Future of the EU cohesion policy

The fundamental objective of the EU cohesion policy is to strengthen economic and social solidarity in the Community, ensure the harmonised development of the overall Community and close the development gap of less-favoured regions. The cohesion policy and its supporting system of instruments (e.g. the Structural Funds and the Cohesion Fund) is the key means for ensuring the strengthening of economic and social convergence.  

The European Commission has already started developing – in collaboration with member states and candidate countries – the reform of the cohesion policy regulating the 2007-2013 financial period, and has drafted certain concepts, which define the potential courses of change. We will present the key documents that relate to the reform process in the following. From amongst these documents, the Financial Outlook for the 2007-2013 period issued by the European Commission in February 2004 and Cohesion Report 3 defining the future basic principles of the cohesion policy are particularly relevant.  

The objective of the regional policy, otherwise known as – economic, social and territorial – cohesion (Articles 158-162 of the Treaty) policy aims at reducing regional development disparities within the EU, decreasing disparities in living standards, i.e. for the European Union to ensure a dignified average standard of living and income for citizens in all regions. 

Naturally, there are many different structures within the EU; therefore, beyond economic and social differences, linguistic, cultural, geographic and natural differences make certain disparities only natural. In compliance with the principle of „unity in diversity”, the objective of the EU does not pertain to eliminating characteristic differences, but instead relates to reducing disadvantages ensuing from this by developing the competitiveness of less-favoured regions – by granting funding for development investments – reducing income disparities, reducing or eliminating permanent under-development manifested on the basis of numerically quantifiable economic characteristics.        

The Community set up the Directorate General for regional policy – DG XVI - within the Commission in 1967 in order to reach these objectives, even though Community level regional policy did not exist at this point in time. At the Paris Summit of 1972, the 6 founding member states agreed to commit themselves to „reducing regional and structural disproportions within the Community”, pursuant to which the European Regional Development Fund (ERDF) was set up 1975. Two obstacles nevertheless did remain as regards the implementation of the regional policy, namely: the low budget of the fund on the one hand (which only represented 1.3 billion ECUs at this point), whilst on the other hand, the Community determined the share of ERDF funding for individual member states in advance, i.e. on the basis of a quota system. It was the Single European Act (SEA) that eventually integrated regional policy in the Acquis (i.e. became a Community level policy), by inserting title V of part three, namely, „Economic and Social Cohesion”, in the provisions of the Treaty of Rome. This defined the basis of the Community regional and structural policy, and set out the reform of the structural funds underpinning the attainment of these objectives. 

In order to promote the comprehensive harmonised development of Article 158, the Community shall shape and continue to perform operations in a way that it engenders the strengthening of economic and social cohesion.
The Community particularly endeavours to reduce disparities arising in the level of development of various regions and the arrears of the least-favoured region or islands, including rural regions as well.
Article 160 setting out the objective of the European Regional Development Fund, which relates to eliminating the most significant regional disparities within the Community by the developing regions lagging behind, supporting their structural adaptation, as well as by participating in the structural transformation of industrial areas on the decline.

Current regulations
Relevant Community regulations define Structural Funds use for the current programming period (2000-2006, or 2004-2006 in the case of member states acceding in May 2004), out of which Council Regulation (EC) 1260/1999 defining the general principles of Structural Funds use is particularly relevant. Regulations on the specific funds, as well as so-called implementation regulations specify the details of general provisions set out in the above Regulation. According to the present system the European Regional Development Fund, the European Social Fund, the Financial Instrument for Fisheries Guidance and the Guidance Section of the European Agricultural Guidance and Guarantee Fund are all a part of the Structural Funds. (The Cohesion Fund was originally set up to facilitate investments in environmental protection and transport with long-term returns in less developed member states – Ireland, Spain, Greece and Portugal - joining the Economic and Monetary Union, and therefore counts as separate instrument)   

Cohesion policy following 2007

The European Commission has already started developing – in collaboration with member states and candidate countries – the reform of the cohesion policy regulating the 2007-2013 financial period, and has drafted certain concepts, which set potential courses of change. The agreement on the 7-year financial frameworks for the 2007-2013-period constitutes a precondition for the approval of regulations on the frameworks of the cohesion policy (see: Article 161).