 

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4.1. 

GUIDELINE:  Making  Europe  and  its  regions  more  attractive  places  to  invest 
and work 

One  of  the  preconditions  for  growth  and  jobs  is  to  ensure  that  the  necessary  infrastructure 
(e.g.  transport,  environment,  energy)  is  available  to  businesses.  A  modern  and  secure 
infrastructure  is  an  important  factor  in  the  performance  of  many  enterprises,  affecting  the 
economic and social attractiveness of regions and cities. Infrastructure investment in regions 
that are lagging behind, especially in the new Member States, will encourage growth and thus 
reinforce  convergence  with  the  rest  of  the  Union  as  well  as  improving  quality  of  life. 
Resources should come not just from grants but also, where possible, from the private sector 
and from loans, for example from the EIB. For the next period, programme authorities in the 
Member  States  will  have  an  opportunity  to  make  greater  use  of  EIB  expertise  to  prepare 
suitable projects for European funding under the JASPERS initiative. 

JASPERS: A new technical assistance partnership 

JASPERS, “Joint Assistance in Supporting Projects in European Regions”, is a new technical 
assistance partnership between the Commission, the EIB and the EBRD. It is a facility at the 
disposal  of  the  Member  States  to  assist  with  the  preparation  of  large  projects  submitted  for 
approval for support under the Cohesion Fund and the ERDF. It draws on the experience of 
the EIB and the EBRD in large project preparation, and in other important areas such as the 
development of public-private partnerships. The combined efforts of the three institutions is 
intended to ensure a successful implementation of cohesion policy in the programming period 
2007-2013 by greatly increasing the resources available for project preparation. The technical 
assistance will be offered from the early stages of the project development cycle. JASPERS 
will provide comprehensive assistance for all stages of the cycle from the initial identification 
of a project through to the submission of projects for Commission decision.  

4.1.1.  Expand and improve transport infrastructures 

The provision of efficient, flexible, safe and clean transport infrastructure can be regarded as a 
necessary  precondition  for  economic  development  as  it  boosts  productivity  and  thus,  the 
development prospects of the regions concerned by facilitating the movement of people and 
goods.  Transport  networks  boost  opportunities  for  trade,  while  increasing  efficiency. 
Furthermore, the development of Europe-wide transport infrastructures (notably the relevant 
parts of the thirty priority projects for Trans-European Transport Networks), with a particular 
focus  on  cross-border  projects,  is  essential  to  achieving  greater  integration  of  national 
markets, especially within the context of an expanded Union. 

Infrastructure  investment  needs  to  be  adapted  to  the  specific  needs  and  level  of  economic 
development of the regions and countries concerned. These needs are generally highest in the 
Convergence  regions  and  in  the  countries  covered  by  the  Cohesion  Fund.  Typically, 
infrastructure investments (as with other investments) show diminishing rates of return above 
a  certain  level  of  funding.  The  economic  returns  on  such  investments  are  high  when 
infrastructure  is  scarce  and  basic  networks  have  not  been  completed,  but  they  are  likely  to 
decrease once a certain level has been reached. 

The  level  of  regional  economic  development  and  the  existence  of  large  infrastructure 
endowments should thus be taken into account. In the least developed regions and countries, 
international  and  interregional  connections  may  offer  higher  returns  over  the  longer  term  in 
the  form  of  increased  business  competitiveness  and  also  facilitate  labour  mobility.  On  the 

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other hand, for regions with a dispersed, small-scale economic base and a settlement pattern 
based  on  small  towns,  the  construction  of  a  regional  transport  infrastructure  may  be  more 
appropriate.  In  regions  with  inadequate  road  networks,  funding  should  also  be  available  to 
build  economically  vital  road  links.  The  challenges  of  mobility  and  accessibility  in  urban 
areas should also be tackled, supporting integrated management systems and clean transport 
solutions. 

In  order  to  maximise  the  benefits  deriving  from  transport  investments,  assistance  from  the 
Funds should be based on a number of principles. 

First, objective criteria should be used to determine the level and nature of the infrastructure 
investment to be undertaken. For instance, potential rates of return should be measured by the 
level  of  economic  development  and  the  nature  of  economic  activities  of  the  regions 
concerned,  the  prevailing  density  and  quality  of  infrastructures  or  the  degree  of  congestion. 
When  determining  the  social  rates  of  return,  due  account  should  also  be  taken  of 
environmental and social implications of prospective infrastructure projects. 

Second,  the  principle  of  environmental  sustainability  should  be  respected  to  the  greatest 
possible  extent,  in  accordance  with  the  White  Paper13.  Shifts  to  the  more  environmental 
friendly modes should be pursued. However, the environmental and general performance of 
each mode of transport should be optimised, in particular concerning the use of infrastructure 
within and across the different modes14. 

Third,  particular  attention  should  be  paid  in  the  Convergence  regions  and  in  the  countries 
covered by the Cohesion Fund to modernising the railway system by carefully selecting the 
priority  sections,  ensuring  their  interoperability  within  the  framework  of  the  European  Rail 
Transport Management System (ERTMS).  

Fourth,  investments  in  transport  infrastructure  should  be  accompanied  by  proper  traffic 
management, with particular attention to safety, in accordance with national and Community 
standards.  National  or  regional  strategies  should  take  into  account  the  need  to  achieve  a 
balanced  (and  clean)  modal  split  that  serves  both  economic  and  environmental  needs. 
Strategies  should  include,  for  example,  intelligent  transport  systems,  multi-modal  platforms 
and,  in  particular,  technology  used  for  the  ERTMS,  mentioned  above  and  for  the  Single 
European  Sky  ATM  Research  Programme  (SESAR  -  for  a  more  uniform  air  traffic 
management system in Europe). 

13 
14 

“European transport policy for 2010 : time to decide”. COM(2001) 370. 
"Keep Europe moving. Sustainable mobility for the European continent". COM(2006)314, 22.6.2006. 

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Based on the above principles, the guidelines for action are as follows: 

–  Member States and regions eligible for funding under the Convergence objective15 or the 
Cohesion Fund, should give priority to those of the 30 projects of European interest where 
they  fall  within  their  territory.  Within  this  group  of  projects,  cross-border  links  merit 
special  attention.  Member  States  should  make  use  of  the  co-ordinators  as  a  means  of 
shortening the time that elapses between designation of the planning of the network and the 
physical  construction.  Other  TEN  projects,  and  strategic  transport  links,  should  be 
supported  where  this  is  a  strong  case  in  terms  of  their  contribution  to  growth  and 
competitiveness. 

–  Complementary  investment  in  secondary  connections  will  also  be  important  in  the 
context  of  an  integrated  regional  transport  and  communications  strategy  covering  urban 
and rural areas, in order to ensure that the regions benefit from the opportunities created by 
the major networks. 

–  Support  for  rail  infrastructure  should  seek  to  ensure  greater  access.  Track  fees  should 
facilitate  access  for  independent  operators.  They  should  also  enhance  the  creation  of  an 
EU-wide  interoperable  network.  Compliance  and  applications  of  the  interoperability  and 
the fitting of ERTMS on board and on track should be part of all projects financed. 

–  Promoting  environmentally  sustainable  transport  networks,  particularly  in  urban  areas. 
This includes public transport facilities (including park-and-ride infrastructures), mobility 
plans,  ring  roads,  increasing  safety  at  road  junctions,  soft  traffic  (cycle  lanes,  pedestrian 
tracks).  It  also  includes  actions  providing  for  accessibility  to  common  public  transport 
services for certain target groups (the elderly, disabled persons) and providing distribution 
networks  for  alternative  vehicle  fuels. Inland navigation  routes  can  also contribute to the 
sustainability of networks. 

–  In  order  to  guarantee  the  optimum  efficiency  of  transport  infrastructures  for  promoting 
regional  development,  attention  should  be  paid  to  improving  the  connectivity  of 
landlocked  territories  to  the  Trans-European  network  (TEN-T).  In  this  respect,  the 
development of secondary links, with a focus on inter-modality and sustainable transport, 
will help. In particular, harbours and airports should be connected to their hinterland. 

–  More attention should be paid to developing the “motorways of the sea” and to short-sea 

shipping as a viable alternative to long-distance road and rail transport. 

Where Member States receive support at the same time from both the Cohesion Fund and the 
Structural  Funds,  a  distinction  should  be  made  in  the  programmes  between  the  types  of 
actions funded by each of the Funds, with the Cohesion Fund playing the key role in support 
of Trans-European transport networks.  

to  measures 

In  turn,  the  Structural  Funds  should  generally  focus  on  the  development  of  infrastructure 
linked 
tourism  development, 
to  stimulate  economic  growth  (such  as 
improvements  to  increase  the  attractiveness  of  industrial  sites,  etc.).  With  regard  to  road 
infrastructure, investments shall also fit the overall goal of road safety. 

15 

OJ L 167, 30.04.2004, p. 1. 

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Co-financing  from  the  Cohesion  Fund  and  the  Structural  Funds  should  complement  grants 
from  the  budget  for  Trans-European  Networks  while  avoiding  duplication  in  terms  of 
Community  assistance.  Member  States  individually  will  need  to  determine  in  advance  the 
instrument  most  suited  to  the  planned  projects.  Cohesion  policy  funding  can  be  combined 
with the loan guarantee part of the TEN instruments. 

4.1.2. 

Strengthen the synergies between environmental protection and growth 

Environmental investments can contribute to the economy in three ways: they can ensure the 
long-term  sustainability  of  economic  growth,  they  decrease  external  environmental  costs  to 
the  economy  (e.g.  health  costs,  clean-up  costs  or  damage  recovery)  and  they  stimulate 
innovation and job creation. Future cohesion programmes should seek to strengthen potential 
synergies  between  environmental  protection  and  growth.  The  provision  of  environmental 
services  such  as  clean  water  supplies,  waste  and  waste-water  treatment  infrastructures, 
management of natural resources and biodiversity, the decontamination of land to prepare it 
for  new  economic  activities,  and  protection  against  certain  environmental  risks,  should  all 
have high priority in this context.  

In order to maximise economic benefits and minimise the costs, priority should be given to 
tackling environmental pollution at its sources. In the waste management sector, this implies 
focusing on waste prevention, recycling and biodegradation of waste which are cost-effective 
and help to create jobs. 

Development  strategies  should  be  based  on  a  prior  evaluation  of  needs  and  specific  issues 
faced  by  regions,  where  possible  using  appropriate  indicators.  Efforts  should  be  made  to 
promote  the  internalisation  of  external  environmental  costs,  with  support  for  the  setting  up 
and development of market-based instruments (see, for example, instruments proposed in the 
Environmental Technologies Action Plan). Attention is drawn in this context to the initiative 
Global  Monitoring  for  Environment  and  Security,  which  from  2008  will  provide  Europe-
wide, up-to-date information on land-cover/land-use and ocean properties as well as incident 
maps in case of disasters and accidents. 

Accordingly, the recommended guidelines for action are the following:  

–  Addressing  the  significant  needs  for  investment  in  infrastructure,  particularly  in  the 
Convergence  regions  and  especially  in  the  new  Member  States,  to  comply  with 
environmental  legislation  in  the  fields  of  water,  waste,  air,  and  nature  and  species 
protection and bio-diversity.  

–  Ensuring  that  attractive  conditions  exist  for  businesses  and  their  highly-skilled  staff. 
This can be ensured by promoting land-use planning which reduces urban sprawl, and by 
rehabilitating the physical environment, including the development of natural and cultural 
assets. Investments in this area should be clearly linked to the development of innovative 
and job-creating businesses on the sites concerned. 

–  Promoting,  in  addition  to  the  investments  in  sustainable  energy  and  transport  covered 

elsewhere, investments that contribute to the EU Kyoto commitments. 

–  Undertaking  risk  prevention  measures  through  improved  management  of  natural 
resources,  more  targeted  research  and  better  use  of  ICTs,  and  more  innovative  public 
management policies including, for example, preventive monitoring.  

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Where Member States receive support from both the Cohesion Fund and the Structural Funds, 
a clear distinction should be made in the programmes between the types of actions funded by 
each of the Funds, respectively. 

4.1.3.  Address Europe’s intensive use of traditional energy sources 

A related priority is the need to reduce traditional energy dependency through improvements 
in energy efficiency and renewable energies. Investments in these fields contribute to security 
of energy supply for long-term growth, while acting as a source of innovation and providing 
opportunities for exports, and are cost effective especially if energy prices remain high.  

Investment in traditional sources of energy is also needed, so as to ensure security of supply. 
In  particular,  the  Funds  should  concentrate  –  where  there  is  evidence  of  market  failure  and 
where  it  does  not  go  against  the  liberalisation  of  the  market  –  on  the  completion  of 
interconnections, with special emphasis on the Trans-European networks, the improvement of 
electricity  grids  and  the  completion  and  improvement  of  gas  transmission  and  distribution 
networks including where appropriate in insular and outermost regions.  

Guidelines for action under this heading are the following: 

–  Supporting  projects  to  improve  energy  efficiency,  for  example  in  buildings,  and 

dissemination of low energy intensity development models. 

–  Supporting the development and use of renewable and alternative technologies (such as 
wind, solar, biomass), including in heating and cooling, which can give the EU a leading 
edge and thus strengthen its competitive position. Such investments also contribute to the 
Lisbon objective of ensuring that, by 2010, 21% of electricity is generated from renewable 
sources. 

–  Concentrating  investment  in  traditional  energy  sources  to  develop  the  networks  where 
there  is  evidence  of  market  failure.  These  investments  mostly  concern  the  Convergence 
regions.  

4.2. 

GUIDELINE: Improving knowledge and innovation for growth 

The  Union’s  aims  of  growth  and  job  creation  will  require  a  structural  shift  in  the  economy 
towards  knowledge-based  activities.  This  calls  for  action  on  a  number  of  fronts:  to  address 
low  levels  of  Research  and  Technological  Development  (RTD),  especially  in  the  private 
sector;  to  promote  innovation  through  new  or  improved  products,  processes  and  services 
which  can  withstand  international  competition;  to  increase  regional  and  local  capacities  to 
generate and  absorb new technologies (ICTs in  particular); and to provide more support for 
risk-taking.  

RTD  expenditure  as  a  percentage  of  GDP  has  been  increasing,  but  only  marginally  and,  at 
1.9% of GDP, remains well short of the Lisbon target of 3%16. It is estimated that an increase 
in the share of RTD expenditure from 1.9% to 3% of GDP (in order to reach the Lisbon target 
by 2010) will result in an increase of 1.7% in the level of GDP by 201017. While the shortfall 
in business investment in RTD remains significant, there are signs that public investment in 

16 
17 

“Investing in research: an action plan for Europe”. COM(2003) 226, 30.4.2003. 
“The economic costs of non-Lisbon” - SEC(2005) 385, 15.3.2005. 

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this  field  is  also  coming  under  pressure.  The  RTD  and  innovation  gap  within  and  between 
countries,  particularly  in  relation  to  business  expenditure  on  RTD,  is  much  bigger  than  the 
income  gap.  While  a  combination  of  national  and  Community  initiatives  have  been 
undertaken, more action is needed to match business needs with RTD supply from public and 
private  RTD  institutions.  Europe’s  innovation  gap  is  widening:  the  European  Innovation 
Scoreboard shows that Europe lags behind the US in 9 out of 11 Innovation indicators18. Also 
within  Europe,  the  innovation  gap  persists,  as  the  Union  too  often  fails  to  transform 
technological development into commercial products and processes. Cohesion policy can help 
to  address  the  main  problems  behind  Europe’s  underperformance  in  innovation,  including 
ineffective  innovation  systems,  insufficient  entrepreneurial  dynamism  or  slow  business 
adoption of ICT.  

In  this  context,  it  is  necessary  to  enhance  national  and  regional  RTD  capacities,  to  support 
investment  in  ICT  infrastructure,  and  to  disseminate  technology  and  knowledge  through 
appropriate technology transfer and knowledge exchange mechanisms. Awareness-raising to 
promote  a  better  use  of  existing  RTD  potential  could  be  encouraged  by  regional  ‘foresight’ 
and other regional strategic planning methods, involving regular and systematic dialogue with 
key  stakeholders.  It  is  also  important  to  enhance  the  RTD  absorption  capacity  of  firms, 
particularly  SMEs,  through  actions  to  develop  skills  and  competencies;  to  encourage  the 
creation and exploitation of a larger pool of high-quality research talent in Europe; to increase 
private  and  public  investment  in  RTD  and  innovation;  and  to  encourage  RTD  partnerships 
across the different regions of the Union. European Technology Platforms, for example, offer 
the potential to better tailor research programmes to business needs; cohesion policy can play 
an  important  role  in  supporting  implementation  of  their  Strategic  Research  Agendas  across 
the Union including in less developed regions. 

While direct grants remain important, notably in Convergence regions, there is a need to focus 
on the provision of collective business and technology services to groups of firms, in order to 
help  them  improve  their  innovative  activity.  Direct  grants  to  individual  firms  should  be 
targeted at improving the RTD and innovation capacity of the firm, rather than at a temporary 
reduction  of  its  production  costs  generating  high  deadweight  effects.  This  is  particularly 
important in traditional sectors, particularly those exposed to global competition which need 
additional efforts in order to remain competitive, as well as in SMEs which often represent the 
highest source of employment at the regional level. Most importantly, these policies need to 
be adapted to the particular conditions of each region, and in particular to the needs of SMEs. 
National, regional, and local strategies should be based on a comprehensive analysis of RTD 
investment opportunities. 

Knowledge and innovation are at the centre of the Union’s efforts to promote faster growth 
and more jobs. Two related framework programmes are proposed at Union level: the Seventh 
Framework  programme  for  RTD  and  the  Competitiveness  and  Innovation  Framework 
Programme  (CIP).  Synergy  between  cohesion  policy  and  these  instruments  is  vital  so  that 
research  and  cohesion  policies  mutually  reinforce  each  other  at  regional  level  with  national 
and regional development strategies showing how this will be achieved. Cohesion policy can 
help all regions to build up research and innovation capacity, thus contributing to the effective 
participation  of  those  regions  in  the  European  Research  Area  and  research  and  innovation 
activities of the Union in general. In particular, it has two important roles to play. The first is 
in  helping  regions  to  implement  regional  innovation  strategies  and  action  plans  which 

18 

SEC(2004) 1475. 

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potentially can have a significant impact on competitiveness, both at regional level and in the 
Union as a whole; the second is in contributing to raising the research and innovation capacity 
in the region up to a level where it can participate in transnational projects for research. 

