Category Archives: Regional Policy

Proposals for the Cohesion Policy 2014-2020

The Commission has published its proposals which will frame cohesion policy for 2014-2020. The first part of the proposal sets out common rules governing the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF). The second part sets out common rules governing the three main funds delivering the objectives of cohesion policy: the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).

When adopted, the legislation package will establish a common strategic framework for the ERDF, ESF, CF, the EAFRD and EMFF. A Partnership Contract will be agreed between the Commission and each EU Member State, bringing together all the country’s commitments to delivering European objectives and targets. Before funds are paid out, authorities will have to demonstrate that satisfactory strategic, regulatory and institutional frameworks are in place to ensure the funds are used effectively. The release of additional funds will be dependent on performance. Deficiencies in macroeconomic policy (excessive budget deficits, etc.) will lead to suspension of the cohesion financing. Procedures will be simplified and computerised where possible. Eligibility rules for EU funding instruments will be harmonised.

 

 

Commission Proposes Increase of EU Funds Co-Financing for Six Countires

The European Commission has proposed to increase the co-financing rates for the EU funds for six EU countries that have been affected by the crisis.

Under the proposal, six countries would be asked to contribute less to projects that they currently co-finance with the European Union. The supplementary EU co financing is designated for Greece, Ireland, Portugal, Romania, Latvia and Hungary.

The measure does not represent new or additional funding but it allows an earlier reimbursement of funds already committed under EU cohesion policy, rural development and fisheries. The EU contribution would be increased to a maximum of 95% if requested by a Member State concerned. This should be accompanied by a prioritisation of projects focusing on growth and employment, such as retraining workers, setting up business clusters or investing in transport infrastructure. In this way level of execution can be increased, absorption augmented and extra money injected into the economy faster.

It concerns Member States that have been most affected by the crisis and have received financial support under a programme from the Balance of Payments mechanism for countries not in the Euro area (Romania, Latvia and Hungary) or from the European Financial Stabilisation Mechanism for countries in the Euro area (Greece, Ireland and Portugal). Bulgaria is not included in this scheme.

 

 

Commission Proposal for the New Multiannual Financial Framework 2014-2020

The Commission has put forward its proposal for the new Multiannual Financial Framework of the European Union for the period 2014-2020. The Multiannual Financial Framework is the main budgeting document of the EU for the seven-year period, and little can be changed once it is adopted. The proposal has to be approved by the Member States and the Parliament.

The main innovations:

1. Expenses

  • A new fund for financing infrastructure, the Connecting Europe Facility that includes a preliminary list of transport, energy and ICT projects;
  • Stronger link of cohesion financing with the Europe 2020 objectives;
  • New category of ‘transition regions';
  • New conditionality provisions;
  • Partnership contracts with each Member State to ensure mutual reinforcement of national and EU funding;
  • An integrated programme of €15.2 billion for education, training and youth, with a clear focus on developing skills and mobility;
  • A common EU strategy called “Horizon 2020″ for investment in research and innovation worth 80 billion €;
  • 30% of direct support to farmers will be conditional on “greening” their businesses;
  • €4.1 billion for the fight against crime and terrorism and €3.4 billion for migration and asylum policies.

2. Revenues

  • New own resources for financing the budget- a financial transaction tax (Tobin tax) and a new modernized VAT;
  • Simplification of the existing correction mechanisms.

You can also read the critical assessment of the proposal by Charlemagne. Real Time Brussels looks at the fierce political battles that will likely emerge in the process of adoption of the Multiannual Financial Framework.

 

Why the Structural Funds Don’t Work Properly in Bulgaria

The Open Society Institute Sofia has issued a report that outlines the main causes for the poor performance of Structural Funds in Bulgaria (summary in English here). The Structural Funds are the main instruments of the EU regional and cohesion policy. However, new Member States from Eastern Europe, and Bulgaria in particular, face significant difficulties in using those funds in their regional development.

Three problems are outlined in the report:

  • Deficits in the national programming of EU funds for the financial period 2007–2013;
  • Poor implementation of the principle of partnership with representatives of the civic sector in the national management of the Structural Funds;
  • Deficits of the regional planning in Bulgaria.

These findings are significant, since they put in doubt the implementation of the next EU multiannual financial framework in Bulgaria. The absorption capacity is clearly very low, and specific measures must be provisioned to avoid repeating the mistakes. The European Commission usually focuses its criticism on the institutional capacity of the Bulgarian administration and the quality of the management structures. But this report clearly indicates that the problem is much deeper and starts with the programming and planning stages.

