EU regional policy and financial instruments

UNDP Seminar on Local Capacity Building to Absorb EU Funds

Skopje, 1-3 December 2004

Claus Schultze, INTERREG IIIC East Joint Technical Secretariat, Vienna

+43 1 4000 76142, claus.schultze@interreg3c.net, www.interreg3c.net

Policy context•EU regional policy is extremey complex•It is a policy that still evolves•Based on political consensus•Hence a mix of political and technical

ingredients (framework+funding) •Policy cycle often not closed,

experiences lost•Member States and Commission are

masters of the game with role of MS growing

•But need to programme for needs of regions (at least in ERDF) and involve stakeholders

Current instruments• Structural Funds: ERDF, ESF, EAGGF (part of

CAP), FIFG (part of CAP)• CIs: URBAN, EQUAL, INTERREG, LEADER• Cohesion fund• Pre-accession instruments• State aid rules• (Other sectoral programmes important in the

context of territorial development, i.e. SMEs, Information Society, Research, etc.)

• Overlap with other EU policies, lack of coordination, lack of harmonisation

Eligibility• Nuts data determines eligibilty• Cohesion Fund: Nuts 1 (MS level)• Objective 1: NUTS 2 regions < 75%• Objective 2: NUTS 3 or smaller: Declining

regions with certain characteristics (e.g. unemployment rate)

• SF are governed by different funds (e.g. allocation of money, eligible activities, management structures and procedures)

• Each fund has their own management rulesand legal basis

Region in EU terms (1)• NUTS specification• Nuts 1 (3-7 million)• Nuts 2 (800‘ to 3 million)• Nuts 3 (150‘ to 800‘)

Region in EU terms (2)• The political region• The Committee of the Regions• 317 elected representatives from 25 MS• Nominated by national governments• Represent the entire range of local and regional

government: regional presidents, regional parliamentarians, town councillors, mayors of large cities, etc.

• Strengthens regional/local level in the EU• Advisory body with rising influence• Competition with EP + legislative regions

Governance apects (1)

• Regions/localities can get involved in programming (mostly competence of MS)

• Regions/localities can get involved in programme implementation (shared competence)

• Regions/localities can be beneficiaries or coordinators of individual projects

Governance aspects (2)

• Partnership principle vs. subsidiarity• No clear binding rules, only soft law• Top-down vs. bottom-up elements• Depending on governance arrangements• SF: specific regimes (e.g. ESF and Cohesion

Fund centralized, ERDF decentralised)• In new MS: pretty centralised management

(not much prior experience, lack of capacities and experiences at regional level, MS responsible in case of irregularities, etc.)

Public participation

• Regions/localities only one actor among other stakeholders (e.g. NGOs)

• Involvement in new MS and some more centralised old MS not systematic and often only sporadic

• NGOs (e.g. environment) often better informed and have professional lobbying (e.g. EEB bankwatch)

Programming: Examply HungaryConsultation process (Source: NDP, 259ff.)• Social partners, economic and professional organisations: contacted directly• Regional partners and local governments : Regional Development Councils and• Agencies were asked to comment on the plan, due to high number of potential

partners (>3000 localities) indirect contact through their associations• Non-governmental organisations registered on official lobby list of Parliament

received plan for consultation• Seminars• National Partnership

Conference• Webpage, etc.

Partners actively respondingto request by NPD Office

Capacity building• Before enlargement and ongoing: PHARE-Twinning

(mainly national level) and other Phare-funded capacity-building measures + Phare CBC, SPF

• After enlargement: Mainly up to MS (TA budgets)• INTERREG CI contributes indirectly to capacity-building at

regional level (ex/ex)• INTERACT Point Managing Transition provides services

(www.interact-eu.net)• EU concentrates on national level and implementation

structures• No systematic CB for regions, not to speak of localities

(too many for EU to deal with)

INTERREG IIICommunity Initiative: indirect CB instrument

3 strands:

• IIIA: cross-border (54 programmes)

• IIIB: transnational (13 programmes)

• IIIC: interregional (4 programmes)

Available Budget (2000-2006)

SF total: 195 billion (EU15)

INTERREG: 4.9 billion (EU15)

IIIA:67%, IIIB:27%, IIIC:6%

www.cadses.net

Case-study: INTERREG IIIC is only ERDF-funded programme, that allows

all regions and localities to build European-wide partnerships following a bottom-up approach

Projects aim at policy learning, skills development and capacity building („improving policies and instruments of regional development and cohesion“)

Method: Exchange and dissemination of Structural Funds and other relevant experiences and know-how transfer

Projects involve and/or target regional/local authorities or bodies responsible for development policies/instruments

Strong visibility, transparent procedures, proximity to project promoters

Management

Joint Technical Secretariats

North: Rostock, Germany

East: Vienna, Austria

South: Valencia, Spain

West: Lille, France

NorthEastSouthWest

Managing and PayingAuthorities are regionalpublic bodies, Monitoring and Steering Committee are representativesof Member States and Neighbouring States

TimelineProgramme start: 2002 1st call: October – Januar 20032nd call: May – September 20033rd call: March – April 20044th call: June – October/November 2004Winding up: 2008