Regional  strategies  should  thus  concentrate  on  investing  in  RTD,  innovation  and 
entrepreneurship; ensuring that these investments respond to the economic development needs 
of  the  region  and  that  the  capacity  exists  to  transform  into  marketable  product,  process  and 
service  innovation;  enhancing  technology  transfer  and  knowledge  exchange;  promoting  the 
development,  dissemination  and  uptake  of  ICTs  within  firms,  and  ensuring  that  enterprises 
willing  to  invest  in  high  added  value  goods  and  services  have  access  to  finance.  Such 
strategies should make specific provision for experimentation, with a view to increasing the 
capacity of policy interventions and intermediary organisations to stimulate regional and local 
actors, in particular SMEs, to innovate. 

4.2.1. 

Increase and better target investment in RTD 

The competitiveness of European enterprises crucially depends on their ability to bring new 
knowledge to the market as quickly as possible. This ability is strengthened by public support 
for  RTD  which  can  be  justified  where  market  failures  are  identified  and  by  the  public 
character of certain RTD investments. In addition, issues of ownership of research results and 
the  need  to  achieve  critical  mass  in  certain  research  sectors  provide  justification  for 
government support for RTD.  

The  specific  nature  of  RTD  should  be  considered  when  implementing  regional  policy.  In 
particular, RTD requires close interaction between the players to encourage the formation of 
poles of excellence which are needed to reach critical mass. Geographical proximity through 
the existence of clusters of SMEs and innovation poles around public research institutions for 
instance,  can  play  a  key  role.  As  a  result,  RTD  activities  necessarily  have  to  be  spatially 
concentrated while the absorptive capacity of low RTD-intensive areas is fostered. 

RTD in the less developed Member States and regions should be developed around existing 
poles  of  excellence  and  avoid  the  excessive  spatial  dispersion  of  resources.  Here  also, 
European  Technology  Platforms  can  help  focus  investments  on  priority  areas  for  research. 
Investments  should  also  complement  European  priorities  set  out  in  the  Seventh  Framework 
Programme  and  support  the  objectives  of  the  renewed  Lisbon  agenda.  Priority  should  be 
given to the development of new and marketable products, services and skills. 

Actions in RTD should be aligned with EU RTD policy and the needs of regions in question. 
In terms of method, these need be based on a sound analytical approach, such as foresight; as 
well as use  of indicators,  such  as patents; human resources in RTD; location  of private and 
public research institutions; and on the existence of clusters of innovative businesses. 

The guidelines for action in the field of RTD can be identified as follows: 

–  Strengthening  co-operation  among  businesses  and  between  businesses  and  public 
research/tertiary education institutions, for example, by supporting the creation of regional 
and trans-regional clusters of excellence.  

–  Supporting RTD activities in SMEs and technological transfer (enabling SMEs to access 

RTD services in publicly-funded research institutions). 

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–  Support  for  regional  cross-border  and  transnational  initiatives  aimed  at  strengthening 

research collaboration and capacity building in priority areas of EU research policy.  

–  Strengthen  R&D  capacity  building,  including  ICT,  research  infrastructure  and  human 

capital in areas with significant growth potential. 

Programmes  -  particularly  for  regions  eligible  under  the  Convergence  objective  -  can 
contribute  to  developing  RTD  infrastructure  (including  regional  high-speed  data  networks 
between  and  within  research  establishments),  education  infrastructure  (in  regions  eligible 
under  the  Convergence  objective),  equipment  and  instrumentation  in  both  publicly  funded 
research  institutions  and  businesses,  provided  that  these  investments  are  directly  linked  to 
regional  economic  development  objectives.  This  may  include  research  infrastructure  for 
which  the  feasibility  studies  have  been  financed  from  earlier  Framework  Programmes. 
Support  for  Seventh  Framework  Programme  priorities  should  seek  to  develop  the  full 
potential of emerging and existing centres of excellence and to step up investment in human 
capital,  particularly  by  training  researchers  at  national  level  and  by  creating  conditions  to 
attract researchers trained abroad.  

4.2.2.  Facilitate innovation and promote entrepreneurship 

Innovation  is  the  result  of  complex  and  interactive  processes,  including  the  ability  of 
enterprises to connect to complementary knowledge from other market players, organisations 
and institutions. 

Investments in innovation represent an overarching priority for cohesion policy under both the 
Convergence and Regional competitiveness and employment programmes. Their co-financing 
should  be  a  major  priority  in  the  regions  covered  under  the  latter,  where  limited  financial 
resources need to be concentrated so as to reach critical mass and generate a leverage effect. 

The main objective should be to promote a business climate which promotes the production, 
dissemination  and  use  of  new  knowledge  by  firms.  In  order  to  create  efficient  regional 
innovation systems, economic, social and political actors need to be brought into contact with 
the  leading  edge  of  technology  and  business  practice  in  the  world,  beyond  the  national  or 
local  levels.  In  this  respect,  co-operation  should  be  also  sought  with  the  Innovation  Relay 
centres and the Euro-Info-Centres which are financed under the CIP, especially in the field of 
trans-national technology and diffusion of information. 

Start-up companies, particularly those linked to RTD, need to be supported with the aim of 
developing  partnerships  with  research  institutions  based  on  a  longer-term  vision  and  clear 
market  orientation.  Cohesion  policy  should  seek  to  compensate  for  market  failure  that 
hampers  innovation and entrepreneurship. Actions should seek to build on existing poles of 
activity  in  order  to  exploit  regional  potential  for  RTD  and  to  foster  networking  and 
technological cooperation within and between regions. 

Public  authorities  should  ensure  that  research  institutions,  the  private  sector  and  the  public 
sector exploit to the full the potential synergies between them. 

In terms of method, economic development strategies would be improved by the collection of 
data  on  existing  innovative  activities  in  the  regions  concerned,  for  example,  on  private 
patenting or on the nature, scope and development potential of existing clusters of innovative 
activities,  including  those  which  involve  both  private  and  public  research  institutions.  The 

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21 

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Community Innovation Surveys and the European Innovation Scoreboard are also helpful in 
this regard. 

The guidelines for action under this heading are the following: 

–  Making  regional  RTD  innovation  and  education  supply  more  efficient  and  accessible  to 
firms,  in  particular  SMEs,  for  example  by  establishing  poles  of  excellence,  bringing 
together  high  technology  SMEs  around  research  and  technological  institutions,  or  by 
developing and creating regional clusters around large companies. 

–  Providing  business  support  services  to  enable  enterprises,  and  in  particular  SMEs,  to 
increase competitiveness and to internationalise, in particular by seizing the opportunities 
created  by  the  Internal  Market.  Business  services  should  prioritise  the  exploitation  of 
synergies  (for  example,  technology  transfer,  science  parks,  ICT  communication  centres, 
incubators  and  related  services,  co-operation  with  clusters)  and  give  more  traditional 
support in  the  areas of management, marketing, technical support,  recruitment, and  other 
professional and commercial services. 

–  Ensuring  full  exploitation  of  European  strengths  in  the  area  of  eco-innovations.  Eco-
innovations should be promoted, together with the improvement of SME practices through 
the introduction of environmental management systems. By investing in this area now, EU 
businesses will be in a strong position in the near future when other regions appreciate the 
necessity of such technologies. This is an area with a clear link to the Competitiveness and 
Innovation Framework Programme. 

–  Promoting entrepreneurship, facilitating the creation and development of new firms, and 
promoting  spin-out  and  spin-off  companies  from  research  institutions  or  firms  using  a 
variety  of  techniques  (for  example,  awareness  raising;  prototyping;  tutoring  and  the 
provision of managerial and technological support to entrepreneurs-to-be). 

It  is  important  to  ensure  that  companies,  including  SMEs,  can  make  commercial  use  of 
research results.  

Business  services  should  preferably  be  delivered  by  the  private  sector  or  by  mixed  public-
private organisations. The services should be top-class, readily available, easy to access and 
responsive to the needs of SMEs. The quality of the services should be defined and monitored 
and there should be coherence between service providers, e.g. by establishing public-private 
partnerships and one-stop shops. 

Administrative  procedures  are  often  too  complex.  Information  and  initial  support  should  be 
available  from  a  network  of  one-stop  shops,  which  could  provide  the  interface  between  the 
public  sector  and  the  grant  applicant;  this  should  include  the  various  actions  cofinanced  by 
Cohesion  Policy.  These  providers  should  have  competence  for  the  full  range  of  state  aids  - 
independently of national or regional responsibilities - and targets for the efficiency of their 
operation which are monitored regularly.  

Whenever  the  circumstances  are  appropriate,  tailored  support  should  be  made  available  to 
specific  categories  of  business  (e.g.  start-ups  or  recently  transferred  companies)  or 
entrepreneurs  (e.g.  young  people,  women,  older  workers  or  those  from  ethnic  minority 
communities). Entrepreneurship education should also be encouraged in schools. 

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4.2.3.  Promote the information society for all 

The dissemination of ICT across the Union’s economy represents a major lever for improving 
both  productivity  levels  and  the  competitiveness  of  regions.  The  dissemination  of  ICT  also 
encourages the re-organisation of production methods and the emergence of new business and 
private  services.  The  efficient  and  effective  delivery  of  public  services  -  in  particular  e-
government and e-health – has a significant potential for economic growth and for enabling 
new services. Technology dissemination can contribute to regional development by favouring 
the creation and growth of poles of excellence in ICT activities and developing connectivity 
and  networking  among  enterprises  and  SMEs  in  particular.  Measures  should  encourage  the 
development  of  products  and  services  with  a  view  to  facilitating  and  stimulating  private 
investment in ICT while guaranteeing competition in the ICT sector. 

Policy measures should therefore focus on connectivity. This includes improving innovation 
support  services  for  SMEs  with  the  particular  objective  of  boosting  technology  transfer 
between  research  institutions  and  enterprises.  It  also  requires  the  development  of  the  skills 
needed in the knowledge economy and to develop content through the delivery of applications 
and  services  (such  as  e-government,  e-business,  e-learning,  e-health),  which  provide 
interesting  alternatives  to  other,  often  more  costly,  service  delivery  models.  This  is 
particularly  relevant  for  remote  and  sparsely-populated  areas,  as  well  as  for  the  outermost 
regions, islands or areas with natural handicaps. Clearly the use and development of products 
and  content-based  services  can  only  work  if  the  appropriate  infrastructure  is  available  and 
capable  of  supporting  broadband  services.  It  is  therefore  important  that  an  appropriate 
broadband communication infrastructure is available across the Union at an accessible cost.  

As  a  general  rule,  investment  in  ICT  infrastructure  should  take  into  account  rapid 
technological  development,  respect  for  the  principles  of  technological  neutrality  and  open 
access.  Compliance  with  competition  rules  and  with  the  implementation  of  the  regulatory 
framework for electronic communications is essential. 

Actions  need  to  be  based  on  context  indicators  related  to  the  existing  economic  structure 
(including industrial specialisation; level of economic development; quality of connectivity to 
ICTs and potential synergies between regional poles of economic activity). The identification 
of  regional  needs  should  take  into  account  existing  Union  initiatives  in  favour  of  ICTs,  in 
particular the i2010 – a European Information Society for growth and employment19.  

Given that ICTs cut across all sectors of economy and society, it is imperative that Member 
States and regions develop compatible information society strategies which ensure coherence 
and  integration  among  sectors,  by  balancing  supply  and  demand  measures  on  the  basis  of 
local requirements, stakeholders’ participation, and strong public political support. 

19 

COM(2005) 229. 

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23 

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The guidelines for action are as follow: 

–  Ensuring uptake of ICTs by firms and households and promoting development through the 
balanced  support  for  the  supply  and  demand  of  ICT  products  and  both  public  and 
private services, as well as through increased investment in human capital. These actions 
should  increase  productivity,  promote  an  open  and  competitive  digital  economy  and  an 
inclusive  society  (for  example,  improving  accessibility  for  disabled  and  elderly  people), 
and thus boost growth and jobs. 

–  Ensuring availability of ICT infrastructure and related services where the market fails to 
provide it at an affordable cost and to an adequate level to support the required services, 
especially in remote and rural areas and in new Member States. 

4.2.4. 

Improve access to finance 

Another key ingredient for the promotion of knowledge and innovation is to facilitate access 
to  finance.  For  the  purpose  of  fostering  growth  and  job  creation,  it  must  be  sufficiently 
rewarding  for  entrepreneurs  and  enterprises  to  invest  in  the  development  and  production  of 
goods and services than to focus efforts, for example, on rent-seeking activities.  

Access to finance in this context is often difficult, thus creating an obstacle to growth and job-
creation.  Improving  access  to  capital  both  for  RTD  activities  and  for  start-ups  is  important. 
Risk capital markets related to innovation activities need to be developed in conjunction with 
a better regulatory environment that makes entrepreneurship easier.  

These  programmes  could  be  undertaken  in  close  cooperation  with  the  European  Investment 
Fund  (EIF)  under  the  JEREMIE  initiative  in  order  to  develop  financial  resources  in  areas 
where  entrepreneurship  is  hampered  by  market  failures  owing  to  the  high  risks  associated 
with RTD activities. Due account must also be taken of the impact of government support for 
business creation, in order to avoid the crowding-out of private investment and measures that 
are damaging to competition. Coordination between funds should also be enhanced. 

Private equity and venture capital, and rotating funds for innovative start-ups should play the 
essential  role  as  an  engine  for  entrepreneurship,  innovation  and  job  creation;  public  sector 
institutions  are  not  always  best  suited  to  risk-taking.  The  priority  should  be  to  create  or 
expand  specialised  providers  of  risk  capital  and  bank  guarantees,  where  there  is  market 
failure.  Typically,  they  will  be  more  effective  if  they  provide  an  integrated  package  of 
support, starting with training prior to the business start-up or expansion. 

Based on these principles, the guidelines for action are: 

–  Supporting non-grant instruments such as loans, secured debt financing for subordinate 
debt,  convertible  instruments  (mezzanine  debt)  and  risk  capital  (e.g.  seed  capital  and 
venture capital). Grants should be used to build and maintain infrastructures that facilitate 
access to finance (e.g. technology transfer offices, incubators, “business angels” networks, 
investment  readiness  programmes).  Guarantee  and  mutual  guarantee  mechanisms  could 
also be supported to facilitate access to micro-credit by SMEs. The EIB and the EIF could 
provide valuable input in this regard. 

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24 

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–  Developing  an  integrated  approach  that  simultaneously  supports  innovation,  its  transfer 

into new commercial activity and the availability of risk capital. 

–  Outreaching  to  certain  specific  groups,  for  example,  young  or  female  entrepreneurs  or 

disadvantaged groups.  

It  is  particularly  important  to  work  closely  with  the  EIF  in  view  of  the  expertise  it  has 
developed  over  a  number  of  years,  in  order  to  give  SMEs  the  required  support,  while 
developing the European risk capital market at the same time. This could involve participation 
in the JEREMIE initiative. 

JEREMIE: improving access to finance  

In  order  to  improve  access  to  finance  for  business  development,  a  new  initiative  has  been 
established in partnership with the 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 
identified. This support will take the form of expert management of resources set aside under 
the  programme  for  developing  access  to  finance,  and  attracting  and  accrediting  financial 
intermediaries  who  would  on-lend  for  business  development.  It  is  envisaged  that  the  grant 
contribution  under  the  programme  will  lever  in  significant  additional  loan  capital  from  the 
international  financial  institutions,  and  the  financial  sector  in  general.  The  successful 
implementation  of  the  JEREMIE  initiative  will,  however,  require  the  full  support  and 
cooperation on the part of the authorities in the Member States and regions. 

4.3. 

GUIDELINE : More and better jobs 

In relaunching the Lisbon strategy, the European Council endorsed a single set of Guidelines 
bringing together the Broad Economic Policy Guidelines and the Guidelines of the European 
Employment  Strategy20, 
integrating  macro-economic,  micro-economic  and 
employment  policies  for  growth  and  jobs.  In  accordance  with  the  Fund  regulations21,  in  the 
sphere  of  employment  and  human  resources  the  priorities  of  the  Community  Strategic 
Guidelines  on  cohesion  are  those  of  the  European  Employment  Strategy22  supplemented  by 
the EU Employment Recommendations which provide country-specific priorities.  

thereby 

The drive for full employment and higher productivity depends on a wide variety of actions, 
including those already discussed above. Investment in infrastructure, business development 
and research improve job opportunities, both in the short run as a result of first round effects 
and  in  the  longer  run  as  a  result  of  their  positive  effect  on  competitiveness.  To  maximise 
employment  and  create  high  quality  permanent  jobs  from  these  investments,  human  capital 
should be further developed and enhanced. 

20 
21 

22 

OJ L 205, 12.7.2005, p. 21. 
Article [2] of Regulation (EC) No. […] of the European Parliament and of the Council on the European 
Social Fund repealing regulation (EC) No 1784/1999. OJ L …., Date , p. 
COM(2005) 141,12.4.2005 

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In terms of human capital development, the Employment Guidelines highlight three priorities 
for action for Member States' policies: 

–  attract and retain more people in employment and modernise social protection systems; 

–  improve adaptability of workers and enterprises and the flexibility of the labour markets; 

–  increase investment in human capital through better education and skills. 

In addition to these priorities, appropriate attention should be given to investments to improve 
efficiency in public administration, as well as to education, social and health infrastructures.  

Cohesion  policy  should  focus  on  addressing  the  specific  challenges  of  the  European 
Employment  Strategy  in  each  Member  State,  by  supporting  actions  under  the  convergence 
and the regional competitiveness and employment objectives, taking into account the scope of 
activities  defined  in  the  legislative  framework.  The  range  of  eligible  actions  and  financial 
resources is greater for the former objective. For the latter, EU resources will need to be much 
more focused to achieve a significant impact.  

Employment  and  human  resource  development  programmes  should  take  into  account  the 
country  specific  challenges  and  priorities  as  highlighted  in  Employment  Recommendations. 
The  programmes  whether  managed  at  national  or  regional  level,  should  effectively  address 
territorial disparities and be adapted to needs in different areas.  

Finally, one of the most visible aspects of European value added in the 2000-2006 period of 
the Structural Funds was the support to Member States and regions to exchange experiences, 
and  build  up  networks,  thus  promoting  innovation.  In  this  context,  the  experience  gained 
through  EQUAL  Community  Initiative  should  be  capitalised  through  the  mainstreaming  of 
the  principles  upon  which  it  was  built  –  innovation;  transnationality;  partnership;  gender 
mainstreaming. 

