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April 2001

The quarterly magazine of the actors of regional development

2 / 9

Putting it plainly
Cohesion policy at the heart of the debate

A satisfactory assessment
Redrawing the map of European development
The future of cohesion policy

"The debate is now open," declared Commissioner Michel Barnier while presenting the Second Cohesion Report - adopted by the Commission on 31 January last - to the European Parliament and the Committee of the Regions. Titled "Unity, solidarity and diversity for Europe, its people and territory", the report assesses the current status of cohesion policy and prepares the ground for a debate on its future form in an enlarged Union.

The combined impact of assistance from the Structural Funds and the Cohesion Fund has led to some notable successes in recent years. However, there is no room for complacency. While disparities persist, mainly within Member States, Europe is about to face one of its biggest challenges yet, the forthcoming enlargement.

A satisfactory assessment

In little over ten years, cohesion policy has coped with developments such as globalisation, the move from industrial to knowledge-based economies, and profound changes in demographic trends. At the same time it has moved to meet the growing and justified calls for greater openness in Community policy-making and on the uses made of taxpayers' money.

Some figures are illustrative. For example, since the end of the 1980s, the development disparities between Member States have narrowed by 33% and those between the different regions of the European Union by 20%.

Ireland, for example, is no longer one of the least prosperous countries in the Union. The ground made up by the Irish economy in reaching average EU levels is one of the most notable successes scored by the Structural Funds in spurring development and growth in Member States. At the same time, the three other so-called "cohesion countries" - Greece, Spain and Portugal - have seen average per-capita income rise from 68% of the European average in 1988 to some 79% in 1999.

Moreover, these nations have experienced GDP growth rates above the Community average, enjoying considerable improvements in their rail, road and telecommunications networks.

However, such impressive progress must not be allowed to obscure the obstacles that persist on the road to achieving evenly spread growth and competitiveness. Glaring disparities remain within Member States - as witness unemployment rates topping 20% in some Italian and Spanish regions and in the overseas territories.

While the European Union as a whole has managed to reverse unemployment trends, imbalances nevertheless remain within national borders in the areas of employment and training, education, innovation and research.

Redrawing the map of European development

Second Cohesion Report

According to the Second Cohesion Report , the results obtained in the last ten years and the immediate prospect of enlargement are evidence of the remarkable flexibility of Community cohesion policy. This will be needed to meet a twofold challenge - developing new approaches to persisting problems in existing Member States and at the same time demonstrating that solidarity remains at the heart of the European model.

Cohesion in a Union of 27 members cannot be handled in the same way as in a Union of 15. The entry of 12 new members is set to appreciably increase disparities. The figures make this clear: while the population in the enlarged Union will swell by 33%, GDP will rise only by a modest 5%. Never, in previous enlargements, has the Union been confronted with such substantial gaps in development.

The Report breaks down the 27 eventual members into three groups, based on current GDP levels. In the first rank are the twelve most prosperous current Member States, i.e. those with GDP at or above the Community average.

These are followed by Greece, Spain, Portugal, Cyprus, Malta, Slovenia and the Czech Republic, all with GDP around 80% of the Community average. The last group would be made up of the eight applicant countries with per-capita GDP below 40% of the Community average, which together will account for some 16% of the total population of the enlarged Community.

The future of cohesion policy

In his speeches to Parliament and the Committee of the Regions, Mr Barnier contributed to the wide-ranging debate that will be held before the Commission presents its specific proposals by outlining a number of scenarios regarding the purpose and future form of regional development policy.

1. The purpose of cohesion policy

One thing for certain is that enlargement will go hand in hand with an increase in subsidiarity.

  Mr Barnier "Regional policy is not likely to disappear with enlargement - on the contrary, widening disparities will lend it renewed legitimacy in both existing and future Member States, based on the same principles and ambitions."

However, cohesion policy must not be limited to simply writing out cheques for less-developed Member States - instead it must continue to serve the interests of the Community as a whole, namely by nurturing balanced and sustainable development across the Union. The priorities of cohesion policy are also due for a rethink, so that more resources can be concentrated on the most intractable problems - unemployment, urban problems and areas with natural disadvantages. And the spatial development dimension of this policy must be reinforced, and the efficiency of its financial management enhanced.

2. The beneficiaries of cohesion policy

The Structural Funds will continue to target less-developed regions, based on a clear and simple yardstick - GDP. However, enlargement will inevitably reduce overall GDP in the Union, automatically excluding certain current beneficiary regions from Objective 1 funding in 2007. Since the poverty of some does not free others of their problems, the terms of reference for regional policy will need to be reviewed to take account of socio-economic realities. The policy only makes sense if it covers the whole European Union, for all and by all. And at the end of the day, efficient implementation is no substitute for comprehensive subsidiarity, even at regional level.

3. How cohesion policy is implemented

The policy's credibility rests to a large degree on how effective it is. Public money must be properly managed and more emphasis placed on providing demonstrable results from the funding allocated.

If regional policy is to fulfil its objectives, it must command adequate resources. What is more, in view of budgetary constraints, today more than ever other Community policies will need to be in synergy with cohesion objectives.

The debate on regional development sparked by the Second Cohesion Report will be decisive for the future of the European Union. The Cohesion Forum, to be held from 21-22 May in Brussels, will be an opportune moment for the invited actors who contribute in uniting Europe to reflect upon this issue.

The transcripts of Mr Barnier's speeches to the Parliament and the Committee of the Regions can be found on his homepage.
The Second Report on economic and social cohesion can be found on the Inforegio website .


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