Regional Policy Cohesion Policy Growth and jobs

1. Regional PolicyCohesion Policy Growth and jobs Background presentation for Chamber of Commerce/Euractiv meeting, Bucaresti 2 April 2007 charles.white@ec.europa.eu www.europa.eu.int/inforegio

2. Five things to remember • It has successfully reduced the gaps between the regions in Europe and made a major contribution to growth, jobs and democratic stability; Regions do deliver growth and jobs; • It has improved management and governance in the regions; the Commission does not select projects; loan system now in regulations • It is the EU’s second biggest budget heading; • It works by investing in infrastructure, training, integration, adaptation, innovation and research. Not hand outs. • Its success is recognised by all candidate countries and by many others (China, S. Africa) A European Cohesion Policy Simple message

3. Cohesion policy budget • Cohesion Policy now includes • 2 Structural Funds: • ERDF: European Regional Development Fund (1975) • ESF: European Social Fund (1959) • Cohesion Fund (1993) (whole MS with <90% average GNI (GNP); projects in environment and transport); • the IPA - pre accession instrument (2006) • Budget of €49.5 billion p.a. fixed, firm and stable = €347 bn, or 0.37% of GNI (at today’s prices). • No longer a connection with EAGGF or FIFO A European Cohesion Policy

4. Convergence objective Regions > 75% in EU25) Objective 'Regional Competitiveness and Employment' Geographical Eligibility for Structural Funds Support 2007-2013 (GDP/head 2000-2001-2002) A European Cohesion Policy Convergence objective statistically affected regions Objective 'Regional Competitiveness and Employment' Phasing-in regions, "naturally" above 75% Index EU 25= 100 Source: Eurostat

5. <50 50 - 75 75 - 90 90 - 100 100 - 125 ³ 125 Regional disparities in development in EU27 GDP per head in % and in purchase power parities (2003) A European Cohesion Policy Index, EUR-27 = 100 Source: Eurostat

6. Cohesion Fund Convergence Convergence: Phasing-out Regional Competitiveness and Employment: Phasing-in Regional Competitiveness and Employment European Territorial Cooperation EU structural funds 2007-2013 in billion of euro by Member State, in current prices 60 40 20 BE BG CZ DK DE EE GR ES FR IR IT CY LV LT LU HU MT NL AT PL PT SL SK FI SV UK RO

7. Priorities of the reform (I)First objective: Convergence and competitiveness • 81.9% of the total of €348 billion • Regions less than 75% of EU 25 average GDP/head • Statistical effect regions (Phasing out): less than 75% of EU 15 GDP/head but more than 75% of EU 25. • States with less than 90% of EU 25 average GNI/head (Cohesion Fund) • Special accessibility programme for OMR A European Cohesion Policy Reform of the policy

8. Priorities of the reform (II) Regional competitiveness and employment • Cohesion policy at the service of all other regions in the Union – no community zoning Making up 15.7% of the total budget it contains two elements: • 1. Regional competitiveness (50%) • innovation and the knowledge society • accessibility environment and risk prevention • 2. Employment - based on European Employment Strategy (50%) - adaptation, modernisation, anti discrimination A European Cohesion Policy Reform of the policy

9. Priorities of the reform (III) European Territorial co-operation • Trans national border regions, including sea borders • Cross border co-operation (MS to propose changes to the 13 present zones of INTERREG III B) • Interregional co-operation (also linked to main programmes) – “Regions for Economic change” • External cross-border co-operation Inter regional cooperation – INTERREG - makes up only 2.4% of total budget. But brings community added value by making possible balanced integration of the whole Union: A European Cohesion Policy Reform of the policy

10. Making it happen: why is our method so effective? • It applies to all • It is based on what works (evaluation, exchange of best practice, long experience) • Partnership (civil society) improves governance • Decentralised management plus detailed control • Leverage effect makes EC euro bigger (by unlocking up to 60% public/private contributions) • Programming (5 stages) brings objectivity • It incorporates the best elements of the Community Initiatives (mainstreaming) A European Cohesion Policy

11. What about Lisbon? • We got it wrong first time around by fixating on competitiveness, knowledge society, ICTs and setting unrealistic targets which everyone ignored • The Lisbon agenda needed to be extended to all growth factors and so be centred on Cohesion Policy • More realistic approach is for Member states to prepare National ReformProgrammes and report annually (an embarrassment system) • The new programming system for Cohesion Policy now has stage 1: preparation by EC of the StrategicGuidelines for Cohesion and 2: preparation by MS of National Strategic Reference Frameworks based on Strategic Guidelines and Integrated Guidelines above • We now have a kind of Lisbon Mark II… background