4.3.1.  Attract  and  retain  more  people  in  employment  and  modernise  social  protection 

systems 

Widening  the  base  of  economic  activity,  raising  employment  levels  and  reducing 
unemployment are vital to sustain economic growth, promote socially inclusive societies and 
combat poverty. Increasing participation in employment is all the more necessary because of 
the  expected  decline  in  the  working  age  population.  In  the  framework  of  the  Employment 
Guidelines, Guidelines for action under this heading are the following: 

–  Implement  employment  policies  aimed  at  achieving  full  employment,  improving  quality 

and productivity at work, and strengthening social and territorial cohesion 

–  Promote a life-cycle approach to work  

–  Ensure inclusive labour markets, enhance work attractiveness, and make work pay for job-

seekers, including disadvantaged people, and the inactive. 

–  Improve matching of labour market needs. 

Actions  should  be  based  on  prior  identification  of  needs  by,  for  instance,  using  relevant 
national  and/or  regional  indicators  such  as  unemployment  and  participation  rates,  long-term 

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26 

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unemployment rates, population at risk of poverty rates and level of income. Attention should 
be paid to the local level, where acute disparities may fail to be picked up by regional level 
statistics. 

The  presence  of  efficient  and  effective  labour  market  institutions,  notably  employment 
services  that  can  respond  to  the  challenges  of  rapid  economic  and  social  restructuring  and 
demographic  ageing  is  essential  in  order  to  support  service  delivery  to  job  seekers,  the 
unemployed and disadvantaged people and could be supported by the Structural Funds. These 
institutions  have  a  pivotal  role  to  play  in  implementing  active  labour  market  policies  and 
providing  services  on  a  personalised  basis  with  a  view  to  promoting  occupational  and 
geographical mobility and matching labour supply and demand, including at local level. They 
should help to anticipate shortages and bottlenecks in the labour market and occupational and 
skills requirements. Positive management of economic migration would also be assisted as a 
result.  Easy  access  to  and  transparency  of  the  services  on  offer  are  crucial.  The  EURES 
network is central to increasing occupational and geographic mobility, both at European level 
and nationally23.  

An important priority should be to strengthen active and preventive labour market measures to 
overcome obstacles to entering or remaining in the labour market and to promote mobility for 
job seekers, the unemployed and inactive, older workers as well as those at risk of becoming 
unemployed,  with  particular  attention  to  low-skilled  workers.  Action  should  focus  on  the 
provision of personalised services, including job search assistance, job placement and training 
to  adjust  the  skills  of  job-seekers  and  employees  to  the  needs  of  local  labour  markets.  The 
potential for self-employment and business creation, ICT skills and digital literacy should be 
fully taken into account. Special attention should be paid to: 

–  implementing  the  European  Youth  Pact,  by  facilitating  access  to  employment  for  young 
people, by easing the transition from education to work, including through career guidance, 
assistance in completing education, access to appropriate training and apprenticeships; 

–  implementing  the  European  Pact  for  gender  equality  by  mainstreaming  and  by  specific 
action  to  increase  women’s  participation  in  employment,  to  reduce  occupational 
segregation  and  address  gender  pay  gaps  and  gender  stereotyping  and  to  promote  more 
family-friendly  working  environments,  and  the  reconciliation  of  professional  and  private 
life.  Facilitating  access  to  childcare  and  care  services  for  dependent  persons  is  crucial, 
alongside gender mainstreaming in policies and measures, awareness-raising and dialogue 
among stakeholders; 

–  specific  action  to  strengthen  access  of  migrants  to  the  labour  market  and  facilitate  their 
social  integration,  through  training  and  validation  of  competences  acquired  abroad, 
personalised  guidance,  language  training,  appropriate  support  for  entrepreneurship  and 
awareness  raising  among  employers  and  migrant  workers  about  their  rights  and 
obligations, and strengthening the enforcement of anti-discrimination rules. 

Another  important  priority  should  be  to  ensure  inclusive  labour  markets  for  people  at  a 
disadvantage  or  at  risk  of  social  exclusion,  such  as  early  school-leavers,  the  long-term 

23 

Set up in 1993, EURES is a co-operation network between the European Commission and the Public 
Employment  Services  of  the  EEA  Member  States  (EU  Member  States  plus  Norway,  Iceland  and 
Liechtenstein) and other partner organisations. 

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27 

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unemployed, minorities and people with disabilities. This calls for an even broader range of 
support to build pathways to integration and combat discrimination. The aim should be to: 

–  improve  their  employability  by  enhancing  participation  in  vocational  education  and 
training, rehabilitation and appropriate incentives and working arrangements, as well as the 
necessary social support and care services, including through the development of the social 
economy; 

–  combat  discrimination  and  promote  the  acceptance  of  diversity  in  the  workplace  through 
diversity  training  and  awareness-raising  campaigns,  in  which  local  communities  and 
enterprises would be fully involved.  

4.3.2. 

Improve  adaptability  of  workers  and  enterprises  and  the  flexibility  of  the  labour 
market  

In the light of increasing pressures from globalisation, including sudden and unexpected trade 
shocks, and the continual introduction of new technologies, Europe must increase its capacity 
to  anticipate,  trigger  and  absorb  economic  and  social  change.  In  the  framework  of  the 
Employment Guidelines, Guidelines for action under this heading are the following: 

–  Promote  flexibility  combined  with  employment  security,  and  reduce  labour  market 

segmentation, having due regard to the role of the social partners.  

–  Ensure employment-friendly labour cost developments and wage-setting mechanisms. 

The  main  focus  should  be  on  actions  to  promote  investment  in  human  resources  by 
enterprises, especially SMEs, and workers through the provision of lifelong learning strategies 
and  systems  which  equips  employees,  in  particular  low-skilled  and  older  workers,  with  the 
necessary  skills  to  adapt  to  the  knowledge  economy  and  to  prolong  their  working  life. 
Attention should be given in particular to: 

–  the development of lifelong learning strategies and systems including mechanisms such as 
regional  and  sector  funds,  with  the  aim  of  increasing  investment  by  enterprises  and 
participation of workers in training; 

–  Implementation of such strategies by contributing to the funding of schemes and training 
activities. Priority should be given to SMEs, including facilitating their access to external 
sources  of  competence,  financial  engineering,  such  as  the  JEREMIE  instrument  and 
training solutions – with emphasis being placed on ICT and management skills. Particular 
attention should be paid to increasing the participation of the low-skilled and older workers 
in training and re-training.  

Better anticipation and positive management of economic restructuring, especially as a result 
of changes linked to the opening-up of trade, are particularly important. Consideration should 
be  given  to  creating  monitoring  systems  involving  the  social  partners,  enterprises  and  local 
communities, to scrutinising socio-economic changes at national, regional and local level, and 
assessing  future  economic  and  labour  market  trends.  Support  for  the  programmes  aimed  at 
modernisation  of  labour  markets  and  anticipation  of  gradual  changes  throughout  the  Union 
particularly in sectors such as agriculture, textiles, automobiles and mining, needs to be put in 
place,  alongside  active  measures  to  reinforce  the  economic  well-being  of  regions.  There  is 
also a role for specific employment, training and support services for workers in the context 

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of company and sector restructuring, such as rapid response schemes in the case of collective 
lay-offs.  

Attention should also be given to developing and disseminating knowledge on innovative and 
adaptable  forms  of  work  organisation  to  take  advantage  of  new  technologies  -  including 
teleworking,  improving  health  and  safety  at  work  (e.g.  industrial  safety),  increasing 
productivity  and  promoting  better  reconciliation  of  work  and  family  life.  This  may  also 
include  raising  awareness  of  corporate  social  responsibility,  developing  consciousness  as 
regards  employment  rights,  initiatives  for  respecting  the  labour  code,  reducing  the  grey 
economy and ways to transform undeclared work into regular employment. 

Social  partners  have  an  important  role  to  play  in  setting  up  mechanisms  that  ensure  the 
flexibility of the labour market. Therefore Member States should encourage the participation 
of social partners in activities under this priority. Further, under the Convergence objective, 
an  appropriate  amount  of  the  European  Social  Fund  (ESF)  resources  shall  be  allocated  to 
capacity-building, which shall include training, networking measures, strengthening the social 
dialogue and activities jointly undertaken by the social partners. 

4.3.3. 

Increase investment in human capital through better education and skills 

Europe needs to invest more in human capital. Too many people do not enter or remain in the 
labour  market,  because  of  lack  of  skills  including  in  basic  literacy  and  numeracy,  or  due  to 
skills  mismatches.  To  enhance  access  to  employment  for  all  ages  and  to  raise  productivity 
levels  and  quality  at  work,  there  is  a  need  to  step  up  investment  in  human  capital  and  to 
develop  and  implement  effective  national  lifelong  learning  strategies  for  the  benefit  of 
individuals,  enterprises,  the  economy  and  society.  In  the  framework  of  the  Employment 
Guidelines, Guidelines for action under this heading are the following: 

–  Expand and improve investment in human capital  

–  Adapt education and training systems in response to new competence requirements. 

Reforms  in  labour  market  training  to  attract  more  people  into  employment  and  increase 
adaptability  of  workers  and  enterprises  need  to  be  coupled  with  reforms  in  education  and 
training  systems.  In  previous  programming  periods,  the  Structural  Funds  have  invested 
substantially  in  education  and  training  systems.  In  the  next  programming  period,  the 
investment in human capital should be reinforced by focusing on the Lisbon objectives in line 
with  the  integrated  guidelines  for  growth  and  employment.  The  following  general  priorities 
should be addressed: 

–  expanding  and  improving  investment  in  human  capital  including  the  development  of 
appropriate incentives and cost-sharing mechanisms for enterprises, public authorities and 
individuals; 

–  supporting  coherent  and  comprehensive  lifelong  learning  strategies,  with  particular 
attention given to addressing the skill needs of the knowledge economy, including support 
to co-operation and the establishment of partnerships between Member States, regions and 
cities in terms of education and training to facilitate the exchange of experience and good 
practice, including  innovative projects. Particular attention should be given to addressing 
the needs of disadvantaged groups; 

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–  supporting the design and introduction of reforms in education and training systems using 
where  relevant  common  European  references  and  principles,  in  particular  to  raise  the 
labour-market relevance of education and training; 

–  strengthening  the  links  between  universities,  research  and  technological  centres  and 

enterprises, in particular through networking activities and joint actions.  

Under  the  Convergence  objective,  many  Member  States  and  regions  are  faced  with  very 
significant  education  and  training  challenges.  Financial  resources  should  be  used  for  the 
implementation of reforms, which should address the following specific priorities:  

–  ensuring  an  adequate  supply  of  attractive,  accessible  and  high  quality  education  and 
training  provision  at  all  levels,  including  the  improvement  of  staff  competences  and 
qualification, promoting flexible learning pathways and new options starting as early as the 
school and preschool stage, actions to achieve a significant decline in early school-leaving 
and  higher  completion  rates  of  upper  secondary  education  and  improved  access  to  pre-
school and school education; 

–  supporting the modernisation of higher education and the development of human potential 
in  research  and  innovation,  through  post-graduate  studies,  further  training  of  researchers, 
and attracting more young people into scientific and technical studies; 

–  promoting  the  quality  and  attractiveness  of  vocational  education  and  training,  including 

apprenticeships and entrepreneurship education; 

–  ensuring,  where  appropriate,  greater  mobility  at  regional,  national  or  transnational  level, 
and  promoting  frameworks  and  systems  to  support  the  transparency  and  recognition  of 
qualifications and the validation of non-formal and informal learning; 

–  investment in education and training infrastructure including ICTs, where such investments 
are  necessary  for  the  implementation  of  reform  and/or  where  they  can  significantly 
contribute to increasing the quality and effectiveness of the education and training system. 

4.3.4.  Administrative Capacity 

In previous programming periods, the Funds have, through technical assistance, reinforced the 
management  capacity  of  Member  States  and  managing  authorities  in  implementing  the 
regulations. This will also apply for the period 2007 to 2013. 

Above and beyond the management of the Funds, effective administrative capacity of public 
administrations and public services i.e. smart administration, is a fundamental requirement for 
economic  growth  and  jobs.  Thus  in  line  with  the  revised  Lisbon  Strategy  which  calls  for 
better legislation, policy design and delivery to create the conditions for economic growth and 
job creation, the Funds will support investment in the human capital and related ICT facilities 
of administrative and public services at all territorial levels.  

For Cohesion countries and regions under the Convergence objective, increasing productivity 
and  quality  at  work  in  the  public  sector  -  especially  in  the  economic,  employment,  social, 
educational,  health,  environmental  and  judicial  areas,  is  essential  to  pursue  and  accelerate 
reforms,  to  raise  productivity  and  growth  in  the  wider  economy  and  to  promote  social  and 
territorial cohesion and sustainable development. The Structural Funds can play an important 

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role  in  supporting  effective  policy  design  and  implementation,  which  involves  all  relevant 
stakeholders, in a broad range of fields.  

Therefore, Cohesion countries and regions falling under the Convergence Objective are called 
upon  to  build  up  public  administrations  and  public  services  at  national,  regional  and  local 
level.  Actions  in  this  field  should  take  into  account  the  specific  situation  of  each  Member 
State. Thus, in line with the principle of concentration, Member States are invited to conduct a 
comprehensive  analysis  to  identify  the  policy  areas  requiring  the  most  support  for 
administrative capacity. Investment should concentrate on those policy areas where there are 
the  greatest  obstacles  to  socio-economic  development  and  on  the  key  elements  of 
administrative reforms. 

Member States should ensure that the need to increase efficiency and transparency in public 
administrations  and  to  modernise  public  services  is  adequately  addressed.  Guidelines  for 
action under this heading are the following: 

–  Support  good  policy  and  programme  design,  monitoring,  evaluation  and  impact 
for 

assessment, 
interdepartmental coordination and dialogue between relevant public and private bodies; 

statistics,  expertise,  and 

foresight, 

through 

studies, 

support 

–  Enhance  capacity  building  in  the  delivery  of  policies  and  programmes,  including  with 
regard to the crime proofing and enforcement of legislation, especially through mapping of 
training  needs,  career  development  review,  evaluation,  social  audit  procedures, 
implementation of open government principles, managerial and staff training and specific 
support to key services, inspectorates and socio-economic actors. 

4.3.5.  Help maintain a healthy labour force 

In the light of the EU’s demographic structure, and ageing population and a likely decline in 
the  labour  force  in  years  to  come,  it  is  essential  that  the  Union  takes  steps  to  increase  the 
number  of  healthy  years  of  work  for  members  of  its  workforce.  Investment  in  health 
promotion and disease prevention will help to maintain active participation in society for as 
many  workers  as  possible,  thus  maintaining  their  economic  contribution  and  reducing 
dependency  levels.  This  has  a  direct  effect  on  productivity  and  competitiveness,  as  well  as 
having important positive spin-offs for quality of life in general.  

There  are  major  differences  in  health  status  and  access  to  health  care  between  European 
regions.  It  is  therefore  important  for  cohesion  policy  to  contribute  to  health  care  facilities, 
thereby  helping  to  increase  the  number  of  healthy  years  of  work  in  particular  in  the  less 
prosperous  Member  States  and  regions.  Community-based  health  improvement  and 
preventive action have an important role to play in reducing health inequalities. Good health 
care  translates  into  greater  participation  in  the  labour  market,  longer  working  life,  higher 
productivity and lower healthcare and social costs. 

It is important for cohesion policy, especially in regions lagging behind, to contribute to the 
improvement  of  long-term  care  facilities  and  invest  in  the  improvement  of  health 
infrastructure, in particular when their absence or insufficient development represent a major 
barrier  to  economic  development.  Member  States  should  ensure  that  the  need  to  increase 
efficiency  in  health  care  systems  is  addressed  through  investment  in  ICT,  knowledge  and 
innovation. Guidelines for action under this heading are the following:  

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–  Preventing health risks to help raise productivity levels by means of health information 
campaigns and by ensuring a transfer of knowledge and technology and ensure that health 
services have the necessary skills, products and equipment to prevent risks and minimise 
their potential damage. 

–  Filling  the  gaps  in  health  infrastructure  and  promoting  efficient  provision  of  services 
where  the  economic  development  of  the  less  prosperous  Member  States  and  regions  is 
being affected. This action should be based on a thorough analysis of the optimal level of 
services  provision  and  appropriate  technology,  such  as  telemedicine  and  the  cost-saving 
potential of e-health services. 

5. 

THE TERRITORIAL DIMENSION OF COHESION POLICY  

One of the features of cohesion policy - in contrast to sectoral policies - lies in its capacity to 
adapt  to  the  particular  needs  and  characteristics  of  specific  geographical  challenges  and 
opportunities. Under cohesion policy, geography matters. Accordingly, when developing their 
programmes  and  concentrating  res1ources  on  key  priorities,  Member  States  and  regions 
should pay particular attention to these specific geographical circumstances. 

Taking on board the territorial dimension will help to develop sustainable communities and to 
prevent  uneven  regional  development  from  reducing  overall  growth  potential.  Such  an 
approach also requires that the specific problems and opportunities of urban and rural areas 
may  need  to  be  addressed  as  well  as  those  of  particular  territories  such  as  cross  border  and 
broader transnational areas, or regions suffering from other handicaps due to their insularity, 
remoteness  (such  as  the  outermost  or  Arctic  regions),  sparse  population  or  mountainous 
character.  The  environmental  and  demographic  constraints  faced  by  coastal  areas  may  also 
need  to  be  addressed.  The  successful  implementation  of  actions  to  promote  territorial 
cohesion requires implementing mechanisms that can help to guarantee fair treatment for all 
territories  based  on  their  individual  capacities  as  a  factor  of  competitiveness.  Thus,  good 
governance is important to successfully addressing the territorial dimension.  

In fact, for the next generation of programmes, promoting territorial cohesion should be part 
of  the  effort  to  ensure  that  all  of  Europe’s  territory  has  the  opportunity  to  contribute  to  the 
growth  and  jobs  agenda.  More  specifically,  this  means  that  a  different  meaning  should  be 
given  to  territorial  cohesion,  linked  to  each  Member  State’s  history,  culture  or  institutional 
situation.  

The  development  of  high  quality  partnerships  is  also  essential,  bringing  aboard  actors  at  all 
levels,  national,  regional,  urban,  rural  and  local.  Success  in  the  area  of  territorial  cohesion 
depends  on  a  comprehensive  strategy  which  sets  the  framework  within  which  specific 
objectives and actions are pursued. 

Under the new legislative framework, Member States have the possibility to delegate to cities, 
funds  addressing  urban  issues  within  the  new  programmes.  To  get  the  full  benefits  of 
partnership, cities should be involved throughout the process. This includes responsibility for 
the design and implementation of the sub-delegated portion of the programme. 

The  new  legislative  framework  also  provides  for  special  assistance  to  outermost  regions  in 
order  to  address  the  high  costs  of  distance  that  they  face.  A  particular  challenge  will  be  to 

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ensure that this  assistance contributes to  the realisation of the  strategy of  the  programme as 
whole in terms of helping to generate sustainable growth and jobs. 

