Structural Funds and Cohesion Fund

The Structural Funds and the Cohesion Fund are financial tools set up to implement the Cohesion policy also referred to as the Regional policy of the European Union. They aim to reduce regional disparities in terms of income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes.

The Structural Funds are made up of the European Regional Development Fund (ERDF) and the European Social Fund (ESF). Together with the Common Agricultural Policy (CAP), the Structural Funds and the Cohesion Fund make up the great bulk of EU funding, and the majority of total EU spending.

Apart from funds under the Cohesion policy, there are other funds that have the potential to contribute to the regional development. These are:

• Funds under the CAP, namely the European agricultural guarantee fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD)
• The European fisheries fund (EFF) established for the programming period 2007-2013 with the Council Regulation (EC) No 1198/2006 of 27 July 2006.

Sections below present information about objectives that have been defined for the current programming period, which runs from 1 January 2007 to 31 December 2013. The overall budget for this period is €347bn: €201bn for the European Regional Development Fund, €76bn for the European Social Fund, and €70bn for the Cohesion Fund. The objectives setup shapes the main focus of interventions (eligible activities and costs) and the overall allocations of funds from the EU budget.

The key indicator for the division of regions under singular objectives is the Gross National Product per capita (GDP p.c.) level. This is subject to criticism based on the fact that GDP p.c. is unable to reflect the real socioeconomic reality of regions. Some groups (e.g. Beyond GDP) and organizations propose the creation of a set of alternative indicators that could substitute the GDP and its derivates.^[1]

Objectives for 2007-13

Convergence Objective (Formerly Objective 1)

This objective covers regions whose GDP per capita is below 75% of the EU average and aims at accelerating their economic development. It is financed by the ERDF, the ESF and the Cohesion Fund. The priorities under this objective are human and physical capital, innovation, knowledge society, environment and administrative efficiency. The budget allocated to this objective is € 283.3bn in current prices.

Regional Competitiveness and Employment Objective (Formerly Objective 2)

This objective covers all regions of the EU territory, except those already covered by the Convergence objective. It aims at reinforcing competitiveness, employment and attractiveness of these regions. Innovation, the promotion of entrepreneurship and environment protection are the main themes of this objective. The funding – € 55bn in current prices – comes from the ERDF and the ESF.

Territorial Cooperation Objective (Formerly Objective 3)

This objective builds upon the Interreg initiatives of previous years, which were originally planned to be fully incorporated into the main objectives of the structural funds. Financed by the ERDF with a budget of €8.7bn, its aim is to promote cooperation between European regions, as well as the development of common solutions for issues such as urban, rural and coastal development, shared resource management or improved transport links. This objective is divided in three strands:

• cross-border cooperation (formerly the Interreg IIIA) - aimed at neighboring border-regions
• transnational cooperation - aimed at the multilateral cooperation of regions from countries (minimally 3) divided into wider programme areas (e.g. Central Europe, Southeast Europe, Mediterranean, etc.)
• interregional cooperation - aimed at cooperation in the field of policy making, research and capacity building, encompassing programmes Interact II, ESPON, Interreg IVC and URBACT

The Funds

The European Regional Development Fund (ERDF)

The ERDF supports programmes addressing regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU. Funding priorities include modernising economic structures, creating sustainable jobs and economic growth, research and innovation, environmental protection and risk prevention. Investment in infrastructure also retains an important role, especially in the least-developed regions.

The European Social Fund (ESF)

The ESF focuses on four key areas: increasing the adaptability of workers and enterprises, enhancing access to employment and participation in the labour market, reinforcing social inclusion by combating discrimination and facilitating access to the labour market for disadvantaged people, and promoting partnership for reform in the fields of employment and inclusion.

The Cohesion Fund

The Cohesion Fund contributes to interventions in the field of the environment and trans-European transport networks. It applies to member states with a Gross National Income (GNI) of less than 90% of the EU average. As such, it covers all 12 new member states as well as Greece and Portugal. Spain is also eligible for the Cohesion Fund, but on a transitional basis (so-called "phasing out").

A New Strategic Approach

This section explains the interplay between different political levels - European, national and regional - in determining the priorities for the Structural Funds and the guidelines for implementing regional projects. In general, the overarching priorities for the Structural Funds are set at the EU level and then transformed into national priorities by the member states and regions.

At the EU level the overarching priorities are established in the Community Strategic Guidelines (CSG). These set the framework for all actions that can be taken using the funds. Within this framework, each member state develops its own National Strategic Reference Framework (NSRF). The NSRF sets out the priorities for the respective member state, taking specific national policies into account. Finally, Operational Programmes for each region within the member state are drawn up in accordance with the respective NSRF, reflecting the needs of individual regions.

• EU Level: Community Strategic Guidelines,
• National Level: National Strategic Reference Framework for each member state,
• Regional Level: Operational Programme for each region.

Community Strategic Guidelines

The Community Strategic Guidelines (CSG) contain the principles and priorities of the EU's cohesion policy and suggest ways the European regions can take full advantage of the funding that has been made available for national and regional aid programmes for the period 2007-2013. There are three priorities:

• Improving the attractiveness of member states, regions and cities by improving accessibility, ensuring adequate quality and level of services, and preserving their environmental potential;
• Encouraging innovation, entrepreneurship and the growth of the knowledge economy by supporting research and innovation capacities, including new information and communication technologies;
• Creating more and better jobs by attracting more people into employment entrepreneurial activity, improving adaptability of workers and enterprises and increasing investment in human capital.

National Strategic Reference Framework

A National Strategic Reference Framework (NSRF) establishes the main priorities for spending the EU structural funding a member state receives between 2007 and 2013. Each member state has its own NSRF.^[2] Adopting an NSRF is a new requirement of the Structural Funds regulations for 2007 to 2013. Each NSRF functions as a high-level strategy for the Operational Programmes in the respective member state. The document provides an overview of the economic strengths and weaknesses of the member state's regions, and sets out the approach to future Structural Funds spending across the member state.

Operational Programmes

An Operational Programme (OP) sets out a region's priorities for delivering the funds. Although there is scope for regional flexibility, a region’s priorities must be consistent with the member state's NSRF. There is an Operational Programme for each region in the EU. These OPs, just like the NSRF, have to be approved by the European Commission before any implementation.^[3]

Funds management

Although the Structural Funds are part of the EU budget, the way they are spent is based on a system of shared responsibility between the European Commission and the member state authorities:

• The Commission negotiates and approves the NSRFs and OPs proposed by the member states, and uses these as a basis for allocating resources.
• The member states and their regions manage the programmes. This includes implementing the OPs by selecting individual projects, controlling and assessing them.
• The Commission is involved in overall programme monitoring, pays out approved expenditure and verifies the national control systems.

New architecture for the future programming period (2014-2020)

Coming soon

See also

• European Union Regional policy
• ERDF
• ESF
• European Grouping for Territorial Cooperation

References

1. ^ Beyond-GDP.eu
2. ^ National Strategic Reference Framework 2007-2013
3. ^ Michelle Cini (ed.), European Union politics, Oxford University Press, 2003, p.298 (ISBN 9780199248360)

External links

• European Commission
  • Cohesion Fund
  • European Regional Development Fund
  • European Social Fund
• Community Strategic Guidelines 2007-2013
• Operational Programmes for all European regions