 

 

EU Flagship Initiative on Resource Efficiency Launched

The European Commission has launched a very important flagship initiative on resource efficiency under the Europe 2020 Strategy. The Commission believes that increasing resource efficiency will be key to securing growth and jobs for Europe. It will bring major economic opportunities, improve productivity, drive down costs and boost competitiveness.

The most important medium-term policy measures are:

• An energy efficiency plan with a time horizon of 2020 which will identify measures to achieve energy savings of 20% across all sectors, and which will be followed by legislation to ensure energy efficiency and savings;

• Proposals to reform the Common Agricultural Policy, the Common Fisheries Policy, Cohesion Policy, energy infrastructure and trans-European networks for transport in the context of the next EU budget to align these areas with the requirements of a resource-efficient, low-carbon economy;

• A new EU biodiversity strategy for 2020 to halt further loss to and restore biodiversity and ecosystem services in the light of pressures on ecosystems;

• Measures to tackle the challenges in commodity markets and on raw materials which will, amongst others, periodically assess critical raw materials and define a trade policy to ensure sustainable supplies of raw materials from global markets. These measures will promote extraction, recycling, research, innovation and substitution inside the EU;

• A strategy to make the EU a ‘circular economy’, based on a recycling society with the aim of reducing waste generation and using waste as a resource;

• Early action on adaptation to climate change to minimise threats to ecosystems and human health, support economic development and help adjust our infrastructures to cope with unavoidable climate change;

• A water policy that makes water saving measures and increasing water efficiency a priority, in order to ensure that water is available in sufficient quantities, is of appropriate quality, is used sustainably and with minimum resource input, and is ultimately returned to the environment with acceptable quality.

Three Options for the Future of the Common Agricultural Policy

The European Commission has adopted its communication on “the Common Agricultural Policy (CAP) towards 2020 – Meeting the food, natural resources and territorial challenges of the future”.

The Commission outlines three main options for reform.

  1. adjusting most pressing shortcomings in the CAP through gradual changes;
  2. making the CAP greener, fairer, more efficient, and more effective; and
  3. moving away from income support and market measures and focusing on environmental and climate change objectives.

In all 3 options, the Commission foresees the maintenance of the current system of 2 Pillars – a 1st Pillar (covering direct payments and market measures, where rules are clearly defined at EU level) and a 2nd Pillar (comprising multi-annual rural development measures, where the framework of options is set at EU level, but the final choice of schemes is left to member states or regions under joint management). Another common element to all 3 options is the idea that the future system of direct payments cannot be based on historical reference periods, but should be linked to objective criteria.

The CAP blog cites the initial critical reaction of the UK’s National Farmers Union and promises more analysis in the following days.

 

 

Public Consultation on the Future of the Cohesion Policy

The Commission is opening a public consultation on the future of cohesion policy. In its conclusions of the fifth report on economic, social and territorial cohesion the Commission has outlined the main ideas for reform that will be discussed during the consultation. This is a very important exercise in the policy development phase.

The main topics:

1. A new strategic programming approach for cohesion policy, consisting of:

- common strategic framework (CSF) adopted by the Commission translating the targets and objectives of Europe 2020 into investment priorities, and

- a development and investment partnership contract which, based on the common strategic framework, would set out the investment priorities, the allocation of national and EU resources between priority areas and programmes, the agreed conditionalities, and the targets to be achieved.

2. Increasing thematic concentration – Member States and regions should concentrate EU and national resources on a small number of priorities responding to the specific challenges that they face.

3. Strengthening performance through conditionality and incentives – specific binding conditionality in the areas directly linked to cohesion policy would be agreed with each Member State and/or region.

4. Improving evaluation, performance and results – setting of clear and measurable targets and outcome indicators, using impact evaluations.

5. Supporting use of new financial instruments.

6. Introducing a third dimension: territorial cohesion – whether the regulatory architecture of cohesion policy should allow greater flexibility in organising operational programmes in order to reflect the nature and geography of development processes better.

7. Reinforcing partnership – supporting active inclusion, fostering social innovation, developing innovation strategies or designing schemes for regeneration of deprived areas.

8. Financial management – output- or results-based elements for disbursement of the EU contribution, simplified methods of reimbursement.

9. Reducing the administrative burden – alignment of rules on eligibility of expenditures across policy areas, financial instruments and funds.

10. Financial discipline.

11. Financial control – review the procedure for ex-ante assessment of the management and control systems.

12. The architecture of cohesion policy – including regions currently eligible under the ‘convergence’ objective but whose GDP would be higher than 75% of the Union average according to the latest statistics.