5.1. 

The contribution of cities to growth and jobs 

As  outlined  in  the  Commission  Communication  on  cohesion  policy  and  cities,  over  60%  of 
the population in the European Union lives in urban areas of over 50,000 inhabitants24. Cities, 
and metropolitan areas in general, are the home of most jobs, businesses and higher education 
institutions and are key to achieving social cohesion. European cities and metropolitan areas 
tend to attract the highly skilled, often creating a virtuous circle that stimulates innovation and 
business adding to their attractiveness to new talent. 

Cities  and  metropolitan  areas  concentrate  not  only  opportunities  but  also  challenges  and 
account should be taken of the specific problems facing urban areas, such as unemployment 
and  social  exclusion  (including  the  problem  of  the  ‘working  poor’),  high  and  rising  crime 
rates, increased congestion and the existence of pockets of deprivation within city boundaries. 

Programmes  with  a  focus  on  urban  areas  can  take  several  different  forms.  First,  there  are 
actions  to  promote  cities  as  motors  of  regional  development.  Such  actions  should  target 
improvements in competitiveness, for example, through clustering. Actions supported include 
measures  to  promote  entrepreneurship,  innovation  and  the  development  of  services, 
including  producer  services.  Attracting  and  retaining  very  highly  skilled  personnel  is  also 
important (with measures relating to accessibility, the supply of cultural services, etc).  

Second,  there  are  actions  to  promote  internal  cohesion  inside  the  urban  areas  that  seek  to 
improve the situation of crisis districts. Not only does this bring direct benefit to the districts 
themselves, it helps to relieve some of the pressure towards suburban sprawl in pursuit of a 
better quality of life. 

In  this  context,  measures  are  important  that  seek  to  rehabilitate  the  physical  environment, 
redevelop  brownfield  sites  especially  in  old  industrial  areas,  and  preserve  and  develop  the 
historical  and  cultural  heritage  with  potential  spin-offs  for  tourism  development  in  order  to 
create more attractive cities in which people want to live. The regeneration of existing public 
spaces and industrial sites can play an important role in avoiding suburbanisation and urban 
sprawl,  thereby  helping  to  create  the  conditions  necessary  for  sustainable  economic 
development. More generally, by improving the planning, design and maintenance of public 
spaces, cities can ‘plan out’ crime, helping to create attractive streets, parks and open spaces 
which  are  safe  and  feel  safe.  In  urban  areas,  the  environmental,  economic  and  social 
dimensions  are  strongly  interlinked.  A  high  quality  urban  environment  contributes  to  the 
priority of the renewed Lisbon Strategy to make Europe a more attractive place to work, live 
and invest25. 

Third,  there  are  actions  to  promote  a  more  balanced,  polycentric  development  by 
developing the urban network at national and Community level  including  links between the 
economically strongest cities and other urban areas including small and medium-sized cities. 
This  will  require  the  making  of  strategic  choices  in  identifying  and  strengthening  growth 
poles  and,  just  as  important,  putting  in  place  the  networks  that  link  them  in  both  physical 

24 

25 

Communication  to  the  Council  and  Parliament  “Cohesion  Policy  and  cities:  the  urban  contribution to 
growth and jobs in the regions”. COM (2006) […]. 12.7.2006. 
Thematic Strategy on the Urban Environment. COM (2005) 718 final.  

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(infrastructure,  information  technologies,  etc.)  and  human  (actions  to  promote  cooperation, 
etc.) terms. Since these poles serve wider territories, including the immediate rural hinterland, 
they  contribute  to  a  sustainable  and  balanced  development  of  the  Member  State  and  the 
Community as a whole. In a similar way, rural areas provide services to the wider society, for 
example, in the form of recreational opportunities and highly valued landscapes. Focus should 
therefore also be put on the urban rural interface. 

Based on previous experience, there are a number of key principles in urban actions. First, the 
key  partners  in  the  cities  and  local  authorities  have  an  important  role  to  play  in  achieving 
these objectives. As mentioned above, Member States may delegate responsibility to cities for 
urban  development.  This  is  particularly  important  where  proximity  matters,  for  example,  in 
order to respond to the challenges of a mostly local nature such as social exclusion or lack of 
access to key services. 

Second, the preparation of a medium- to long-term development plan for sustainable urban 
development  is  generally  a  precondition  for  success  as  it  ensures  the  coherence  of 
investments and of their environmental quality. This will also help to secure the commitment 
and  participation  of  the  private  sector  in  urban  renewal.  In  general,  a  multi-disciplinary  or 
integrated  approach  is  needed.  For  area-based  actions,  for  example,  to  promote  social 
inclusion,  this  requires  that  actions  seeking  to  improve  the  quality  of  life  (including  the 
environment  and  housing)  or  the  level  of  services  to  citizens  are  combined  with  actions  to 
promote the development of new activities and job creation in order to secure the long-term 
future  of  the  areas  concerned.  The  new  JESSICA  initiative  is  designed  to  promote  and 
facilitate  the  development  of  financial  engineering  products  to  support  projects  included  in 
urban development plans.  

In general, integrated support services and programmes should have a focus on those groups 
which are most in need, such as immigrants, young people and women. All citizens should be 
encouraged to participate in both the planning and delivery of services. 

JESSICA: sustainable urban development 

JESSICA (Joint European Support for Sustainable Investment in City Areas) is a new policy 
initiative,  creating  a  framework  for  enhanced  cooperation  on  financial  engineering  for 
sustainable  urban  development  policy  between,  on  the  one  hand,  the  authorities  in  the 
Member  States,  and  on  the  other  hand,  the  Commission  in  cooperation  with  the  European 
Investment  Bank  (EIB)  and  the  Council  of  Europe  Development  Bank  (CEB).  Other 
International Financial Institutions (IFIs), as well the European banking and private sector are 
also expected to participate and contribute. JESSICA has been launched by the Commission, 
in  cooperation  with  EIB  and  CEB,  with  a  view  to  offering  help  and  providing  new 
opportunities to managing authorities responsible for the next generation of cohesion policy 
programmes. 

The JESSICA initiative is inspired by, and has many similarities with, the JEREMIE initiative 
to  enhance  access  to  finance  for  SMEs,  especially  in  methodological  terms.  As  with 
JEREMIE,  JESSICA  provides  a  framework  that,  based  on  a  contribution  from  the 
programmes to urban development funds or holding funds, adds specialist expertise, levers-in 
additional  loan  resources,  and  facilitates  the  relationships  with  project  promoters  leading  to 
new investments on the ground.  

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The  JESSICA  and  JEREMIE  initiatives  will  be  complementary  in  the  context  of  integrated 
urban  development  plans.  JEREMIE  can  support  improved  access  to  finance  for  micro  to 
medium enterprises in urban areas, while JESSICA can support urban infrastructure projects 
and  networks,  energy  efficiency  or  ICT  projects,  or  any  other  project  or  group  of  projects 
falling  within  the  scope  of  intervention  of  the  ERDF  (or  the  ESF  where  appropriate),  not 
relating to access to finance for SMEs, and included in an integrated urban development plan. 

5.2. 

Support  the  economic  diversification  of  rural  areas,  fisheries  areas  and  areas 
with natural handicaps 

Cohesion  policy  can  also  play  a  key  role  in  support  of  the  economic  regeneration  of  rural 
areas,  complementing  the  actions  supported  by  the  new  rural  development  fund  (European 
Agricultural Fund for Rural Development - EAFRD)26. This complementary approach should 
seek to support the restructuring and diversification of the economy in Europe's rural areas. 

The  synergy  between  structural,  employment  and  rural  development  policies  needs  to  be 
encouraged. In this context, Member States should ensure synergy and consistency between 
actions  to  be  financed  by  the  ERDF,  Cohesion  Fund,  ESF,  EFF  and  EAFRD  on  a  given 
territory  and  in  a  given  field  of  activity.  The  main  guiding  principles  as  regards  the 
demarcation line and the coordination mechanisms between actions supported by the different 
Funds  should  be  defined  at  the  level  of  national  strategic  reference  framework/national 
strategy plan. 

For  cohesion  policy,  action  in  favour  of  rural  areas  or  for  areas  with  natural  handicaps, 
including many island regions, should contribute to the creation of new opportunities through 
the  diversification  of  the  rural  economy.  This  includes  efforts  to  support  the  provision  of  a 
minimum  level  of  access  to  services  of  general  economic  interest  in  order  to  attract  firms 
and  qualified  personnel  and  to  limit  out-migration.  In  this  context,  connectivity  to  the  main 
national and European networks is necessary. In addition, cohesion policy should support the 
endogenous  capacity  of  rural  territories  by  promoting,  for  example,  product  marketing  at 
national and global level, and favouring process and product innovation in existing economic 
activities. 

Achieving the necessary critical mass to deliver services efficiently - including services for a 
healthy workforce referred to above - is a particular challenge. Ensuring universal access to 
all  services,  particularly  in  very  sparsely  populated  areas,  may  be  achieved  by  investing  in 
development  poles  in  rural  areas  (for  example  in  small  and  medium-sized  towns)  and  by 
developing  economic  clusters  based  on  local  assets  combined  with  the  use  of  new 
information technologies. 

Many  rural  regions  depend  heavily  on  tourism.  These  regions  require  an  integrated 
approach dedicated to quality, focusing on consumer satisfaction and based on the economic, 
social  and  environmental  dimensions  of  sustainable  development.  Actions  should  take 
advantage  of,  and  seek  to  preserve  and  develop  natural  and  cultural  assets  which  can  have 
important positive spin-offs by protecting habitats and supporting investment in biodiversity. 
The integrated approach should aim to have a positive impact on the tourism sector, the local 
economy, the people working in the tourism sector, visitors and the local population, as well 
as the natural and cultural heritage. 

26 

Council Regulation (EC) No 1685/2005 of 20 September 2005. OJ L 277, of 21.10.2005, p. 1. 

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With regard to the fisheries sector, the economic restructuring of fisheries-dependent coastal 
areas  and  the  smaller  islands  is  often  a  particular  challenge  for  geographic  reasons,  and 
cohesion policy can play an important role as a complement to the actions supported by the 
new European Fisheries Fund (EFF).  

5.3. 

Cooperation 

Measures  to  promote  cross-border,  transnational,  and  interregional  cooperation,  including 
maritime  cooperation  where  appropriate,  should  complement  the  three  priorities  indicated 
above.  As  a  consequence,  closer  cooperation  across  EU  regions  should  help  speed  up 
economic development and the achievement of higher growth. National borders are often an 
obstacle to the development of European territory as a whole, and can restrict its potential for 
full  competitiveness.  In  the  cross-border  and  transnational  context,  transport,  water 
management and environment protection are clear examples of challenges requiring a focused 
and integrated approach that goes beyond national boundaries.  

5.4. 

Cross-border cooperation 

The ultimate objective of cross-border cooperation in Europe is to integrate areas divided by 
national  borders  that  face  common  problems  requiring  common  solutions.  Such  challenges 
are  faced  by  all  border  regions  in  the  Union  as a  result  of  the  fragmentation  of  markets  for 
labour and capital, infrastructure networks, fiscal capacity, and institutions. 

Though cooperation programmes should be tailored according to the particular situation faced 
by each border region, it is important that an effort is made to concentrate the assistance on 
the main priorities in support of growth and job creation.  

Generally  applicable  recommendations  for  future  cross-border  cooperation  are  not  always 
relevant owing to the large diversity of situations. At the same time, in view of the obstacles 
created  by  borders,  a  useful  starting  point  is  the  improvement  of  existing  transport  and 
communication infrastructure and the development, where necessary, of new links. These are 
pre-conditions for establishing or developing cross-border contacts. 

Cross-border  cooperation  should  focus  on  strengthening  the  competitiveness  of  the  border 
regions. In addition, it should contribute to economic and social integration, especially where 
there are wide economic disparities on either side. Actions include promoting knowledge and 
know-how  transfer,  the  development  of  cross-border  business  activities,  cross-border 
education/training  and  healthcare  potential  and  integrating  the  cross-border  labour  market; 
and  joint  management  of  the  environment  and  common  threats.  Where  the  basic  conditions 
for cross-border cooperation are already in place, cohesion policy should focus assistance on 
actions  that  bring  added  value  to  cross-border  activities:  e.g.  increasing  cross-border 
competitiveness  through  innovation  and  research  and  development;  connecting  intangible 
networks  (services)  or  physical  networks  (transport)  to  strengthen  cross-border  identity  as  a 
feature  of  European  citizenship;  the  promotion  of  cross-border  labour  market  integration; 
cross-border water management and flood control. 

Particular  attention  needs  to  be  paid  to  the  challenges  and  opportunities  presented  by  the 
changing  external  borders  of  the  Union  following  enlargement.  Here,  there  is  a  need  to 
promote  coherent  cross-border  actions  that  encourage  economic  activity  on  both  sides,  and 
remove  obstacles  to  development.  To  this  end,  cohesion  policy  and  the  new  European 

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Neighbourhood  and  Partnership  Instrument  need  to  create  a  coherent  framework  for  such 
actions. 

5.5. 

Transnational cooperation 

Transnational areas are macro-regions where there is a need to increase economic and social 
integration and cohesion. Transnational cooperation programmes seek to increase cooperation 
across Member States on matters of strategic importance.  

Support  should  therefore  be  given  to  actions  which  seek  to  improve  the  physical 
interconnection of territories (e.g. investments in sustainable transport) as well as intangible 
connections (networks, exchanges between regions and between the parties involved). 

The actions envisaged include the creation of European transport corridors (particularly cross-
border sections) for the prevention of natural hazards, water management at river basin level, 
integrated maritime cooperation and R&D/innovation networks.  

The map of the current zones for transnational cooperation has been modified to ensure that 
they create the conditions for implementing basic structural actions. They have been drawn up 
taking  account  of  territorial  coherence  and  functional  criteria  of  a  geographical  nature,  for 
example,  sharing  the  same  river  basin  or  coastal  zone,  belonging  to  the  same  mountainous 
area,  being  crossed  by  a  major  transport  corridor.  Other  criteria,  such  as  history  or 
institutional structures, or existing cooperation or Conventions, are also pertinent. 

5.6. 

Interregional cooperation 

Interregional  cooperation  programmes  should  focus  on  the  Growth  and  Jobs  Agenda: 
strengthening  innovation,  SMEs  and  entrepreneurship,  the  environment  and  risk  prevention. 
In  addition,  exchange  of  experiences  and  best  practices  regarding  urban  development, 
modernisation  of  public  sector  services  (such  as  health  and  government  using  ICT)  and  the 
implementation  of  cooperation  programmes  as  well  as  studies  and  data  collection  will  be 
encouraged.  Interregional  cooperation  will  also  be  supported  within  programmes  for 
Convergence  and  Regional  competitiveness  and  employment.  In  addition,  exchange  of 
experiences  and  best  practices  regarding  urban  development,  social  inclusion,  relationship 
between  cities  and  rural  areas,  and  the  implementation  of  cooperation  programmes  will  be 
encouraged. 

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2006/0131 (AVC) 

Proposal for a 

COUNCIL DECISION 

on Community strategic guidelines on cohesion 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  […]/2006  of  [DDMM]2006  laying  down 
general provisions on the European Regional Development Fund, the European Social Fund 
and the Cohesion Fund and repealing Regulation (EC) No 1260/199927, and in particular the 
first paragraph of Article [25] thereof 

Having regard to the proposal from the Commission28, 

Having regard to the assent of the European Parliament29, 

Having regard to the opinion of the European Economic and Social Committee30, 

Having regard to the opinion of the Committee of the Regions31, 

Whereas:. 

(1) 

(2) 

Pursuant  to  Article  158  of  the  Treaty,  in  order  to  strengthen  its  economic  and  social 
cohesion,  the  Community  aims  at  reducing  disparities  between  the  levels  of 
development of the various regions and the backwardness of the least favoured regions 
or islands, including rural areas. 

Pursuant  to  Article  [25]  of  Regulation  (EC)  No  […]/2006  strategic  guidelines  on 
economic, social and territorial cohesion should be established to define an indicative 
framework  for  the  intervention  of  the  European  Regional  Development  Fund,  the 
European  Social  Fund  and  the  Cohesion  Fund  (hereinafter  “the  Funds”),  taking 
account  of  other  relevant  Community  policies,  with  a  view  to  promoting  the 
harmonious, balanced and sustainable development of the Community. 

(3) 

Enlargement  results  in  a  substantial  widening  of  regional  disparities  in  the 
Community, although some of the poorest parts of the new Member States have some 
of  the  highest  growth  rates.  Enlargement  therefore  presents  an  unprecedented 

27 
28 
29 
30 
31 

OJ L …., Date , p.  
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

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(4) 

(5) 

(6) 

(7) 

(8) 

opportunity  for  improved  growth  and  competitiveness  in  the  Community  as  a  whole 
which should be reflected in these strategic guidelines.  

The 2005 Spring European Council confirmed that the Community should mobilise all 
appropriate national and Community resources – including the cohesion policy – in the 
in pursuit of the objectives of the renewed Lisbon agenda, which consists of integrated 
guidelines,  including  the  broad  economic  policy  guidelines  and  the  employment 
guidelines adopted by the Council32.  

In meeting the objectives set out in the Treaty, and in particular that of fostering real 
economic  convergence,  the  actions  supported  with  the  limited  resources  available  to 
cohesion  policy  should  be  concentrated  on  promoting  sustainable  growth, 
competitiveness and employment having regard to the renewed Lisbon agenda.  

The purpose of these strategic guidelines should therefore be to foster an increase in 
the strategic  content of cohesion policy with a view to strengthening synergies with, 
and helping to deliver, the objectives of the renewed Lisbon agenda.  

The  Spring  European  Council  of  2005  concluded  that  greater  ownership  of  the 
objectives of the new Lisbon agenda on the ground was necessary, involving regional 
and local actors and social partners, in particular, in areas where greater proximity is 
essential, such as in innovation, the knowledge economy and the new information and 
communication  technologies,  employment,  human  capital,  entrepreneurship,  support 
for  small  and  medium-sized  enterprises  (SMEs)  and  access  to  risk  capital  financing. 
The strategic guidelines recognise the importance of this involvement. 

The  strategic  guidelines  should  also  recognise  that  the  successful  implementation  of 
cohesion policy depends on macroeconomic stability and structural reforms at national 
level  together  with  a  range  of  other  conditions  which  favour  investment,  including 
effective  implementation  of  the  internal  market,  administrative  reforms,  good 
governance,  a  business-friendly  climate,  and  the  availability  of  a  highly  skilled 
workforce. 

