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STRUCTURAL FUNDS: CHALLENGES & OPPORTUNITIES Michela Lanzutti

STRUCTURAL FUNDS: CHALLENGES & OPPORTUNITIES Michela Lanzutti. EU ECONOMIC AND SOCIAL COHESION HISTORICAL PHASES (1) 1957 Treaty of Rome: Belgium, France, Germany, Italy, Luxemburg, Netherland

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STRUCTURAL FUNDS: CHALLENGES & OPPORTUNITIES Michela Lanzutti

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  1. STRUCTURAL FUNDS: CHALLENGES & OPPORTUNITIES Michela Lanzutti

  2. EU ECONOMIC AND SOCIAL COHESION HISTORICAL PHASES (1) 1957 Treaty of Rome: Belgium, France, Germany, Italy, Luxemburg, Netherland 1958 Establishment of the European Social Fund (ESF) and of the European Agricultural Guidance and Guarantee Fund (EAGGF) 1973 EU Enlargement (1): Denmark, Ireland, United Kingdom 1975 Establishment of the European Regional Development Fund (ERDF)

  3. EU ECONOMIC AND SOCIAL COHESION HISTORICAL PHASES (2) 1981 EU Enlargement (2): Greece 1986 EU Enlargement (3): Portugal and Spain 1986 Single European Act 1988 European Council of Brussels 1989-1993 Structural Funds: first programming period 1992 Treaty of the European Union 1993 Establishment of the Cohesion Fund

  4. EU ECONOMIC AND SOCIAL COHESION HISTORICAL PHASES (3) 1993 European Council of Edinburgh 1994 Establishment of the Financial Instrument for Fisheries Guidance (FIFG) 1994-1999 Structural Funds: second programming period 1995 EU Enlargement (4): Austria, Finland, Sweden 1997 Treaty of Amsterdam 1997 Agenda 2000

  5. EU ECONOMIC AND SOCIAL COHESION HISTORICAL PHASES (4) 1999 European Council of Berlin 1999 Creation of ISPA and SAPARD 2000-2006 Structural Funds: third programming period 2004 EU Enlargement (5): Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia 2007 EU Enlargement (6): Romania and Bulgaria

  6. THE FINANCING INSTRUMENTS (1) A. The Structural Funds (1) a) European Regional Development Fund (ERDF) It is the main instrument of the EU regional policy. It contributes to (i) promote the development and structural adjustment of regions whose development is lagging behind and (ii) support the economic and social conversion of areas facing structural difficulties. It may finance infrastructures, job-creating investments, local development projects and aid for small and medium enterprises.

  7. THE ELIGIBLE MEASURES (1) • European Regional Development Fund - ERDF • Productive investment permitting the creation or mainte-nance of permanent jobs; • Investment in infrastructure, with a varying scope depen-ding on the Objective; • Indigenous development: local and SME development

  8. THE FINANCING INSTRUMENTS (2) A. The Structural Funds (2) b) European Social Fund (ESF) It promotes the improvement of employment opportunities for unemployed and disadvantages groups by increasing their mobility and facilitating their adaptation to industrial changes, through training measures and systems of recruitment aid. It contributes to implement the European Employment Strategy.

  9. THE ELIGIBLE MEASURES (2) • European Social Fund - ESF • Assistance for persons: education and vocational training, aid for employment, higher education in science and re-search, new sources of employment; • Assistance for structures and systems: improving educa-tion and training systems, modernising employment services, developing systems to anticipate qualification needs; • Accompanying measures: raising awareness, services, etc.

  10. THE FINANCING INSTRUMENTS (3) A. The Structural Funds (3) c) European Agricultural Guidance and GuaranteeFund (EAGGF) The Guidance Section contributes to support the regions whose development is lagging behind, by (i) improving the efficiency of the structures of production, processing and marketing of agricultural and forest products and (ii) deve-loping local potentialities in rural areas. The Guarantee Section supports rural development within the framework of the Common Agricultural Policy in the areas facing structural difficulties

  11. THE ELIGIBLE MEASURES (3) • European Agriculture Guidance&Guarantee Fund - EAGGF • investment in agricultural holdings; • start-up support for young farmers; • professional training; • support for early retirement schemes; • compensatory allowances for disadvantaged areas; • agri-environmental measures; • processing and marketing of agricultural products; • development and promotion of forests; • measures for adaptation and development of rural areas.

  12. THE FINANCING INSTRUMENTS (4) A. The Structural Funds (4) d) Financial Instrument for Fisheries Guidance (FIFG) It contributes to adapt and modernise the fishing industry in the Objective 1 regions and in other regions as required, by (i) creating a sustainable balance between marine resources and their use, (ii) making companies more competitive, (iii) improving the supply and development of fishery and aqua-culture products, (iv) helping revitalise the areas dependent on fisheries.

  13. THE ELIGIBLE MEASURES (4) • Financial Instrument for Fisheries Guidance - FIFG • adjustment of efforts in the fisheries sector; • fleet modernisation; • development of fish farming; • protection of maritime areas; • facilities at fishing ports; • processing and marketing of fish products; • promotion of products.

