Union’s revamped regional aid policy targets areas where need is greatest

Date: 27/01/2000

Work on redrawing the regional aid map which governs the share-out of EU structural fund money between member states is now virtually complete, just under a year after Union leaders agreed to reform the system. Simon Coss reports

IT certainly looks good on paper. The plan to entirely re-vamp the EU's multi-billion-euro structural funds agreed by Union leaders at their Agenda 2000 summit in Berlin last March should ensure that aid for the EU's poorest regions and individuals really is targeted on those who need it most.

That at least was the idea behind the European Commission's original proposals to reform the way the structural funds will be spent between now and 2006, and both national capitals and the European Parliament have broadly supported this approach.

But it remains to be seen whether a plan which appears to solve a raft of regional policy problems when looked at in the Commission's Brussels headquarters will actually work on the ground.

The real test of the new scheme will come over the next five years as the

hundreds of thousands of local and regional government officers tasked with running structural-fund projects try to put the new rules into practice.

Up until now, the Commission's reputation for its handling of the structural funds has been, to put it mildly, not good.

The institution is deluged on an almost daily basis with complaints from local government officers who have either not received promised funding or who have seen projects ruined because of bureaucratic bungling by the institution.

Even those national officials who do manage to get their hands on the money they have been allocated argue that working with the Commission can often be a bureaucratic nightmare.

"If I talk to any of my colleagues who have dealings with the Commission, they all say that the one thing that has increased their workload a hundred fold in recent years is having to cope with the paperwork generated by EU programmes," said one British local government officer recently.

The Commission defends itself against such criticisms by arguing that many of the problems generated by the structural funds system are in fact caused by national governments. But such buck-passing cuts little ice with the project managers left waiting for vital funds.

The EU's Committee of the Regions, whose members are drawn from the ranks of the Union's local and regional governments, stressed the need for real changes in the way structural funds are managed in a 'list of priorities' adopted last year.

"Greater autonomy should be recognised in the management of the structural funds at the level of the regions, federal states or provinces," insisted the committee.

The document went on to suggest that "experience has shown that the more local and regional players share in the responsibility, the more they are committed and motivated, the more it will be possible to use these funds."

To be fair to the Commission, the institution is faced with something of a dilemma when it comes to relaxing its centralised control over the way structural funds are spent.

Less than a year ago, former Commission President Jacques Santer and his entire team were forced to resign amid allegations that they had failed to keep adequate tabs on large chunks of the taxpayers' money entrusted to them.

Santer's successor, Romano Prodi, knows that members of the European Parliament and the European public in general will be watching him like a hawk to see if he commits similar errors. This makes it difficult to see how the Commission could take a more 'hands off' approach to doling out the structural funds in the current climate.

But while it will take time to see whether the new system is any more 'user friendly' than its predecessor, it does seem clear that aid provided under the scheme will be more precisely targeted over the coming five years.

By agreeing to slim down the system under which money is shared out, from seven headings - or 'objectives' in EU jargon -to just three, EU leaders accepted the Commission's argument that the Union had in the past tried to spread its limited resources around too many 'good causes'.

Since Berlin, the Commission has certainly lost little time putting some flesh on the bones of the revised rules.

On 1 July 1999, the institution announced the list of regions that would be eligible for Objective 1 funding under the new scheme. Objective 1 status is only granted to the Union's poorest regions, whose development is considered by the Commission to be 'lagging behind' the EU average.

As with all of the Union's structural policies - schemes designed to iron out economic imbalances between the bloc's richest and poorest regions - Objective 1 funds will only be made available if they are accompanied by donations from national coffers.

But unlike many of the EU's other assistance schemes, which stipulate that national authorities must match EU funding euro for euro, Objective 1 funds can normally be used to finance up to 75% of a given project and, in certain exceptional cases, this can rise to 85%.

Most member states will benefit from at least some Objective 1 funding over the next five years, but a number of countries have seen areas which were eligible for such assistance in the past lose their 'poorest region' status.

The Commission argued that this re-drawing of the regional aid map was a natural consequence of the Berlin decision to reform the structural funds. It also pointed out that as the Agenda 2000 summit agreed that the Union's eastward enlargement would be financed without significantly increasing the EU's overall budget in real terms, aid for the poorest areas would clearly have to be re-distributed.

Many of the Union's current Objective 1 regions look positively prosperous when compared to the dire economies of several of the former Iron Curtain states currently lining up to join the EU.

The Commission also points out that any former Objective 1 regions which have lost their status under the new funding rules will not see their economic lifelines severed from one day to the next. The new structural fund rules allow for 'transitional support' to be paid over the next five years to all areas which have had their objectives altered. This 'phase out' assistance will be made available in progressively diminishing amounts and is designed to cushion the blow of a region's change in funding status.

When it comes to funding for Objective 2 regions - areas considered to be in need of assistance but not in such dire straits as their Objective 1 counterparts - the Commission has also not been idle.

The institution has now presented its Objective 2 'maps' for all EU member states eligible for funding under the scheme with the exception of Italy. The institution says that Rome's allocations under the new scheme have not been finalised because the Italians were late in providing information on the areas that they wanted to see covered by the scheme.

In addition, the Commission has not drawn up Objective 2 maps for Ireland, Greece and Portugal as all EU aid to those countries falls into either the Objective 1 or 'transitional' categories.

The institution is also busy studying bids for funding under the new Objective 3 heading. In this category, EU funding is made available for projects which stimulate employment and equal opportunities throughout the EU, and is not geographically based.

Major feature. Work on redrawing the regional aid map which governs the share-out of EU structural fund money between Member States is now virtually complete, just under a year after Union leaders agreed to reform the system.