(9)  Member States have developed national reform programmes to improve the conditions 
for  growth  and  employment  taking  account  of  the  integrated  guidelines.  These 
strategic  guidelines  should  give  priority,  for  all  Member  States  and  regions,  to  those 
areas of investment that help to deliver the national reform programmes taking account 
of national and regional needs and situations: investment in innovation, the knowledge 
economy, the new information and communication technologies, employment, human 
capital, entrepreneurship, support for SMEs or access to risk capital financing. 

(10)  The  strategic  guidelines  should  take  account  of  the  role  of  cohesion  policy  in 
delivering other Community policies consistent with the renewed Lisbon agenda. 

(11) 

In the case of regions and Member States eligible for support under the Convergence 
objective,  the  aim  should  be  to  stimulate  growth  potential,  so  as  to  achieve  and 
maintain  high  growth  rates,  including  addressing  the  deficits  in  basic  infrastructure 
networks and strengthening institutional and administrative capacity.  

32 

OJ 

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39 

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(12)  The  territorial  dimension  of  cohesion  policy  is  important  and  all  areas  of  the 
Community should have the possibility to contribute to growth and jobs. Accordingly 
the  strategic  guidelines  should  take  account  of  investment  needs  in  both  urban  and 
rural  areas  in  view  of  their  respective  roles  in  regional  development  and  in  order  to 
promote balanced development, sustainable communities and social inclusion. 

(13)  The  European  territorial  cooperation  objective  has  an  important  role  to  play  in 
ensuring the balanced and sustainable development of the territory of the Community. 
The  strategic  guidelines  should  contribute  to  the  success  of  the  European  territorial 
objective which depends on shared development strategies of the territories concerned 
at  national,  regional,  and  local  level  and  on  networking  especially  to  ensure  the 
transfer of ideas to mainstream national and regional cohesion programmes.  

(14)  With  a  view  to  promoting  sustainable  development,  the  strategic  guidelines  should 
reflect the necessity to take environmental protection and improvement into account in 
preparing national strategies. 

(15)  Equality between men and women and the prevention of discrimination on the basis of 
gender, race or ethnic origin, religion or belief, disability, age or sexual orientation are 
basic  principles  of  cohesion  policy  and  should  be  incorporated  into  all  levels  of  the 
strategic approach to cohesion.  

(16)  Good  governance  is  essential  at  all  levels for  successful  implementation  of  cohesion 
policy.  The  strategic  guidelines  should  take  account  of  the  role  of  a  broadly  drawn 
partnership in the elaboration and the implementation of development strategies which 
is  necessary  in  order  to  ensure  that  complex  cohesion  strategies  can  be  managed 
successfully and of the need for quality and efficiency in the public sector. 

(17)  These  strategic  guidelines  represent  a  single  indicative  framework  which  Member 
States  and  regions  are  invited  to  use  when  developing  national  and  regional 
programmes, in particular with a view to assessing their contribution to the objectives 
of  the  Community  in  terms  of  cohesion,  growth  and  jobs.  Taking  account  of  these 
strategic guidelines, each Member State should prepare its national strategic reference 
framework and the resulting operational programmes, 

HAS ADOPTED THIS DECISION:  

The Community strategic guidelines on economic, social and territorial cohesion (hereinafter 
“the strategic guidelines”) as set out in the Annex are hereby adopted.  

Article 1 

The  Member  States  shall  ensure  that  the  national  strategic  reference  frameworks  and 
operational programmes for the period 2007 to 2013 are consistent with these guidelines. 

Article 2 

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Article 3 

This Decision is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

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41 

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ANNEX  

Community strategic guidelines on cohesion, 2007-2013 

1. 

INTRODUCTION: GUIDELINES FOR COHESION POLICY, 2007-2013 

In  accordance  with  the  integrated  guidelines  for  growth  and  jobs  of  the  renewed  Lisbon 
agenda, the programmes supported by cohesion policy should seek to target resources on the 
following three priorities33:  

–  improving  the  attractiveness  of  Member  States,  regions  and  cities  by  improving 
accessibility,  ensuring  adequate  quality  and  level  of  services,  and  preserving  the 
environment; 

–  encouraging innovation, entrepreneurship and the growth of the knowledge economy by 
research  and  innovation  capacities,  including  new  information  and  communication 
technologies; and  

–  creating  more  and  better  jobs  by  attracting  more  people  into  employment  or 
entrepreneurial activity, improving adaptability of workers and enterprises and increasing 
investment in human capital. 

In taking on board the renewed Lisbon agenda in the new programmes, attention is drawn to 
the following principles: 

First, in line with the re-launch of the Lisbon agenda itself, cohesion policy should focus to a 
greater  extent  on  knowledge,  research  and  innovation,  and  human  capital.  Accordingly, 
the  overall  financial  effort  in  support  of  these  fields  of  action  should  be  significantly 
increased,  as  required  by  the  new  earmarking  provisions.  In  addition,  Member  States  and 
regions should be inspired by best practice where this has delivered visibly positive results in 
terms of growth and jobs. 

Second, Member States and regions should pursue the objective of sustainable development 
and  boost  synergies  between  the  economic,  social  and  environmental  dimensions.  The 
renewed  Lisbon  strategy  for  Growth  and  Jobs  and  the  National  Reform  Programmes 
emphasize 
in  growth,  competitiveness  and  employment. 
Environmental  protection  needs  to  be  taken  into  account  in  preparing  programmes  and 
projects with a view to promoting sustainable development. 

the  role  of  environment 

Third, Member States and regions should pursue the objective of equality between men and 
women at all stages of the preparation and implementation of programmes and projects. This 
may be done through specific actions to promote equality, as well as by taking careful account 
of how other projects and the management of the Funds may affect women and men. 

Fourth, Member States should take appropriate steps to prevent any discrimination on the 
basis of gender, race or ethnic  origin,  religion or belief,  disability, age or sexual orientation 
during the various stages of implementing the Funds. In particular, accessibility for disabled 

33 

Communication to the Spring European Council “Working Together for growth and jobs – a new start 
for the Lisbon Strategy”. COM(2005) 24, 2.2.2005. 

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42 

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persons is one of the criteria to respect in defining operations cofinanced by the Funds and to 
take into account during the various stages of implementation. 

In the following sections, key aspects of each of these broad areas are examined with specific 
guidelines under each heading. Not all of these more detailed guidelines will be relevant to all 
regions.  The  most  appropriate  mix  of  investments  ultimately  depends  on  the  analysis  of  the 
strengths and weaknesses of each Member State and region and specific national and regional 
circumstances. The guidelines rather represent a single framework which Member States and 
regions  are  invited  to  use  when  developing  national,  regional,  and  local  programmes,  in 
particular with a view to assessing their contribution to the objectives of the Community in 
terms of cohesion, growth and jobs.  

1.1 

GUIDELINE:  Making  Europe  and  its  regions  more  attractive  places  to  invest 
and work 

One  of  the  preconditions  for  growth  and  jobs  is  to  ensure  that  the  necessary  infrastructure 
(e.g.  transport,  environment,  energy)  is  available  to  businesses.  A  modern  and  secure 
infrastructure  is  an  important  factor  in  the  performance  of  many  enterprises,  affecting  the 
economic and social attractiveness of regions and cities. Infrastructure investment in regions 
that are lagging behind, especially in the new Member States, will encourage growth and thus 
reinforce  convergence  with  the  rest  of  the  Union  as  well  as  improving  quality  of  life. 
Resources should come not just from grants but also, where possible, from the private sector 
and from loans, for example from the European Investment Bank (EIB). For the next period, 
programme authorities in the Member States will have an opportunity to make greater use of 
EIB expertise to prepare suitable projects for European funding under the JASPERS initiative. 

1.1.1 

Expand and improve transport infrastructures 

The provision of efficient, flexible, safe and clean transport infrastructure can be regarded as a 
necessary  precondition  for  economic  development  as  it  boosts  productivity  and  thus,  the 
development prospects of the regions concerned by facilitating the movement of people and 
goods.  Transport  networks  boost  opportunities  for  trade,  while  increasing  efficiency. 
Furthermore, the development of Europe-wide transport infrastructures (notably the relevant 
parts of the thirty priority projects for Trans-European Transport Networks), with a particular 
focus  on  cross-border  projects,  is  essential  to  achieving  greater  integration  of  national 
markets, especially within the context of an expanded Union. 

Infrastructure  investment  needs  to  be  adapted  to  the  specific  needs  and  level  of  economic 
development of the regions and countries concerned. These needs are generally highest in the 
Convergence regions and in countries covered by the Cohesion Fund. Typically, infrastructure 
investments (as with other investments) show diminishing rates of return above a certain level 
of funding. The economic returns on such investments are high when infrastructure is scarce 
and  basic  networks  have  not  been  completed,  but  they  are  likely  to  decrease  once  a  certain 
level has been reached. 

The  level  of  regional  economic  development  and  the  existence  of  large  infrastructure 
endowments should thus be taken into account. In the least developed regions and countries, 
international  and  interregional  connections  may  offer  higher  returns  over  the  longer  term  in 
the  form  of  increased  business  competitiveness  and  also  facilitate  labour  mobility.  On  the 
other hand, for regions with a dispersed, small-scale economic base and a settlement pattern 
based  on  small  towns,  the  construction  of  a  regional  transport  infrastructure  may  be  more 

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43 

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appropriate.  In  regions  with  inadequate  road  networks,  funding  should  also  be  available  to 
build  economically  vital  road  links.  The  challenges  of  mobility  and  accessibility  in  urban 
areas should also be tackled, supporting integrated management systems and clean transport 
solutions. 

In  order  to  maximise  the  benefits  deriving  from  transport  investments,  assistance  from  the 
Funds should be based on a number of principles. 

First, objective criteria should be used to determine the level and nature of the infrastructure 
investment to be undertaken. For instance, potential rates of return should be measured by the 
level  of  economic  development  and  the  nature  of  economic  activities  of  the  regions 
concerned,  the  prevailing  density  and  quality  of  infrastructures  or  the  degree  of  congestion. 
When  determining  the  social  rates  of  return,  due  account  should  also  be  taken  of 
environmental and social implications of prospective infrastructure projects. 

Second,  the  principle  of  environmental  sustainability  should  be  respected  to  the  greatest 
possible  extent,  in  accordance  with  the  White  Paper34.  Shifts  to  the  more  environmental 
friendly modes should be pursued. However, the environmental and general performance of 
each mode of transport should be optimised, in particular concerning the use of infrastructure 
within and across the different modes35. 

Third, particular attention should be paid in the Convergence regions and in countries covered 
by  the  Cohesion  Fund  to  modernising  the  railway  system  by  carefully  selecting  the  priority 
sections, ensuring their interoperability within the framework of the European Rail Transport 
Management System (ERTMS).  

Fourth,  investments  in  transport  infrastructure  should  be  accompanied  by  proper  traffic 
management, with particular attention to safety, in accordance with national and Community 
standards.  National  or  regional  strategies  should  take  into  account  the  need  to  achieve  a 
balanced  (and  clean)  modal  split  that  serves  both  economic  and  environmental  needs. 
Strategies  should  include,  for  example,  intelligent  transport  systems,  multi-modal  platforms 
and,  in  particular,  technology  used  for  the  ERTMS,  mentioned  above  and  for  the  Single 
European  Sky  ATM  Research  Programme  (SESAR  -  for  a  more  uniform  air  traffic 
management system in Europe). 

Based on the above principles, the guidelines for action are as follows: 

–  Member States and regions eligible for funding under the Convergence objective36 or the 
Cohesion Fund, should give priority to those of the 30 projects of European interest where 
they  fall  within  their  territory.  Within  this  group  of  projects,  cross-border  links  merit 
special  attention.  Member  States  should  make  use  of  the  co-ordinators  as  a  means  of 
shortening the time that elapses between designation of the planning of the network and the 
physical  construction.  Other  TEN  projects,  and  strategic  transport  links,  should  be 
supported  where  this  is  a  strong  case  in  terms  of  their  contribution  to  growth  and 
competitiveness. 

34 
35 
36 

“European transport policy for 2010 : time to decide”. COM(2001) 370. 
"Keep Europe moving. Sustainable mobility for the European continent". COM(2006)314, 22.6.2006. 
OJ L 167, 30.04.2004, p. 1. 

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44 

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–  Complementary investment in secondary connections will also be important in the context 
of an integrated regional transport and communications strategy covering urban and rural 
areas,  in  order  to  ensure  that  the  regions  benefit  from  the  opportunities  created  by  the 
major networks. 

–  Support  for  rail  infrastructure  should  seek  to  ensure  greater  access.  Track  fees  should 
facilitate  access  for  independent  operators.  They  should  also  enhance  the  creation  of  an 
EU-wide  interoperable  network.  Compliance  and  applications  of  the  interoperability  and 
the fitting of ERTMS on board and on track should be part of all projects financed. 

–  Promoting  environmentally  sustainable  transport  networks,  particularly  in  urban  areas. 
This includes public transport facilities (including park-and-ride infrastructures), mobility 
plans,  ring  roads,  increasing  safety  at  road  junctions,  soft  traffic  (cycle  lanes,  pedestrian 
tracks).  It  also  includes  actions  providing  for  accessibility  to  common  public  transport 
services for certain target groups (the elderly, disabled persons) and providing distribution 
networks  for  alternative  vehicle  fuels. Inland navigation  routes  can  also contribute to the 
sustainability of networks. 

–  In  order  to  guarantee  the  optimum  efficiency  of  transport  infrastructures  for  promoting 
regional  development,  attention  should  be  paid  to  improving  the  connectivity  of 
landlocked,  insular  or  outermost  territories  to  the  Trans-European  network  (TEN-T).  In 
this  respect,  the  development  of  secondary  links,  with  a  focus  on  inter-modality  and 
sustainable transport, will help. In particular, harbours and airports should be connected to 
their hinterland. 

–  More attention should be paid to developing the “motorways of the sea” and to short-sea 

shipping as a viable alternative to long-distance road and rail transport. 

Where Member States receive support at the same time from both the Cohesion Fund and the 
Structural  Funds,  a  distinction  should  be  made  in  the  programmes  between  the  types  of 
actions funded by each of the Funds, with the Cohesion Fund playing the key role in support 
of Trans-European transport networks.  

to  measures 

In  turn,  the  Structural  Funds  should  generally  focus  on  the  development  of  infrastructure 
tourism  development, 
to  stimulate  economic  growth  (such  as 
linked 
improvements  to  increase  the  attractiveness  of  industrial  sites,  etc.).  With  regard  to  road 
infrastructure, investments shall also fit the overall goal of road safety. 

Co-financing from the Funds should complement grants from the budget for Trans-European 
Networks  while  avoiding  duplication  in  terms  of  Community  assistance.  Member  States 
individually  will  need  to  determine  in  advance  the  instrument  most  suited  to  the  planned 
projects. Cohesion policy funding can be combined with the loan guarantee part of the TEN 
instruments. 

1.1.2. 

Strengthen the synergies between environmental protection and growth 

Environmental investments can contribute to the economy in three ways: they can ensure the 
long-term  sustainability  of  economic  growth,  they  decrease  external  environmental  costs  to 
the  economy  (e.g.  health  costs,  clean-up  costs  or  damage  recovery)  and  they  stimulate 
innovation and job creation. Future cohesion programmes should seek to strengthen potential 
synergies  between  environmental  protection  and  growth.  The  provision  of  environmental 

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45 

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services  such  as  clean  water  supplies,  waste  and  waste-water  treatment  infrastructures, 
management of natural resources, the decontamination of land to prepare it for new economic 
activities, and protection against certain environmental risks, should all have high priority in 
this context.  

In order to maximise economic benefits and minimise the costs, priority should be given to 
tackling environmental pollution at its sources. In the waste management sector, this implies 
focusing on waste prevention, recycling and biodegradation of waste which are cost-effective 
and help to create jobs. 

Development  strategies  should  be  based  on  a  prior  evaluation  of  needs  and  specific  issues 
faced  by  regions,  where  possible  using  appropriate  indicators.  Efforts  should  be  made  to 
promote  the  internalisation  of  external  environmental  costs,  with  support  for  the  setting  up 
and development of market-based instruments (see, for example, instruments proposed in the 
Environmental Technologies Action Plan). Attention is drawn in this context to the initiative 
Global  Monitoring  for  Environment  and  Security,  which  from  2008  will  provide  Europe-
wide, up-to-date information on land-cover/land-use and ocean properties as well as incident 
maps in case of disasters and accidents. 

Accordingly, the recommended guidelines for action are the following:  

–  Addressing  the  significant  needs  for  investment  in  infrastructure,  particularly  in  the 
Convergence  regions  and  especially  in  the  new  Member  States,  to  comply  with 
environmental  legislation  in  the  fields  of  water,  waste,  air,  nature  and  species  protection 
and bio-diversity.  

–  Ensuring  that  attractive  conditions  exist  for  businesses  and  their  highly-skilled  staff. 
This can be ensured by promoting land-use planning which reduces urban sprawl, and by 
rehabilitating the physical environment, including the development of natural and cultural 
assets. Investments in this area should be clearly linked to the development of innovative 
and job-creating businesses on the sites concerned. 

–  Promoting,  in  addition  to  the  investments  in  sustainable  energy  and  transport  covered 

elsewhere, investments that contribute to the EU Kyoto commitments. 

–  Undertaking  risk  prevention  measures  through  improved  management  of  natural 
resources,  more  targeted  research  and  better  use  of  ICTs,  and  more  innovative  public 
management policies including, for example, preventive monitoring.  

Where Member States receive support from both the Cohesion Fund and the Structural Funds, 
a clear distinction should be made in the programmes between the types of actions funded by 
each of the Funds, respectively. 

1.1.3.  Address Europe’s intensive use of traditional energy sources 

A related priority is the need to reduce traditional energy dependency through improvements 
in energy efficiency and renewable energies. Investments in these fields contribute to security 
of energy supply for long-term growth, while acting as a source of innovation and providing 
opportunities for exports, and are cost effective especially if energy prices remain high.  

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Investment in traditional sources of energy is also needed, so as to ensure security of supply. 
In  particular,  the  Funds  should  concentrate  –  where  there  is  evidence  of  market  failure  and 
where  it  does  not  go  against  the  liberalisation  of  the  market  –  on  the  completion  of 
interconnections, with special emphasis on the Trans-European networks, the improvement of 
electricity  grids  and  the  completion  and  improvement  of  gas  transmission  and  distribution 
networks including where appropriate in insular and outermost regions.  

