Regional fund reform talks set to gather pace

Date: 17/09/1998

By Myles Neligan

UNION OFFICIALS and diplomats are bracing themselves for a rapid acceleration in the pace of negotiations on the reform of the EU structural funds after next weekend's German elections.

"It's been shadow-boxing and clarification up to now. Everybody seems to be waiting for the new German government to get its feet under the negotiating table," said one senior diplomat.

So far, discussion between EU and national officials has been confined to the technical aspects of Regional Affairs Commissioner Monika Wulf-Mathies' proposals for reforming the structural funds, designed to help Europe's most economically backward regions to catch up.

The changes, due to be implemented after the year 2000, aim to concentrate the 210 billion ecu earmarked for regional development from 2000 to 2006 on the most deprived areas.

"Anything with a political as opposed to a purely technical dimension has effectively been put aside until a later date," said a Council of Ministers official.

The Austrian presidency has deliberately postponed negotiations on how the available funds should be shared out between member states, and observers say the other contentious issues have been discussed "only at the most generalised level".

But participants in the talks report that the proximity of the German elections on 27 September, together with the rapidly approaching March 1999 deadline for final agreement, have injected a new note of urgency.

"The detail and reasoning behind the member states' positions have started to become clearer," said another EU diplomat.

Discussions so far indicate that the major battle in the coming months will be over the criteria which regions must meet to qualify for the high levels of aid paid to areas in industrial decline ('Objective 2' regions).

Wulf-Mathies' proposals define these criteria solely in terms of unemployment rates, but the UK, the Netherlands, Germany and Denmark, where unemployment has fallen in recent years, would prefer to use a wider range of indicators. "If the present criteria are strictly applied, Objective 2 coverage would fall by as much as 80% in the UK," said a British official.

Sparks are also set to fly over Wulf-Mathies' plan to hold back 10% of the funds allocated to regional development programmes until project managers can show that the money is being spent efficiently.

There is almost unanimous opposition to this, with critics claiming that the way programmes are managed varies so widely from country to country that it would be better to leave responsibility for evaluating them to national governments.

"The efficiency reserve is simply a device to ensure that the Commission can retain leverage over key regional spending decisions, despite its stated intention to withdraw from the day-to-day operation of the fund," said one EU diplomat.