Member states push to cancel review of areas eligible for aid

Date: 23/11/1995

By Michael Mann

FIERCE opposition from most member states is set to force the European Commission to abandon any idea of a full review of the regions qualifying for structural fund money designed to help areas of industrial decline.

Instead, Regional Policy Commissioner Monika Wulf-Mathies will try to encourage member states to focus Objective 2 funding more closely on areas particularly badly hit by industrial decline and unemployment.

The latest statistics make it quite clear that a full-scale review of the financial allocations would see a significant shift in aid towards France - where industrial unemployment is worsening - and away from Germany, the Netherlands, Italy and the UK.

This issue will top the agenda when EU regional planning ministers gather for an informal meeting on 30 November and 1 December.

The overwhelming view is expected to be that a complete reassessment of which regions should qualify should be avoided.

Although certain regions should theoretically fall out of the remit of Objective 2 - victims of the success of the scheme - political considerations are likely to outweigh purely statistical questions.

Not surprisingly, those countries which would stand to lose from a full review of the list of areas eligible for Objective 2 money will push hard for the 8.072 billion ecu earmarked for 1997-99 to be distributed on the same basis as in the period between 1994 and 1996.

This would provide funding of around 40 ecu per capita in the areas covered by Objective 2, according to Commission figures.

Officials believe that even France, which would benefit from a reallocation, is unlikely to oppose this approach. In part, this reflects an appreciation that gaps in Objective 2 funding are plugged in several regions by Objective 5(b), targeted at areas of rural decline.

“It's also an internal management issue for the French, who receive far more bids than they can cope with. They want to avoid the political difficulty of saying no to some regions,” a Commission official pointed out.

“It would also be pretty hard for them to ask for even more funds, when they are the biggest recipients of structural funds already.”

Several regions, including some in Scotland and Austria, are concerned that they might lose funding, even though they insist that they remain relatively poor compared to other regions.

Parts of the former East Germany are even reported to have called for compensation for the fact that they do not receive funding under 'Interreg' - because they do not have any borders with other member states.

So far, the Commission has only been able to gather harmonised data on the unemployment situation in regions which are the equivalent of French “départements”, British “counties” or German “Kreise”. Its final assessment will be based also on 1995 unemployment figures and extra data from a recent questionnaire sent to the member states. But existing information has allowed it to draw quite clear conclusions about the deterioration in the employment situation in French industrial regions relative to elsewhere in the EU.

Officials suggest that recent improvements in the UK would see it losing out on funding even more than on the basis of 1992/93/94 figures.

The UK's West Midlands, along with the Nord-Pas-de-Calais region of France, North-Rhine Westphalia in Germany and Cataluña in Spain are currently among the principal beneficiaries of Objective 2 money.

Wulf-Mathies, who has prepared an initial report on the review of Objective 2 ahead of next week's informal meeting, is expected to reiterate her preference for resources to be concentrated on the worst-hit areas, bearing in mind her favoured themes of environmental protection and equal opportunities.

In bringing her wishes to fruition, she will not only be able to rely on her powers of persuasion, but also the fact that the final decision on the award of funding rests with the Commission.

The criteria for deciding on Objective 2 funding are the rate of unemployment, the share of industrial employment in the total and the rate of job losses in the traditional heavy industries.

Member states may also use five additional sectoral criteria in their requests for funding, with the Commission basing part of its assessment on the quality of the data it is given.

The population rate of a region which has qualified carries the most weight in determining the amount of financing it will receive, although areas with higher unemployment rates receive slightly more money.

The Commission hopes to finalise its position by early next year and member states will be asked to submit their draft programmes before the August 1996 holiday.