Third of budget spent on regional aid

Date: 23/11/1995

By Michael Mann

SPAIN will remain the largest beneficiary of money from the EU's structural funds until 1999 and will also receive over half of the Cohesion Fund, set up officially under the Maastricht Treaty to bring the poorest four member states closer to the levels attained by their wealthier partners.

Spending on regional and social measures between 1994 and 1999 will total the best part of 150 billion ecu, marking a considerable rise over the 64 billion ecu distributed between 1989 and 1993. Expenditure in the first 30 years of the European Economic Community came to less than 60 billion ecu.

The increase means the total will amount to around a third of the EU budget between now and the end of the century. But the European Commission emphasises that about half of the Union's citizens are covered by the funds.

This is a rather higher proportion than benefit from the EU's largest single area of spending, the Common Agricultural Policy.

The decision taken at the 1992 Edinburgh summit to raise member states' 'own resources' contributions to the budget to 1.27&percent; of their gross national product by 1999 will help to ease the additional strain extra spending will put on the budget.

Awards to Spain of about 32 billion ecu are far higher than the roughly 20 billion ecu due to be received by both Italy and Germany. The lion's share of German allocations come under Objective 1 of the funds, purely because of German unification - all of the former East Germany is classified under Objective 1.

Next come Portugal and Greece, which will each receive roughly 15 billion ecu, again purely from Objective 1 funds, and France, which will receive the majority of its 12.5 billion ecu from Objectives 5(b) and 2. The UK, the second largest member state in terms of population, will benefit to the tune of 10 billion ecu.

The first 90&percent; of the structural fund budget is used to support measures undertaken at the initiative of member states, through the 'Community support frameworks' and 'single programming documents'.

The Union also part-finances measures it proposes itself - the 'Community Initiatives' - which take 9&percent; of the budget, while the final 1&percent; is spent on a series of 'innovative measures'.

In the period from 1995 to 1999, the Community Initiatives will concentrate on seven themes: cross-border cooperation will be encouraged by 2.9 billion ecu under the Interreg programme; local development in rural areas will benefit from 1.4 billion ecu under Leader; Regis will provide 600 million ecu for the EU's remotest regions; the Employment programme will receive 1.4 billion ecu; several industrial programmes will account for 3.8 billion ecu; the Urban programme will distribute 600 million ecu and Pesca will provide 250 million ecu for restructuring in the fisheries sector.

For most of the funds, financing programmes are worked out for the whole 1994-99 period. But the current Objective 2 programmes end in 1996 and decisions on financing for 1997-99 are yet to be made.

The Cohesion Fund was formally established by the Maastricht Treaty to assist countries whose per capita GDP is under 90&percent; of the Community average. Between 1993 and 1999, it will pay 15.150 billion ecu to Spain (which will get between 52&percent; and 58&percent; of the total), Greece and Portugal (16&percent;-20&percent; each) and Ireland (7&percent;-10&percent;) to encourage environmental and transport infrastructure measures.

Figures from the EU's statistical office, Eurostat, for 1994 suggest that per capita GDP in Greece still stands at just 61&percent; of the EU average, compared with 67&percent; in Portugal, 76&percent; in Ireland and 77&percent; in Spain.

Two others - Finland and the UK - are also below the average, with Luxembourg by contrast enjoying GDP at 156&percent; of the EU average, followed by Austria at 115&percent;, despite one area - the Burgenland - having been awarded Objective 1 status.

As far as individual regions are concerned, the new German Länder, two Greek regions, the French overseas départements and a number of Portuguese regions have a per capita GDP rate at less than 50&percent; of the EU average.

In response to concerns voiced by wealthier member states, who are heavy net contributors to the EU budget, the Commission insists that for every 100 ecu invested through the structural funds, between 22 and 33 ecu flows back to the more advanced regions in payments for the know-how and equipment they provide.

Growth stimulated by regional development also provides new trade and investment opportunities, adds the Commission.