12. Community's strategic guidelines on cohesion proposed by the Commission, adopted by the Council, assent by the European Parliament 1 National Strategic Reference Framework proposed by the Member State in applying the partnership principle; reflects on the Union‘s orientations, lays down a national strategy and its programming; finally decided by the Commissionen 2 Operational Programmes one programme by fund and Member State or region, description of priorities, management and financial sources; proposed by Member State or region; finally decided by the Commission 3 Programme management and project selection by Member States and regions; “shared management“ principle = concertation with the Commission 4 Strategic follow-up and annual debate by the European Council in Spring, based on an annual report of the Commission and Member States 5 Five levels of programming and follow-up A European Cohesion Policy

13. The new Strategic guidelines: building in the (revised) Lisbon agenda (1) I) Making Europe and its regions a more attractive place to invest and work • expand and improve transport infrastructures • improve the environmental contribution to growth and jobs • address the intensive use of traditional energy sources II) Knowledge and innovation for growth • increase and improve investment in RTD • facilitate innovation and promote entrepreneurship • promote the information society for all • improve access to finance A European Cohesion Policy Priorities

14. The new Strategic guidelines: building in the Lisbon agenda (2) III) More and better jobs • attract and retain more people in employment and modernise social protection systems • improve adaptability of workers and enterprises and the flexibility of the labour market • increase investment in human capital through better education and skills • administrative capacity • health and the labour force A European Cohesion Policy Priorities

15. New Instruments in the new period Improve performance in closer co-operation with International Financial Institutions (IFIs): • JASPERS: a new technical assistance/evaluation partnership with EIB and EBRD for large projects • JEREMIE: finance for business development for micro to medium enterprises through European Investment Fund. • JESSICA: financial engineering for sustainable urban development with EIB, CEB and other IFIs To develop better co-operation between regions • Regions for Economic Change initiative • European Grouping of Territorial Co-operation (EGTC): gives legal structure to implement programmes A European Cohesion Policy New Instruments

16. Possible growth and employment effects Growth: Major gains in terms of additional GDP of approximately 10% in most new MS by 2013 (8.9% in Poland, more than 10% in Baltic States). Productivity: Gains vary between 2.3% (Slovakia; Hungary) and 7% (Bulgaria; Romania). Employment: Overall 2.5 million new jobs (between +4% to 8%).

17. What is happening now? • We are in between stages 2 and 3 of programming: in the process of bringing out the Operational programmes • What about enlargement? (must now await ‘institutional reform’) We can’t stop now if we want to find solutions in Cyprus or the Balkans… • Informing the Public • It is quite likely that the new MS will never, ever have such an opportunity, with such funds again. They have to learn faster and perform better than the Member States before them. But there is a lot of experience and good will available to help them. Financial aspects

18. What is happening now? • We are in between stages 2 and 3 of programming: in the process of bringing out the Operational programmes • In Romania this process has been held up pending clarification of certain forecasts, statistics, processes and projects. • Please note that this is a perfectly normal part of negotiation. Best to get it right at the start. • Need to be sure of capacities (absorption, road, technical and others) No criticism. Financial aspects

19. Informing the specialists and the wider public • A new Information and Publicity Regulation (1083/2006 Article 69) • Strengthened Communication plans directly linked to Annual reports • Minimum requirements: major publicity effort for the launch of the programme and for results: list of beneficiaries, Euro flags outside MA premises 9 May • Group of I&P contacts formalised: INFORM Financial aspects

20. Why Cohesion? Article 158 of the EC Treaty says that in order to strengthen cohesion the European Community “aims at reducing disparities between levels of development of the various regions”. It also refers to reducing the backwardness of the least favoured regions or islands, including rural areas. A European Cohesion Policy

21. Why Cohesion? • Introducing the European Regional Development fund in 1975, the first Commissioner for Regional Policy, George Thomson said it was as interesting for the richer regions as for the poorer regions. In other words there were clear returns to be expected from the investment. • Three reforms between 1988 and 2000, simplifying systems and decentralising management • The fourth reform, for 2007-2013 will enable the structural funds to face up to the future: • Greater disparities with enlargement • Dealing with ageing population, Globalisation and technological change => Achieving growth and sustainable development through the Lisbon and Gothenburg agendas A European Cohesion Policy