Eligible beneficiariesPublic bodiesPublic equivalent bodies

Co-operation themesTheme Share of

operations in %

Research, Technology and Innovation 11.4 %

SME development and entrepreneurship 14.7 %

Information Society and e-Government 7.6 %

Employment, social inclusion, human resources and education

7.1 %

Environment, risk prevention, energy and resource management

16.8 %

Regional planning, territorial regeneration and urban development

19.6 %

Tourism, Heritage and Culture 19.0 %

Accessibility, mobility and transport 3.8 %

19,80047,300

76,50048,400

192,000

13,300

14,900

55,000

41,000

124,200

0,000

50,000

100,000

150,000

200,000

250,000

300,000

350,000

North East South West Total

Remaining

Allocated

Separate budget for Border Regions Remaining: 0,465 Million ERDF

Budgets

Applications - Projects

6 614 8

348

2625

18

77

10

25 15

18

68

0

50

100

150

200

North East South West Total

3rd round

2nd round

1st round

21 2793

18

159

2964

118

40

251

33

66

130

40

269

0

100

200

300

400

500

600

700

800

North East South West Total

3rd round

2nd round

1st round

Total: 83 157 341 98 679 24 57 54 44 179

Partners in approved operations

66 90 116 128

87

216210

21397

229 183

253

0

100

200

300

400

500

600

700

North East South West

3rd round

2nd round

1st round1888 partners

(incl. Lead Partners)

27 % local authorities 29 % regional authorities 7 % national authorities 37 % public equivalent bodies

49 countries

93% EU incl.

20% new MS

7% other

191 different EU regions 46 % are Objective 1Total: 250 535 509 594

3913

212323262932333439

586061626569

100104

120130

180211

253

0 50 100 150 200 250 300

LuxemburgCyprus

MaltaSlovak Republic

DenmarkLatvia

EstoniaI reland

BelgiumSlovenia

LithuaniaCzech Republic

PortugalAustria

SwedenNetherlands

FinlandHungary

PolandGreece

United KingdomFrance

GermanySpainI taly

EU Countries involved

Partners in approved operations (incl. LPs)

23

22

14

12

8

6

6

5

4

4

4

4

3

3

12

0 5 10 15 20 25

Norway

Romania

Bulgaria

Croatia

Switzerland

Algeria

Russia

Morocco

Albania

Serbia and Montenegro

Tunisia

Ukraine

Belarus

Turkey

Others

Non-EU Countries involved

Partners in approved operations

Most active regions

Lessons so far• Strong mobilisation of European regions• High interest in programme, patronage of EU is factor

for success and increased commitment• Only EU programme that stimulates strong bottom-up

activity on strategic issues• Many links and networks established• Transfer and dissemination of knowledge and

experiences that would have remained isolated • In-house capacity often weak, many equivalent

bodies, many consultants involved• Some implementation problems (management and

underspending)

What does it take?• Governance dimension, skills dimension• Multi-level game• EU-level: Regional offices, associations, networks• National level: Transparency and clear processes• Regional level: Development agencies and other

actors offering services for public bodies• Local level: Inhouse capacities in municipalities, • But consultants necessary for short-term

assingments (e.g. proposal writing)

Specific Capacity Problems

• Regions/localities eager to engage in EU projects

• Often unrealistic expections about EU funding

• Lack of project development skills

• Lack of professionality

• Lack of language skills

• Internal administrative problems (lack of leadership, coordination, etc.)

• Underdeveloped project pipeline e.g. Project Generation Facility (HU)

What can be done?• Regions and local authority associations should

offer permanent training on EU, regional development and other programme opportunities

• INTERREG good instrument, to be continued and improved (also third-country funding), in particular INTERREG IIIC

• Support of twinning in relevant policy areas for local level could be useful (current EU programmes not sufficient)

• Q for other donors: leave problem to EU and MS or step in with own activities????

Plans for the future SF?• New constitution: territorial cohesion as goal (so far:

economic and social cohesion)• Greater emphasis on spatial issues and specific

geographical handicaps• Proposal for new SF regulations• Simplifaction/Decentralisation• Strategic priorities: new objectives• Convergence (78%), Competitiveness (18%), Territorial

Cooperation (4%)• Abandons system of designated areas for thematic

approach• Thematic priorities: Lisbon/Gothenburg

•Mainstreaming Community Initiatives

•Down to 3 from 6 funding instruments•Goal: Simplification/Decentralisation•‘One programme, one fund’ rule•One document at strategic EU level,

national and regional programmes

•ERDF + ESF + Cohesion fund – same rules•Financial control: definition of minimum

set of control systems, system check, national on-spot checks and reporting

Plans for the future?

Plans for the future•75% co-funding across the board

•Co-funding only for public expenditure

•CBC: 10% may be used outside EU

•CBC: 20% may be used for adjacent areas

•TNC: 10% may be used outside EU

•TNC: 20% may be used outside progr. area

•13 TNC areas to be streamlined

•Better harmonisation across border with PAI and NNI

CB as ongoing challenge

• Political leadership and capable human resources important (e.g. cities)

• Staff fluctuation in PA often high,low salary, brain drain to private sector

• Changing EU priorities and programme frameworks

• Ongoing extension of EU acquis with impact on regions/localities

Accession Countries• Fulfil Chapter 21: national level capacity,

establishment of implementation structures• Phare continuing, from 2007 New

Instrument for Pre-Accession planned to replace Ispa, Sappard, Phare CBC, etc.

• Close to enlargement: more grant schemes, more decentralised implementatin rules

• Delivery modeled on SF (Shadowing)