Guidelines for action under this heading are the following: 

–  Supporting  projects  to  improve  energy  efficiency,  for  example  in  buildings,  and 

dissemination of low energy intensity development models. 

–  Supporting the development and use of renewable and alternative technologies (such as 
wind, solar, biomass), including for heating and cooling, which can give the EU a leading 
edge and thus strengthen its competitive position. Such investments also contribute to the 
Lisbon objective of ensuring that, by 2010, 21% of electricity is generated from renewable 
sources. 

–  Concentrating  investment  in  traditional  energy  sources  to  develop  the  networks  where 
there  is  evidence  of  market  failure.  These  investments  mostly  concern  the  Convergence 
regions.  

1.2 

GUIDELINE: Improving knowledge and innovation for growth 

The  Community’s  aims  of  growth  and  job  creation  will  require  a  structural  shift  in  the 
economy towards knowledge-based activities. This calls for action on a number of fronts: to 
address  low  levels  of  Research  and  Technological  Development  (RTD),  especially  in  the 
private  sector;  to  promote  innovation  through  new  or  improved  products,  processes  and 
services  which  can  withstand  international  competition;  to  increase  regional  and  local 
capacities to generate and absorb new technologies (ICTs in particular); and to provide more 
support for risk-taking.  

RTD  expenditure  as  a  percentage  of  GDP  has  been  increasing,  but  only  marginally  and,  at 
1.9% of GDP, remains well short of the Lisbon target of 3%37. It is estimated that an increase 
in the share of RTD expenditure from 1.9% to 3% of GDP (in order to reach the Lisbon target 
by 2010) will result in an increase of 1.7% in the level of GDP by 201038. While the shortfall 
in business investment in RTD remains significant, there are signs that public investment in 
this  field  is  also  coming  under  pressure.  The  RTD  and  innovation  gap  within  and  between 
countries,  particularly  in  relation  to  business  expenditure  on  RTD,  is  much  bigger  than  the 
income  gap.  While  a  combination  of  national  and  Community  initiatives  have  been 
undertaken, more action is needed to match business needs with RTD supply from public and 
private  RTD  institutions.  Europe’s  innovation  gap  is  widening:  the  European  Innovation 
Scoreboard shows that Europe lags behind the US in 9 out of 11 Innovation indicators39. Also 
within  Europe,  the  innovation  gap  persists,  as  the  Union  too  often  fails  to  transform 
technological development into commercial products and processes. Cohesion policy can help 
to  address  the  main  problems  behind  Europe’s  underperformance  in  innovation,  including 

37 
38 
39 

“Investing in research: an action plan for Europe”. COM(2003) 226, 30.4.2003. 
“The economic costs of non-Lisbon” - SEC(2005) 385, 15.3.2005. 
SEC(2004) 1475. 

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ineffective  innovation  systems,  insufficient  entrepreneurial  dynamism  or  slow  business 
adoption of ICT.  

In  this  context,  it  is  necessary  to  enhance  national  and  regional  RTD  capacities,  to  support 
investment  in  ICT  infrastructure,  and  to  disseminate  technology  and  knowledge  through 
appropriate technology transfer and knowledge exchange mechanisms. Awareness-raising to 
promote  a  better  use  of  existing  RTD  potential  could  be  encouraged  through  regional 
‘foresight’  and  other  regional  strategic  planning  methods,  involving  regular  and  systematic 
dialogue with key stakeholders. It is also important to enhance the RTD absorption capacity 
of firms, particularly SMEs, through actions to develop skills and competencies; to encourage 
the  creation  and  exploitation  of  a  larger  pool  of  high-quality  research  talent  in  Europe;  to 
increase  private  and  public  investment  in  RTD  and  innovation;  and  to  encourage  RTD 
partnerships  across  the  different  regions  of  the  Union.  European  Technology  Platforms,  for 
example, offer the potential to better tailor research programmes to business needs; cohesion 
policy  can  play  an  important  role  in  supporting  implementation  of  their  Strategic  Research 
Agendas across the Union including in less developed regions. 

While direct grants remain important, notably in Convergence regions, there is a need to focus 
on the provision of collective business and technology services to groups of firms, in order to 
help  them  improve  their  innovative  activity.  Direct  grants  to  individual  firms  should  be 
targeted at improving the RTD and innovation capacity of the firm, rather than at a temporary 
reduction  of  its  production  costs  generating  high  deadweight  effects.  This  is  particularly 
important in traditional sectors, particularly those exposed to global competition, which need 
additional efforts in order to remain competitive, as well as in SMEs which often represent the 
highest source of employment at the regional level. Most importantly, these policies need to 
be adapted to the particular conditions of each region, and in particular to the needs of SMEs. 
National, regional, and local strategies should be based on a comprehensive analysis of RTD 
investment opportunities. 

Knowledge  and  innovation  are  at  the  centre  of  the  Community’s  efforts  to  promote  faster 
growth and more jobs. Two related framework programmes are proposed at Community level: 
the  Seventh  Framework  programme  for  RTD  and  the  Competitiveness  and  Innovation 
Framework  Programme  (CIP).  Synergy  between  cohesion  policy  and  these  instruments  is 
vital  so  that  research  and  cohesion  policies  mutually  reinforce  each  other  at  regional  level 
with  national  and  regional  development  strategies  showing  how  this  will  be  achieved. 
Cohesion  policy  can  help  all  regions  to  build  up  research  and  innovation  capacity,  thus 
contributing to the effective participation of those regions in the European Research Area and 
research  and  innovation  activities  of  the  Community  in  general.  In  particular,  it  has  two 
important  roles  to  play.  The  first  is  in  helping  regions  to  implement  regional  innovation 
strategies  and  action  plans  which  potentially  can  have  a  significant 
impact  on 
competitiveness,  both  at  regional  level  and  in  the  Union  as  a  whole;  the  second  is  in 
contributing to raising the research and innovation capacity in the region up to a level where it 
can participate in transnational projects for research. 

Regional  strategies  should  thus  concentrate  on  investing  in  RTD,  innovation  and 
entrepreneurship; ensuring that these investments respond to the economic development needs 
of  the  region  and  that  the  capacity  exists  to  transform  research  into  marketable  product, 
process  and  service  innovation;  enhancing  technology  transfer  and  knowledge  exchange; 
promoting the development, dissemination and uptake of ICTs within firms, and ensuring that 
enterprises willing to invest in high added value goods and  services  have  access  to  finance. 
Such strategies should make specific provision for experimentation, with a view to increasing 

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the capacity of policy interventions and intermediary organisations to stimulate regional and 
local actors, in particular SMEs, to innovate. 

1.2.1. 

Increase and better target investment in RTD 

The competitiveness of European enterprises crucially depends on their ability to bring new 
knowledge  to  the  market  as  quickly  as  possible.  Public  support  for  RTD  can  be  justified 
where market failures are identified and by the public character of certain RTD investments. 
In  addition,  issues  of  ownership  of  research  results  and  the  need  to  achieve  critical  mass  in 
certain research sectors provide justification for government support for RTD.  

The  specific  nature  of  RTD  should  be  considered  when  implementing  regional  policy.  In 
particular, RTD requires close interaction between the players to encourage the formation of 
poles of excellence which are needed to reach critical mass. Geographical proximity through 
the existence of clusters of SMEs and innovation poles around public research institutions for 
instance,  can  play  a  key  role.  As  a  result,  RTD  activities  necessarily  have  to  be  spatially 
concentrated while the absorptive capacity of low RTD-intensive areas is fostered. 

RTD in the less developed Member States and regions should be developed around existing 
poles  of  excellence  and  avoid  the  excessive  spatial  dispersion  of  resources.  Here  also, 
European  Technology  Platforms  can  help  focus  investments  on  priority  areas  for  research. 
Investments  should  also  complement  European  priorities  set  out  in  the  Seventh  Framework 
Programme  and  support  the  objectives  of  the  renewed  Lisbon  agenda.  Priority  should  be 
given to the development of new and marketable products, services and skills. 

Actions in RTD should be aligned with Community RTD policy and the needs of regions in 
question.  In  terms  of  method,  these  need  be  based  on  a  sound  analytical  approach,  such  as 
foresight; as well as use of indicators, such as patents; human resources in RTD; location of 
private  and  public  research  institutions;  and  on  the  existence  of  clusters  of  innovative 
businesses. 

The guidelines for action in the field of RTD can be identified as follows: 

–  Strengthening  co-operation  among  businesses  and  between  businesses  and  public 
research/tertiary education institutions, for example, by supporting the creation of regional 
and trans-regional clusters of excellence.  

–  Supporting RTD activities in SMEs and technological transfer (enabling SMEs to access 

RTD services in publicly-funded research institutions). 

–  Support  for  regional  cross-border  and  transnational  initiatives  aimed  at  strengthening 
research  collaboration  and  capacity  building  in  priority  areas  of  Community  research 
policy.  

–  Strengthen  R&D  capacity  building,  including  ICT,  research  infrastructure  and  human 

capital in areas with significant growth potential. 

Programmes  -  particularly  for  regions  eligible  under  the  Convergence  objective  -  can 
contribute  to  developing  RTD  infrastructure  (including  regional  high-speed  data  networks 
between  and  within  research  establishments),  education  infrastructure  (in  regions  eligible 
under  the  Convergence  objective),  equipment  and  instrumentation  in  both  publicly  funded 

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research  institutions  and  businesses,  provided  that  these  investments  are  directly  linked  to 
regional  economic  development  objectives.  This  may  include  research  infrastructure  for 
which  the  feasibility  studies  have  been  financed  from  earlier  Framework  Programmes. 
Support  for  Seventh  Framework  Programme  priorities  should  seek  to  develop  the  full 
potential of emerging and existing centres of excellence and to step up investment in human 
capital,  particularly  by  training  researchers  at  national  level  and  by  creating  conditions  to 
attract researchers trained abroad.  

1.2.2.  Facilitate innovation and promote entrepreneurship 

Innovation  is  the  result  of  complex  and  interactive  processes,  including  the  ability  of 
enterprises to connect to complementary knowledge from other market players, organisations 
and institutions. 

Investments in innovation represent an overarching priority for cohesion policy under both the 
Convergence and Regional competitiveness and employment programmes. Their co-financing 
should  be  a  major  priority  in  the  regions  covered  under  the  latter,  where  limited  financial 
resources need to be concentrated so as to reach critical mass and generate a leverage effect. 

The main objective should be to promote a business climate which promotes the production, 
dissemination  and  use  of  new  knowledge  by  firms.  In  order  to  create  efficient  regional 
innovation systems, economic, social and political actors need to be brought into contact with 
the  leading  edge  of  technology  and  business  practice  in  the  world,  beyond  the  national  or 
local  levels.  In  this  respect,  co-operation  should  be  also  sought  with  the  Innovation  Relay 
centres and the Euro-Info-Centres which are financed under the CIP programme, especially in 
the field of trans-national technology and diffusion of information. 

Start-up companies, particularly those linked to RTD, need to be supported with the aim of 
developing  partnerships  with  research  institutions  based  on  a  longer-term  vision  and  clear 
market  orientation.  Cohesion  policy  should  seek  to  compensate  for  market  failure  that 
hampers  innovation and entrepreneurship. Actions should seek to build on existing poles of 
activity  in  order  to  exploit  regional  potential  for  RTD  and  to  foster  networking  and 
technological cooperation within and between regions. 

Public  authorities  should  ensure  that  research  institutions,  the  private  sector  and  the  public 
sector exploit to the full the potential synergies between them. 

In terms of method, economic development strategies would be improved by the collection of 
data  on  existing  innovative  activities  in  the  regions  concerned,  for  example,  on  private 
patenting or on the nature, scope and development potential of existing clusters of innovative 
activities,  including  those  which  involve  both  private  and  public  research  institutions.  The 
Community Innovation Surveys and the European Innovation Scoreboard are also helpful in 
this regard. 

The guidelines for action under this heading are the following: 

–  Making  regional  RTD  innovation  and  education  supply  more  efficient  and  accessible  to 
firms,  in  particular  SMEs,  for  example  by  establishing  poles  of  excellence,  bringing 
together  high  technology  SMEs  around  research  and  technological  institutions,  or  by 
developing and creating regional clusters around large companies. 

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–  Providing  business  support  services  to  enable  enterprises,  and  in  particular  SMEs,  to 
increase competitiveness and to internationalise, in particular by seizing the opportunities 
created  by  the  internal  market.  Business  services  should  prioritise  the  exploitation  of 
synergies  (for  example,  technology  transfer,  science  parks,  ICT  communication  centres, 
incubators  and  related  services,  co-operation  with  clusters)  and  give  more  traditional 
support in  the  areas of management, marketing, technical support,  recruitment, and  other 
professional and commercial services. 

–  Ensuring  full  exploitation  of  European  strengths  in  the  area  of  eco-innovations.  Eco-
innovations should be promoted, together with the improvement of SME practices through 
the introduction of environmental management systems. By investing in this area now, EU 
businesses will be in a strong position in the near future when other regions appreciate the 
necessity of such technologies. This is an area with a clear link to the Competitiveness and 
Innovation Framework Programme. 

–  Promoting entrepreneurship, facilitating the creation and development of new firms, and 
promoting  spin-out  and  spin-off  companies  from  research  institutions  or  firms  using  a 
variety  of  techniques  (for  example,  awareness  raising;  prototyping;  tutoring  and  the 
provision of managerial and technological support to entrepreneurs-to-be). 

It  is  important  to  ensure  that  companies,  including  SMEs,  can  make  commercial  use  of 
research results.  

Business  services  should  preferably  be  delivered  by  the  private  sector  or  by  mixed  public-
private organisations. The services should be top-class, readily available, easy to access and 
responsive to the needs of SMEs. The quality of the services should be defined and monitored 
and there should be coherence between service providers, e.g. by establishing public-private 
partnerships and one-stop shops. 

Administrative  procedures  are  often  too  complex.  Information  and  initial  support  should  be 
available  from  a  network  of  one-stop  shops,  which  could  provide  the  interface  between  the 
public  sector  and  the  grant  applicant;  this  should  include  the  various  actions  cofinanced  by 
cohesion  policy.  These  providers  should  have  competence  for  the  full  range  of  state  aids  - 
independently of national or regional responsibilities - and targets for the efficiency of their 
operation which are monitored regularly.  

Whenever  the  circumstances  are  appropriate,  tailored  support  should  be  made  available  to 
specific  categories  of  business  (e.g.  start-ups  or  recently  transferred  companies)  or 
entrepreneurs  (e.g.  young  people,  women,  older  workers  or  those  from  ethnic  minority 
communities). Entrepreneurship education should also be encouraged in schools. 

1.2.3.  Promote the information society for all 

The dissemination of ICT across the Union’s economy represents a major lever for improving 
both  productivity  levels  and  the  competitiveness  of  regions.  The  dissemination  of  ICT  also 
encourages the re-organisation of production methods and the emergence of new business and 
private  services.  The  efficient  and  effective  delivery  of  public  services  -  in  particular  e-
government and e-health – has a significant potential for economic growth and for enabling 
new services. Technology dissemination can contribute to regional development by favouring 
the creation and growth of poles of excellence in ICT activities and developing connectivity 
and  networking  among  enterprises  and  SMEs  in  particular.  Measures  should  encourage  the 

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development  of  products  and  services  with  a  view  to  facilitating  and  stimulating  private 
investment in ICT while guaranteeing competition in the ICT sector. 

Policy measures should therefore focus on connectivity. This includes improving innovation 
support  services  for  SMEs  with  the  particular  objective  of  boosting  technology  transfer 
between  research  institutions  and  enterprises.  It  also  requires  the  development  of  the  skills 
needed in the knowledge economy and to develop content through the delivery of applications 
and  services  (such  as  e-government,  e-business,  e-learning,  e-health),  which  provide 
interesting  alternatives  to  other,  often  more  costly,  service  delivery  models.  This  is 
particularly  relevant  for  remote  and  sparsely-populated  areas,  as  well  as  for  the  outermost 
regions, islands or areas with natural handicaps. Clearly the use and development of products 
and  content-based  services  can  only  work  if  the  appropriate  infrastructure  is  available  and 
capable  of  supporting  broadband  services.  It  is  therefore  important  that  an  appropriate 
broadband communication infrastructure is available across the Union at an accessible cost.  

As  a  general  rule,  investment  in  ICT  infrastructure  should  take  into  account  rapid 
technological  development,  respect  for  the  principles  of  technological  neutrality  and  open 
access.  Compliance  with  competition  rules  and  with  the  implementation  of  the  regulatory 
framework for electronic communications is essential. 

Actions  need  to  be  based  on  context  indicators  related  to  the  existing  economic  structure 
(including industrial specialisation; level of economic development; quality of connectivity to 
ICTs and potential synergies between regional poles of economic activity). The identification 
of regional needs should take into account existing Community initiatives in favour of ICTs, 
in particular the i2010 – a European Information Society for growth and employment40.  

Given that ICTs cut across all sectors of economy and society, it is imperative that Member 
States and regions develop compatible information society strategies which ensure coherence 
and  integration  among  sectors,  by  balancing  supply  and  demand  measures  on  the  basis  of 
local requirements, stakeholders’ participation, and strong public political support. 

The guidelines for action are as follow: 

–  Ensuring uptake of ICTs by firms and households and promoting development through the 
balanced  support  for  the  supply  and  demand  of  ICT  products  and  both  public  and 
private services, as well as through increased investment in human capital. These actions 
should  increase  productivity,  promote  an  open  and  competitive  digital  economy  and  an 
inclusive  society  (for  example,  improving  accessibility  for  disabled  and  elderly  people), 
and thus boost growth and jobs. 

–  Ensuring availability of ICT infrastructure and related services where the market fails to 
provide it at an affordable cost and to an adequate level to support the required services, 
especially in remote and rural areas and in new Member States. 

1.2.4. 

Improve access to finance 

Another key ingredient for the promotion of knowledge and innovation is to facilitate access 
to  finance.  For  the  purpose  of  fostering  growth  and  job  creation,  it  must  be  sufficiently 

40 

COM(2005) 229. 

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rewarding  for  entrepreneurs  and  enterprises  to  invest  in  the  development  and  production  of 
goods and services than to focus efforts, for example, on rent-seeking activities.  

Access to finance in this context is often difficult, thus creating an obstacle to growth and job-
creation.  Improving  access  to  capital  both  for  RTD  activities  and  for  start-ups  is  important. 
Risk capital markets related to innovation activities need to be developed in conjunction with 
a better regulatory environment that makes entrepreneurship easier.  

