In most discussions about EU membership, one can almost always find a central reference to the so-called 'structural' funds. This is sometimes unfortunate, in the sense that the benefits of membership extend well beyond the mere influx of funds from the EU budget. Indeed, an overwhelming focus on the 'structural' funds aspect could obscure this important consideration.
Nevertheless, it is definitely a very relevant perspective since the 'structural' funds represent one of the most important tools for the implementation of the Union's regional policy and the achievement of its cohesion objectives.
Even at this point in time, where Malta is just starting to benefit from the 'structural' funds allocated to it under the 2000-2006 budget framework, discussion has already progressed significantly on the determination and allocation of 'structural' funds in the next budget period, namely 2007-2013.
This discussion has not been restricted only to the question of the global amount of money that will be involved or on how this will be distributed amongst the various eligible regions. The debate is a wider one, with an attempt to reassess the objectives and modalities of the EU's cohesion policy and the consequent reformulation of the regulations that govern the utilisation of the 'structural' funds.
Over the last few months, the Commission has made some very important pronouncements on these points; in particular the publication (on July 14) of its proposals for legislative reform in the implementation of its cohesion policy. Last week, the key aspects of these proposals were presented for discussion in front of the Committee of the Regions, which was meeting in plenary session, in Brussels.
The principal aim of the EU's structural and cohesion policies is, of course, to help reduce economic and social disparities between the various regions that form part of the Union. The EU is indeed one of the most prosperous economic zones in the world but the overall picture is not an even one and some regions display characteristics that are significantly below the EU average, especially as concerns their income per capita.
In many ways, these regions are lagging behind the more prosperous parts of Europe. It is quite obvious that a boost to their rate of growth, which would lead to a reduction in these manifest disparities, would be of direct benefit to them.
At the same time, such a positive development would also benefit the other, more prosperous regions, since the whole European single market would become a more dynamic one, with benefits to be reaped by all that are part of it. The underlying objective of the EU's structural and cohesion policies is therefore to facilitate the development of the least prosperous regions such that the Union, as a whole, might benefit from it.
The EU's structural and cohesion policies are backed by the so called structural funds and by the cohesion fund, all of which are covered by specific appropriations from the EU's budget. There are four existing structural funds - the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Guidance and Guarantee Fund (EAGGF) and the Financial Instrument for Fisheries Guidance (FIFG). Each fund, or financial instrument, has been established to address a particular focus or priority area, although inevitably these areas do overlap.
This overlap is one of the reasons why it has been necessary for the EU to reassess the subject of regional policy as a whole, but not the only one. An equally important factor is the need to take stock in the wake of enlargement (recent and soon-to-be) which has amplified considerably the disparity between the richer and poorer regions within the Union.
However, there are also other relevant considerations, such as the expected acceleration in the pace of economic change in the face of increased globalisation, the effects of new technologies linked to the development of the so-called knowledge economy, as well as the ageing population within Europe coupled with the increasing pressure for migration from outside the Union.
These factors contribute to a scenario where regional policy cannot (and must not) focus only on the poorest regions but it must also seek solutions for those other parts of the Union that are, or could be, facing serious difficulties resulting from forced economic change and significant urban decline or which have to contend with permanent handicaps, such as could be their peripheral location.
Structural and cohesion policy is, by its very nature, a complex subject to administer since it must adapt itself to the varying characteristics of each and every region to which it is applied. For this reason, structural funds are managed by the Commission in close partnership with the recipient regions. Simplifying somewhat the relevant procedures, it is possible to identify the following key sequence in the allocation of structural funds to cover specific projects.
The European Commission "sets the ball rolling" (as it is again in the process of doing now) by submitting a proposal suggesting the overall budget appropriation for structural funds, their allocation to individual countries, the establishment of priority objectives and also of detailed regulations to govern the eventual disbursements of these funds. These considerations must be endorsed by the European Council, jointly with the European Parliament.
On the basis of these decisions, each state or region (as the case may be) formulates its specific proposals in the form of a plan that is intended to provide support to its less favoured areas and disadvantaged social groups, taking due account of the thematic guidelines drawn by the Commission.
Once such plans have been agreed with the Commission, national or regional authorities within the member states are largely responsible for, and involved in, the operational phase that follows (i.e. the actual selection, funding and monitoring of individual projects). This, within the common deadlines that are set with reference to the EU's multi-annual budget framework.
The above was only meant to be an indicative introduction to show the inherent complexity in the management of the structural funds. There are some exceptions, such as the Cohesion fund, which caters exclusively for pre-identified projects whose funding is allocated directly by the Commission. Or programmes such as Interreg which finance co-operative projects involving the participation of more than one region from at least two member states.
However, these exceptions do not, in any way, detract from the already mentioned complexity in the practical implementation of the EU's structural and cohesion policies. The interaction between the EU Commission and the various national and regional authorities within the individual member states makes the efficient management of the structural funds particularly challenging, as is also the monitoring of the projects which are funded by them and, consequently also, their audit.
With this consideration in mind, the Commission has published a detailed proposal on new regulations to govern the disbursement of structural and cohesion funds as from 2007. This discussion should be followed with particular interest in Malta as well as in the many other states or regions that are eligible to benefit from the structural and cohesion funds in the forthcoming budget period 2007-2013. This will be the subject of my contribution next week.