These  programmes  could  be  undertaken  in  close  cooperation  with  the  European  Investment 
Fund  (EIF)  under  the  JEREMIE  initiative  in  order  to  develop  financial  resources  in  areas 
where  entrepreneurship  is  hampered  by  market  failures  owing  to  the  high  risks  associated 
with RTD activities. Due account must also be taken of the impact of government support for 
business creation, in order to avoid the crowding-out of private investment and measures that 
are damaging to competition. Coordination between funds should also be enhanced. 

Private equity and venture capital, and rotating funds for innovative start-ups should play the 
essential  role  as  an  engine  for  entrepreneurship,  innovation  and  job  creation;  public  sector 
institutions  are  not  always  best  suited  to  risk-taking.  The  priority  should  be  to  create  or 
expand  specialised  providers  of  risk  capital  and  bank  guarantees,  where  there  is  market 
failure.  Typically,  they  will  be  more  effective  if  they  provide  an  integrated  package  of 
support, starting with training prior to the business start-up or expansion. 

Based on these principles, the guidelines for action are: 

–  Supporting non-grant instruments such as loans, secured debt financing for subordinate 
debt,  convertible  instruments  (mezzanine  debt)  and  risk  capital  (e.g.  seed  capital  and 
venture capital). Grants should be used to build and maintain infrastructures that facilitate 
access to finance (e.g. technology transfer offices, incubators, “business angels” networks, 
investment  readiness  programmes).  Guarantee  and  mutual  guarantee  mechanisms  could 
also be supported to facilitate access to micro-credit by SMEs. The EIB and the EIF could 
provide valuable input in this regard. 

–  Developing  an  integrated  approach  that  simultaneously  supports  innovation,  its  transfer 

into new commercial activity and the availability of risk capital. 

–  Outreaching  to  certain  specific  groups,  for  example,  young  or  female  entrepreneurs  or 

disadvantaged groups.  

It  is  particularly  important  to  work  closely  with  the  EIF  in  view  of  the  expertise  it  has 
developed  over  a  number  of  years,  in  order  to  give  SMEs  the  required  support,  while 
developing the European risk capital market at the same time. This could involve participation 
in the JEREMIE initiative.  

1.3. 

GUIDELINE : More and better jobs 

In relaunching the Lisbon strategy, the European Council endorsed a single set of Guidelines 
bringing  together  the  Broad  Economic  Policy  Guidelines41  and  the  Guidelines  of  the 
European  Employment  Strategy,  thereby  integrating  macro-economic,  micro-economic  and 

41 

OJ L 205, 6.8.2005, p. 21. 

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employment  policies  for  growth  and  jobs.  In  accordance  with  the  Fund  regulations42,  in  the 
sphere  of  employment  and  human  resources  the  priorities  of  the  Community  strategic 
guidelines  on  cohesion  are  those  of  the  European  Employment  Strategy43  supplemented  by 
the EU Employment Recommendations which provide country-specific priorities.  

The drive for full employment and higher productivity depends on a wide variety of actions, 
including those already discussed above. Investment in infrastructure, business development 
and research improve job opportunities, both in the short run as a result of first round effects 
and  in  the  longer  run  as  a  result  of  their  positive  effect  on  competitiveness.  To  maximise 
employment  and  create  high  quality  permanent  jobs  from  these  investments,  human  capital 
should be further developed and enhanced. 

In terms of human capital development, the Employment Guidelines highlight three priorities 
for action for Member States' policies: 

–  attract and retain more people in employment and modernise social protection systems; 

–  improve adaptability of workers and enterprises and the flexibility of the labour markets; 

–  increase investment in human capital through better education and skills. 

In addition to these priorities, appropriate attention should be given to investments to improve 
efficiency in public administration, as well as to education, social and health infrastructures.  

Cohesion  policy  should  focus  on  addressing  the  specific  challenges  of  the  European 
Employment  Strategy  in  each  Member  State,  by  supporting  actions  under  the  convergence 
and the regional competitiveness and employment objectives, taking into account the scope of 
activities  defined  in  the  legislative  framework.  The  range  of  eligible  actions  and  financial 
resources is greater for the former objective. For the latter, Community resources will need to 
be much more focused to achieve a significant impact.  

Employment  and  human  resource  development  programmes  should  take  into  account  the 
country  specific  challenges  and  priorities  as  highlighted  in  Employment  Recommendations. 
The  programmes  whether  managed  at  national  or  regional  level,  should  effectively  address 
territorial disparities and be adapted to needs in different areas.  

Finally, one of the most visible aspects of European value added in the 2000-2006 period of 
the Structural Funds was the support to Member States and regions to exchange experiences, 
and  build  up  networks,  thus  promoting  innovation.  In  this  context,  the  experience  gained 
through EQUAL Community initiative should be capitalised through the mainstreaming of the 
principles  upon  which  it  was  built  –  innovation;  transnationality;  partnership;  gender 
mainstreaming.  

42 

43 

Article [2] of Regulation (EC) No. […] of the European Parliament and of the Council on the European 
Social Fund repealing regulation (EC) No 1784/1999. OJ L …., Date , p. 
COM(2005) 141,12.4.2005 

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1.3.1.  Attract  and  retain  more  people  in  employment  and  modernise  social  protection 

systems 

Widening  the  base  of  economic  activity,  raising  employment  levels  and  reducing 
unemployment are vital to sustain economic growth, promote socially inclusive societies and 
combat poverty. Increasing participation in employment is all the more necessary because of 
the  expected  decline  in  the  working  age  population.  In  the  framework  of  the  Employment 
Guidelines, Guidelines for action under this heading are the following: 

–  Implement  employment  policies  aimed  at  achieving  full  employment,  improving  quality 

and productivity at work, and strengthening social and territorial cohesion 

–  Promote a life-cycle approach to work  

–  Ensure inclusive labour markets, enhance work attractiveness, and make work pay for job-

seekers, including disadvantaged people, and the inactive. 

–  Improve matching of labour market needs. 

Actions  should  be  based  on  prior  identification  of  needs  by,  for  instance,  using  relevant 
national  and/or  regional  indicators  such  as  unemployment  and  participation  rates,  long-term 
unemployment rates, population at risk of poverty rates and level of income. Attention should 
be paid to the local level, where acute disparities may fail to be picked up by regional level 
statistics. 

The  presence  of  efficient  and  effective  labour  market  institutions,  notably  employment 
services  that  can  respond  to  the  challenges  of  rapid  economic  and  social  restructuring  and 
demographic  ageing  is  essential  in  order  to  support  service  delivery  to  job  seekers,  the 
unemployed and disadvantaged people and could be supported by the Structural Funds. These 
institutions  have  a  pivotal  role  to  play  in  implementing  active  labour  market  policies  and 
providing  services  on  a  personalised  basis  with  a  view  to  promoting  occupational  and 
geographical mobility and matching labour supply and demand, including at local level. They 
should help to anticipate shortages and bottlenecks in the labour market and occupational and 
skills requirements. Positive management of economic migration would also be assisted as a 
result.  Easy  access  to  and  transparency  of  the  services  on  offer  are  crucial.  The  EURES 
network is central to increasing occupational and geographic mobility, both at European level 
and nationally44.  

An important priority should be to strengthen active and preventive labour market measures to 
overcome obstacles to entering or remaining in the labour market and to promote mobility for 
job seekers, the unemployed and inactive, older workers as well as those at risk of becoming 
unemployed,  with  particular  attention  to  low-skilled  workers.  Action  should  focus  on  the 
provision of personalised services, including job search assistance, job placement and training 
to  adjust  the  skills  of  job-seekers  and  employees  to  the  needs  of  local  labour  markets.  The 
potential for self-employment and business creation, ICT skills and digital literacy should be 
fully taken into account. Special attention should be paid to: 

44 

Set up in 1993, EURES is a co-operation network between the European Commission and the Public 
Employment  Services  of  the  EEA  Member  States  (EU  Member  States  plus  Norway,  Iceland  and 
Liechtenstein) and other partner organisations. 

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–  implementing the European Youth Pact, by facilitating access to employment for young 
people, by easing the transition from education to work, including through career guidance, 
assistance in completing education, access to appropriate training and apprenticeships; 

–  implementing  the  European  Pact  for  gender  equality  by  mainstreaming  and  by  specific 
actions  to  increase  women’s  participation  in  employment,  to  reduce  occupational 
segregation  and  address  gender  pay  gaps  and  gender  stereotyping  and  to  promote  more 
family-friendly  working  environments,  and  the  reconciliation  of  professional  and  private 
life.  Facilitating  access  to  childcare  and  care  services  for  dependent  persons  is  crucial, 
alongside gender mainstreaming in policies and measures, awareness-raising and dialogue 
among stakeholders; 

–  specific  action  to  strengthen  access  of  migrants  to  the  labour  market  and  facilitate  their 
social  integration,  through  training  and  validation  of  competences  acquired  abroad, 
personalised  guidance,  language  training,  appropriate  support  for  entrepreneurship  and 
awareness  raising  among  employers  and  migrant  workers  about  their  rights  and 
obligations, and strengthening the enforcement of anti-discrimination rules. 

Another  important  priority  should  be  to  ensure  inclusive  labour  markets  for  people  at  a 
disadvantage  or  at  risk  of  social  exclusion,  such  as  early  school-leavers,  the  long-term 
unemployed, minorities and people with disabilities. This calls for an even broader range of 
support to build pathways to integration and combat discrimination. The aim should be to: 

–  improve  their  employability  by  enhancing  participation  in  vocational  education  and 
training, rehabilitation and appropriate incentives and working arrangements, as well as the 
necessary social support and care services, including through the development of the social 
economy; 

–  combat  discrimination  and  promote  the  acceptance  of  diversity  in  the  workplace  through 
diversity  training  and  awareness-raising  campaigns,  in  which  local  communities  and 
enterprises would be fully involved.  

1.3.2. 

Improve  adaptability  of  workers  and  enterprises  and  the  flexibility  of  the  labour 
market  

In the light of increasing pressures from globalisation, including sudden and unexpected trade 
shocks, and the continual introduction of new technologies, Europe must increase its capacity 
to  anticipate,  trigger  and  absorb  economic  and  social  change.  In  the  framework  of  the 
Employment Guidelines, Guidelines for action under this heading are the following: 

–  Promote  flexibility  combined  with  employment  security,  and  reduce  labour  market 

segmentation, having due regard to the role of the social partners.  

–  Ensure employment-friendly labour cost developments and wage-setting mechanisms. 

The  main  focus  should  be  on  actions  to  promote  investment  in  human  resources  by 
enterprises, especially SMEs, and workers through the provision of lifelong learning strategies 
and  systems  which  equips  employees,  in  particular  low-skilled  and  older  workers,  with  the 
necessary  skills  to  adapt  to  the  knowledge  economy  and  to  prolong  their  working  life. 
Attention should be given in particular to: 

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–  the development of lifelong learning strategies and systems including mechanisms such as 
regional  and  sector  funds,  with  the  aim  of  increasing  investment  by  enterprises  and 
participation of workers in training; 

–  Implementation of such strategies by contributing to the funding of schemes and training 
activities. Priority should be given to SMEs, including facilitating their access to external 
sources  of  competence,  financial  engineering,  such  as  the  JEREMIE  instrument  and 
training solutions – with emphasis being placed on ICT and management skills. Particular 
attention should be paid to increasing the participation of the low-skilled and older workers 
in training and re-training.  

Better anticipation and positive management of economic restructuring, especially as a result 
of changes linked to the opening-up of trade, are particularly important. Consideration should 
be  given  to  creating  monitoring  systems  involving  the  social  partners,  enterprises  and  local 
communities, to scrutinising socio-economic changes at national, regional and local level, and 
assessing  future  economic  and  labour  market  trends.  Support  for  the  programmes  aimed  at 
modernisation  of  labour  markets  and  anticipation  of  gradual  changes  throughout  the  Union 
particularly in sectors such as agriculture, textiles, automobiles and mining, needs to be put in 
place,  alongside  active  measures  to  reinforce  the  economic  well-being  of  regions.  There  is 
also a role for specific employment, training and support services for workers in the context 
of company and sector restructuring, such as rapid response schemes in the case of collective 
lay-offs.  

Attention should also be given to developing and disseminating knowledge on innovative and 
adaptable  forms  of  work  organisation  to  take  advantage  of  new  technologies  -  including 
teleworking,  improving  health  and  safety  at  work  (e.g.  industrial  safety),  increasing 
productivity  and  promoting  better  reconciliation  of  work  and  family  life.  This  may  also 
include  raising  awareness  of  corporate  social  responsibility,  developing  consciousness  as 
regards  employment  rights,  initiatives  for  respecting  the  labour  code,  reducing  the  grey 
economy and ways to transform undeclared work into regular employment. 

Social  partners  have  an  important  role  to  play  in  setting  up  mechanisms  that  ensure  the 
flexibility of the labour market. Therefore Member States should encourage the participation 
of social partners in activities under this priority. Further, under the Convergence objective, 
an  appropriate  amount  of  the  European  Social  Fund  (ESF)  resources  shall  be  allocated  to 
capacity-building, which shall include training, networking measures, strengthening the social 
dialogue and activities jointly undertaken by the social partners. 

1.3.3. 

Increase investment in human capital through better education and skills 

Europe needs to invest more in human capital. Too many people do not enter or remain in the 
labour  market,  because  of  lack  of  skills  including  in  basic  literacy  and  numeracy,  or  due  to 
skills  mismatches.  To  enhance  access  to  employment  for  all  ages  and  to  raise  productivity 
levels  and  quality  at  work,  there  is  a  need  to  step  up  investment  in  human  capital  and  to 
develop  and  implement  effective  national  lifelong  learning  strategies  for  the  benefit  of 
individuals,  enterprises,  the  economy  and  society.  In  the  framework  of  the  Employment 
Guidelines, Guidelines for action under this heading are the following: 

–  Expand and improve investment in human capital  

–  Adapt education and training systems in response to new competence requirements. 

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57 

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Reforms  in  labour  market  training  to  attract  more  people  into  employment  and  increase 
adaptability  of  workers  and  enterprises  need  to  be  coupled  with  reforms  in  education  and 
training  systems.  In  previous  programming  periods,  the  Structural  Funds  have  invested 
substantially  in  education  and  training  systems.  In  the  next  programming  period,  the 
investment in human capital should be reinforced by focusing on the Lisbon objectives in line 
with  the  integrated  guidelines  for  growth  and  employment.  The  following  general  priorities 
should be addressed: 

–  expanding  and  improving  investment  in  human  capital  including  the  development  of 
appropriate incentives and cost-sharing mechanisms for enterprises, public authorities and 
individuals; 

–  supporting  coherent  and  comprehensive  lifelong  learning  strategies,  with  particular 
attention given to addressing the skill needs of the knowledge economy, including support 
to co-operation and the establishment of partnerships between Member States, regions and 
cities in terms of education and training to facilitate the exchange of experience and good 
practice, including  innovative projects. Particular attention should be given to addressing 
the needs of disadvantaged groups; 

–  supporting the design and introduction of reforms in education and training systems using 
where  relevant  common  European  references  and  principles,  in  particular  to  raise  the 
labour-market relevance of education and training; 

–  strengthening  the  links  between  universities,  research  and  technological  centres  and 

enterprises, in particular through networking activities and joint actions.  

Under  the  Convergence  objective,  many  Member  States  and  regions  are  faced  with  very 
significant  education  and  training  challenges.  Financial  resources  should  be  used  for  the 
implementation of reforms, which should address the following specific priorities:  

–  ensuring  an  adequate  supply  of  attractive,  accessible  and  high  quality  education  and 
training  provision  at  all  levels,  including  the  improvement  of  staff  competences  and 
qualification, promoting flexible learning pathways and new options starting as early as the 
school and preschool stage, actions to achieve a significant decline in early school-leaving 
and  higher  completion  rates  of  upper  secondary  education  and  improved  access  to  pre-
school and school education; 

–  supporting the modernisation of higher education and the development of human potential 
in  research  and  innovation,  through  post-graduate  studies,  further  training  of  researchers, 
and attracting more young people into scientific and technical studies; 

–  promoting  the  quality  and  attractiveness  of  vocational  education  and  training,  including 

apprenticeships and entrepreneurship education; 

–  ensuring,  where  appropriate,  greater  mobility  at  regional,  national  or  transnational  level, 
and  promoting  frameworks  and  systems  to  support  the  transparency  and  recognition  of 
qualifications and the validation of non-formal and informal learning; 

–  investment in education and training infrastructure including ICTs, where such investments 
are  necessary  for  the  implementation  of  reform  and/or  where  they  can  significantly 
contribute to increasing the quality and effectiveness of the education and training system. 

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58 

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1.3.4.  Administrative Capacity 

In previous programming periods, the Funds have, through technical assistance, reinforced the 
management  capacity  of  Member  States  and  managing  authorities  in  implementing  the 
regulations. This will also apply for the period 2007 to 2013. 

Above and beyond the management of the Funds, effective administrative capacity of public 
administrations and public services i.e. smart administration, is a fundamental requirement for 
economic  growth  and  jobs.  Thus  in  line  with  the  revised  Lisbon  Strategy  which  calls  for 
better legislation, policy design and delivery to create the conditions for economic growth and 
job creation, the Funds will support investment in the human capital and related ICT facilities 
of administrative and public services at all territorial levels.  

For Cohesion countries and regions under the Convergence objective, increasing productivity 
and  quality  at  work  in  the  public  sector  -  especially  in  the  economic,  employment,  social, 
educational,  health,  environmental  and  judicial  areas,  is  essential  to  pursue  and  accelerate 
reforms,  to  raise  productivity  and  growth  in  the  wider  economy  and  to  promote  social  and 
territorial cohesion and sustainable development. The Structural Funds can play an important 
role  in  supporting  effective  policy  design  and  implementation,  which  involves  all  relevant 
stakeholders, in a broad range of fields.  

Therefore, Cohesion countries and regions falling under the Convergence Objective are called 
upon  to  build  up  public  administrations  and  public  services  at  national,  regional  and  local 
level.  Actions  in  this  field  should  take  into  account  the  specific  situation  of  each  Member 
State. Thus, in line with the principle of concentration, Member States are invited to conduct a 
comprehensive  analysis  to  identify  the  policy  areas  requiring  the  most  support  for 
administrative capacity. Investment should concentrate on those policy areas where there are 
the  greatest  obstacles  to  socio-economic  development  and  on  the  key  elements  of 
administrative reforms. 

Member States should ensure that the need to increase efficiency and transparency in public 
administrations  and  to  modernise  public  services  is  adequately  addressed.  Guidelines  for 
action under this heading are the following: 

–  Support  good  policy  and  programme  design,  monitoring,  evaluation  and  impact 
for 

assessment, 
interdepartmental coordination and dialogue between relevant public and private bodies; 

statistics,  expertise,  and 

foresight, 

through 

studies, 

support 

–  Enhance  capacity  building  in  the  delivery  of  policies  and  programmes,  including  with 
regard to the crime proofing and enforcement of legislation, especially through mapping of 
training  needs,  career  development  review,  evaluation,  social  audit  procedures, 
implementation of open government principles, managerial and staff training and specific 
support to key services, inspectorates and socio-economic actors. 

1.3.5.  Help maintain a healthy labour force 

In the light of the EU’s demographic structure, and ageing population and a likely decline in 
the  labour  force  in  years  to  come,  it  is  essential  that  the  Union  takes  steps  to  increase  the 
number  of  healthy  years  of  work  for  members  of  its  workforce.  Investment  in  health 
promotion and disease prevention will help to maintain active participation in society for as 
many  workers  as  possible,  thus  maintaining  their  economic  contribution  and  reducing 

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59 

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dependency  levels.  This  has  a  direct  effect  on  productivity  and  competitiveness,  as  well  as 
having important positive spin-offs for quality of life in general.  

There  are  major  differences  in  health  status  and  access  to  health  care  between  European 
regions.  It  is  therefore  important  for  cohesion  policy  to  contribute  to  health  care  facilities, 
thereby  helping  to  increase  the  number  of  healthy  years  of  work  in  particular  in  the  less 
prosperous  Member  States  and  regions.  Community-based  health  improvement  and 
preventive action have an important role to play in reducing health inequalities. Good health 
care  translates  into  greater  participation  in  the  labour  market,  longer  working  life,  higher 
productivity and lower healthcare and social costs. 

It is important for cohesion policy, especially in regions lagging behind, to contribute to the 
improvement  of  long-term  care  facilities  and  invest  in  the  improvement  of  health 
infrastructure, in particular when their absence or insufficient development represent a major 
barrier  to  economic  development.  Member  States  should  ensure  that  the  need  to  increase 
efficiency  in  health  care  systems  is  addressed  through  investment  in  ICT,  knowledge  and 
innovation. Guidelines for action under this heading are the following:  

–  Preventing health risks to help raise productivity levels by means of health information 
campaigns and by ensuring a transfer of knowledge and technology and ensure that health 
services have the necessary skills, products and equipment to prevent risks and minimise 
their potential damage. 

–  Filling  the  gaps  in  health  infrastructure  and  promoting  efficient  provision  of  services 
where  the  economic  development  of  the  less  prosperous  Member  States  and  regions  is 
being affected. This action should be based on a thorough analysis of the optimal level of 
services  provision  and  appropriate  technology,  such  as  telemedicine  and  the  cost-saving 
potential of e-health services. 

2. 

THE TERRITORIAL DIMENSION OF COHESION POLICY  

One of the features of cohesion policy - in contrast to sectoral policies - lies in its capacity to 
adapt  to  the  particular  needs  and  characteristics  of  specific  geographical  challenges  and 
opportunities. Under cohesion policy, geography matters. Accordingly, when developing their 
programmes and concentrating resources on key priorities, Member States and regions should 
pay particular attention to these specific geographical circumstances. 

Taking on board the territorial dimension will help to develop sustainable communities and to 
prevent  uneven  regional  development  from  reducing  overall  growth  potential.  Such  an 
approach also requires that the specific problems and opportunities of urban and rural areas 
may  need  to  be  addressed  as  well  as  those  of  particular  territories  such  as  cross  border  and 
broader transnational areas, or regions suffering from other handicaps due to their insularity, 
remoteness  (such  as  the  outermost  or  Arctic  regions),  sparse  population  or  mountainous 
character.  The  environmental  and  demographic  constraints  faced  by  coastal  areas  may  also 
need  to  be  addressed.  The  successful  implementation  of  actions  to  promote  territorial 
cohesion requires implementing mechanisms that can help to guarantee fair treatment for all 
territories  based  on  their  individual  capacities  as  a  factor  of  competitiveness.  Thus,  good 
governance is important to successfully addressing the territorial dimension.  

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In fact, for the next generation of programmes, promoting territorial cohesion should be part 
of  the  effort  to  ensure  that  all  of  Europe’s  territory  has  the  opportunity  to  contribute  to  the 
growth  and  jobs  agenda.  More  specifically,  this  means  that  a  different  meaning  should  be 
given  to  territorial  cohesion,  linked  to  each  Member  State’s  history,  culture  or  institutional 
situation.  

The  development  of  high  quality  partnerships  is  also  essential,  bringing  aboard  actors  at  all 
levels,  national,  regional,  urban,  rural  and  local.  Success  in  the  area  of  territorial  cohesion 
depends  on  a  comprehensive  strategy  which  sets  the  framework  within  which  specific 
objectives and actions are pursued. 

Under the new legislative framework, Member States have the possibility to delegate to cities, 
funds  addressing  urban  issues  within  the  new  programmes.  To  get  the  full  benefits  of 
partnership,  cities  should  be  involved  throughout  the  process.  This  could  include 
responsibility  for  the  design  and  implementation  of  the  sub-delegated  portion  of  the 
programme. 

The  new  legislative  framework  also  provides  for  special  assistance  to  outermost  regions  in 
order  to  address  the  high  costs  of  distance  that  they  face.  A  particular  challenge  will  be  to 
ensure that  this  assistance  contributes to  the realisation of the  strategy of  the  programme as 
whole in terms of helping to generate sustainable growth and jobs. 

2.1. 

The contribution of cities to growth and jobs 

As  outlined  in  the  Commission  Communication  on  cohesion  policy  and  cities,  over  60%  of 
the population in the European Union lives in urban areas of over 50,000 inhabitants45. Cities, 
and metropolitan areas in general, are the home of most jobs, businesses and higher education 
institutions and are key to achieving social cohesion. European cities and metropolitan areas 
tend to attract the highly skilled, often creating a virtuous circle that stimulates innovation and 
business adding to their attractiveness to new talent. 

Cities  and  metropolitan  areas  concentrate  not  only  opportunities  but  also  challenges  and 
account should be taken of the specific problems facing urban areas, such as unemployment 
and  social  exclusion  (including  the  problem  of  the  ‘working  poor’),  high  and  rising  crime 
rates, increased congestion and the existence of pockets of deprivation within city boundaries. 

Programmes  with  a  focus  on  urban  areas  can  take  several  different  forms.  First,  there  are 
actions  to  promote  cities  as  motors  of  regional  development.  Such  actions  should  target 
improvements in competitiveness, for example, through clustering. Actions supported include 
measures  to  promote  entrepreneurship,  innovation  and  the  development  of  services, 
including  producer  services.  Attracting  and  retaining  very  highly  skilled  personnel  is  also 
important (with measures relating to accessibility, the supply of cultural services, etc). 

Second,  there  are  actions  to  promote  internal  cohesion  inside  the  urban  areas  that  seek  to 
improve the situation of crisis districts. Not only does this bring direct benefit to the districts 
themselves,  it  helps  to  relieve  some  of  the  pressure  towards  excessive  suburban  sprawl  in 
pursuit of a better quality of life. 

45 

Communication  to  the  Council  and  Parliament  “Cohesion  Policy  and  cities:  the  urban  contribution to 
growth and jobs in the regions”. COM (2006) […]. 12.7.2006. 

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61 

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In  this  context,  measures  are  important  that  seek  to  rehabilitate  the  physical  environment, 
redevelop  brownfield  sites  especially  in  old  industrial  cities,  and  preserve  and  develop  the 
historical  and  cultural  heritage  with  potential  spin-offs  for  tourism  development  in  order  to 
create more attractive cities in which people want to live. The regeneration of existing public 
spaces and industrial sites can play an important role in avoiding suburbanisation and urban 
sprawl,  thereby  helping  to  create  the  conditions  necessary  for  sustainable  economic 
development. More generally, by improving the planning, design and maintenance of public 
spaces, cities can ‘plan out’ crime, helping to create attractive streets, parks and open spaces 
which  are  safe  and  feel  safe.  In  urban  areas,  the  environmental,  economic  and  social 
dimensions  are  strongly  interlinked.  A  high  quality  urban  environment  contributes  to  the 
priority of the renewed Lisbon Strategy to make Europe a more attractive place to work, live 
and invest46. 

Third,  there  are  actions  to  promote  a  more  balanced,  polycentric  development  by 
developing the urban network at national and Community level  including  links between the 
economically strongest cities and other urban areas including small and medium-sized cities. 
This  will  require  the  making  of  strategic  choices  in  identifying  and  strengthening  growth 
poles  and,  just  as  important,  putting  in  place  the  networks  that  link  them  in  both  physical 
(infrastructure,  information  technologies,  etc.)  and  human  (actions  to  promote  cooperation, 
etc.) terms. Since these poles serve wider territories, including the immediate rural hinterland, 
they  contribute  to  a  sustainable  and  balanced  development  of  the  Member  State  and  the 
Community as a whole. In a similar way, rural areas provide services to the wider society, for 
example, in the form of recreational opportunities and highly valued landscapes. Focus should 
therefore also be put on the urban rural interface. 

Based on previous experience, there are a number of key principles in urban actions. First, the 
key  partners  in  the  cities  and  local  authorities  have  an  important  role  to  play  in  achieving 
these objectives. As mentioned above, Member States may delegate responsibility to cities for 
urban  development.  This  is  particularly  important  where  proximity  matters,  for  example,  in 
order to respond to the challenges of a mostly local nature such as social exclusion or lack of 
access to key services. 

Second, the preparation of a medium- to long-term development plan for sustainable urban 
development  is  generally  a  precondition  for  success  as  it  ensures  the  coherence  of 
investments and of their environmental quality. This will also help to secure the commitment 
and  participation  of  the  private  sector  in  urban  renewal.  In  general,  a  multi-disciplinary  or 
integrated  approach  is  needed.  For  area-based  actions,  for  example,  to  promote  social 
inclusion,  this  requires  that  actions  seeking  to  improve  the  quality  of  life  (including  the 
environment  and  housing)  or  the  level  of  services  to  citizens  are  combined  with  actions  to 
promote the development of new activities and job creation in order to secure the long-term 
future  of  the  areas  concerned.  The  new  JESSICA  initiative  is  designed  to  promote  and 
facilitate  the  development  of  financial  engineering  products  to  support  projects  included  in 
integrated urban development plans. 

In general, integrated support services and programmes should have a focus on those groups 
which are most in need, such as immigrants, young people and women. All citizens should be 
encouraged to participate in both the planning and delivery of services. 

46 

Thematic Strategy on the Urban Environment. COM (2005) 718 final. 

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2.2. 

Support  the  economic  diversification  of  rural  areas,  fisheries  areas  and  areas 
with natural handicaps 

Cohesion  policy  can  also  play  a  key  role  in  support  of  the  economic  regeneration  of  rural 
areas,  complementing  the  actions  supported  by  the  new  rural  development  fund  (European 
Agricultural Fund for Rural Development - EAFRD)47. This complementary approach should 
seek to support the restructuring and diversification of the economy in Europe's rural areas. 

The  synergy  between  structural,  employment  and  rural  development  policies  needs  to  be 
encouraged. In this context, Member States should ensure synergy and consistency between 
actions  to  be  financed  by  the  ERDF,  Cohesion  Fund,  ESF,  European  Fisheries  Fund  (EFF) 
and EAFRD on a given territory and in a given field of activity. The main guiding principles 
as regards the demarcation line and the coordination mechanisms between actions supported 
by  the  different  Funds  should  be  defined  at  the  level  of  national  strategic  reference 
framework/national strategy plan. 

For  cohesion  policy,  action  in  favour  of  rural  areas  or  for  areas  with  natural  handicaps, 
including many island regions, should contribute to the creation of new opportunities through 
the  diversification  of  the  rural  economy.  This  includes  efforts  to  support  the  provision  of  a 
minimum  level  of  access  to  services  of  general  economic  interest  in  order  to  attract  firms 
and  qualified  personnel  and  to  limit  out-migration.  In  this  context,  connectivity  to  the  main 
national and European networks is necessary. In addition, cohesion policy should support the 
endogenous  capacity  of  rural  territories  by  promoting,  for  example,  product  marketing  at 
national and global level, and favouring process and product innovation in existing economic 
activities. 

Achieving the necessary critical mass to deliver services efficiently - including services for a 
healthy workforce referred to above - is a particular challenge. Ensuring universal access to 
all  services,  particularly  in  very  sparsely  populated  areas,  may  be  achieved  by  investing  in 
development  poles  in  rural  areas  (for  example  in  small  and  medium-sized  towns)  and  by 
developing  economic  clusters  based  on  local  assets  combined  with  the  use  of  new 
information technologies. 

Many  rural  regions  depend  heavily  on  tourism.  These  regions  require  an  integrated 
approach dedicated to quality, focusing on consumer satisfaction and based on the economic, 
social  and  environmental  dimensions  of  sustainable  development.  Actions  should  take 
advantage  of,  and  seek  to  preserve  and  develop  natural  and  cultural  assets  which  can  have 
important positive spin-offs by protecting habitats and supporting investment in biodiversity. 
The integrated approach should aim to have a positive impact on the tourism sector, the local 
economy, the people working in the tourism sector, visitors and the local population, as well 
as the natural and cultural heritage. 

With regard to the fisheries sector, the economic restructuring of fisheries-dependent coastal 
areas  and  the  smaller  islands,  is  often  a  particular  challenge  for  geographic  reasons,  and 
cohesion policy can play an important role as a complement to the actions supported by the 
EFF.  

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2.3. 

Cooperation 

Measures  to  promote  cross-border,  transnational,  and  interregional  cooperation,  including 
maritime  cooperation  where  appropriate,  should  complement  the  three  priorities  indicated 
above.  As  a  consequence,  closer  cooperation  across  EU  regions  should  help  speed  up 
economic development and the achievement of higher growth. National borders are often an 
obstacle to the development of European territory as a whole, and can restrict its potential for 
full  competitiveness.  In  the  cross-border  and  transnational  context,  transport,  water 
management and environment protection are clear examples of challenges requiring a focused 
and  integrated  approach  that  goes  beyond  national  boundaries.  In  terms  of  implementation, 
Member  States  may  wish  to  examine  the  possibility  of  creating  a  European  Grouping  of 
Territorial  Co-operation  to  take  on  the  role  of  managing  authority  for  certain  co-operation 
programmes. 

2.4. 

Cross-border cooperation 

The  aim  of  cross-border  cooperation  in  Europe  is  to  integrate  areas  divided  by  national 
borders that face common problems requiring common solutions. Such challenges are faced 
by all border regions in the Union as a result of the fragmentation of markets for labour and 
capital, infrastructure networks, fiscal capacity, and institutions. 

Though cooperation programmes should be tailored according to the particular situation faced 
by each border region, it is important that an effort is made to concentrate the assistance on 
the main priorities in support of growth and job creation.  

Generally  applicable  recommendations  for  future  cross-border  cooperation  are  not  always 
relevant owing to the large diversity of situations. At the same time, in view of the obstacles 
created  by  borders,  a  useful  starting  point  is  the  improvement  of  existing  transport  and 
communication infrastructure and the development, where necessary, of new links. These are 
pre-conditions for establishing or developing cross-border contacts. 

Cross-border  cooperation  should  focus  on  strengthening  the  competitiveness  of  the  border 
regions. In addition, it should contribute to economic and social integration, especially where 
there are wide economic disparities on either side. Actions include promoting knowledge and 
know-how  transfer,  the  development  of  cross-border  business  activities,  cross-border 
education/training  and  healthcare  potential  and  integrating  the  cross-border  labour  market; 
and  joint  management  of  the  environment  and  common  threats.  Where  the  basic  conditions 
for cross-border cooperation are already in place, cohesion policy should focus assistance on 
actions that bring added value to cross-border activities: for example, increasing cross-border 
competitiveness  through  innovation  and  research  and  development;  connecting  intangible 
networks  (services)  or  physical  networks  (transport)  to  strengthen  cross-border  identity  as  a 
feature  of  European  citizenship;  the  promotion  of  cross-border  labour  market  integration; 
cross-border  water  management  and  flood  control;  joint  management  of  natural  and 
technological risks. 

Particular  attention  needs  to  be  paid  to  the  challenges  and  opportunities  presented  by  the 
changing  external  borders  of  the  Union  following  enlargement.  Here,  there  is  a  need  to 
promote  coherent  cross-border  actions  that  encourage  economic  activity  on  both  sides,  and 
remove  obstacles  to  development.  To  this  end,  cohesion  policy  and  the  new  European 
Neighbourhood  and  Partnership  Instrument  and,  where  appropriate,  the  new  Instrument  for 
Pre-Accession, need to create a coherent framework for such actions. 

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2.5. 

Transnational cooperation 

In  transnational  areas  there  is  a  need  to  increase  economic  and  social  integration  and 
cohesion. Transnational cooperation programmes seek to increase cooperation across Member 
States on matters of strategic importance.  

Support  should  therefore  be  given  to  actions  which  seek  to  improve  the  physical 
interconnection of territories (e.g. investments in sustainable transport) as well as intangible 
connections (networks, exchanges between regions and between the parties involved). 

The actions envisaged include the creation of European transport corridors (particularly cross-
border sections) for the prevention of natural hazards, water management at river basin level, 
integrated maritime cooperation and R&D/innovation networks.  

The map of the current zones for transnational cooperation has been modified to ensure that 
they create the conditions for implementing basic structural actions. They have been drawn up 
taking  account  of  territorial  coherence  and  functional  criteria  of  a  geographical  nature,  for 
example,  sharing  the  same  river  basin  or  coastal  zone,  belonging  to  the  same  mountainous 
area,  being  crossed  by  a  major  transport  corridor.  Other  criteria,  such  as  history  or 
institutional structures, or existing cooperation or Conventions, are also pertinent. 

2.6. 

Interregional cooperation 

Interregional  cooperation  programmes  should  focus  on  the  renewed  Lisbon  strategy: 
strengthening  innovation,  SMEs  and  entrepreneurship,  the  environment  and  risk  prevention. 
In  addition,  exchange  of  experiences  and  best  practices  regarding  urban  development, 
modernisation  of  public  sector  services  (such  as  health  and  government  using  ICT)  and  the 
implementation  of  cooperation  programmes  as  well  as  studies  and  data  collection  will  be 
encouraged.  Interregional  cooperation  may  also  be  supported  within  programmes  for 
Convergence  and  Regional  competitiveness  and  employment.  In  addition,  exchange  of 
experiences  and  best  practices  regarding  urban  development,  social  inclusion,  relationship 
between  cities  and  rural  areas,  and  the  implementation  of  cooperation  programmes  will  be 
encouraged. 

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