  14. THE FINANCING INSTRUMENTS (5) B. The Cohesion Fund It supports projects in the fields of environmental and trans-port infrastructures (trans-European networks) in the least prosperous Member States, whose per capita GDP is less than 90% of the Community average and which have introduced a “convergence programme”. Unlike the Structural Funds, the Cohesion Fund does not co-finance programmes but it provide direct finance to projects or stages of projects, which are clearly identified from the beginning.

  15. THE STRUCTURAL INTERVENTIONS (1) • A. The Priority Objectives (1) • OBJECTIVE 1 (territorial): it promotes the development and structural adjustment of regions whose development is lagging behind, by providing basic infrastructure and encouraging investments in business economic activities. • It is financed by ERDF, ESF, FIFG and EAGGF Guidance. • It covers NUTS level II areas (region-level), whose per • capita GDP is less than 75% of the EC average.

  16. THE STRUCTURAL INTERVENTIONS (2) • A. The Priority Objectives (2) • OBJECTIVE 2 (territorial): it supports the economic and social conversion of areas facing structural difficulties. • It is financed by ERDF and ESF. • It covers NUTS level III areas (county-level) or smaller, • including areas undergoing socio-economic changes in the • industrial and service sectors, declining rural areas, urban • areas in difficulty and depressed fisheries-dependent areas.

  17. THE STRUCTURAL INTERVENTIONS (3) • A. The Priority Objectives (3) • OBJECTIVE 3 (thematic): it supports the adaptation and modernisation of policies and systems of education, training and employment. • It is financed by ESF. • It covers the whole European Union except for the • Objective 1 regions.

  18. THE STRUCTURAL INTERVENTIONS (4) • B. The Community Initiatives (1) • INTERREG III: it promotes cross-border (strand A) and transnational (strand B) co-operation to stimulate regional economic development and to encourage balanced regional planning. It also co-finances interregional co-operation (strand C) among regional partners that do not share a common border but show similar socio-economic features and are interested in exchanging their experiences (financed by ERDF)

  19. THE STRUCTURAL INTERVENTIONS (5) • B. The Community Initiatives (2) • URBAN II: it concentrates its support on innovative strategies to regenerate cities and declining urban areas from a social and economic standpoint (financed by ERDF) • LEADER +: it supports the capacities of local actors in rural areas and it encourages the introduction of integrated strategies in sustainable rural development (financed by EAGGF Guidance)

  20. THE STRUCTURAL INTERVENTIONS (6) • B. The Community Initiatives (3) • EQUAL: it supports the development of human resources in a context of equal opportunities, by seeking to eliminate the factors that lead to inequalities and discrimination in the labour market (financed by ESF). By promoting comprehensive development partnerships of public and private partners, it concentrates on discrimination deriving from ethnic origin, disability, age, sexual orientation, religion, lack of qualification.

  21. THE STRUCTURAL INTERVENTIONS (7) C. The Innovative Actions (1) They stimulate regional administrations to experiment new ideas and approaches to meet the challenges of the information society and to make their economies more competitive. They finance the drawing up of new strategies and the experimental phase of projects (eg. studies, pilot projects, exchange of experience). If they prove to be satisfactory, projects may then be included in future strategies under different Objectives.

  22. THE STRUCTURAL INTERVENTIONS (8) • C. The Innovative Actions (2) • In the period 2000-2006 the Innovative Actions financed by the ERDF focus on the 3 strategic themes: • regional economies based on knowledge and technological innovation; • eEuropeRegio: the information society at the service of regional development; • regional identity and sustainable development.

  23. THE STRUCTURAL INTERVENTIONS (9) • D. The Technical Assistance • Structural Funds may finance the preparatory, monitoring, evaluation and checking measures necessary for implementing their assistance. These include: • studies; • TA measures, experience and information exchange aimed at partners, final beneficiaries and general public; • installation, operation and interconnection of computeris-ed systems for management, monitoring and evaluation; • improvements in evaluation methods and information exchange on practices

  24. THE STRUCTURAL INTERVENTIONS (10) • E. The Pre-Accession Instruments (1) • In order to prepare the Candidate Countries from Central and Eastern Europe to join the Union, within the programming period 2000-2006 the European Commission finances three pre-accession instruments, which will be replaced by Structural Funds after the adhesion of these Candidate Countries: • PHARE • ISPA • SAPARD

  25. THE STRUCTURAL INTERVENTIONS (11) E. The Pre-Accession Instruments (2): PHARE Sector: set-up in 1989 to support CEECs in their economic and political transitions, since 1997 it reoriented its vocation and it focused on (i) improvement of institutions’ capacities to ensure the correct application of the EU legislation (institution-building) and (ii) support to new investments in the social and economic sectors where they are most needed (infrastructure, economic development, social measures) Yearly budget:1560 mln EUR Managing Authority: DG Enlargement

  26. THE STRUCTURAL INTERVENTIONS (12) E. The Pre-Accession Instruments (3): ISPA Instrument for Structural Policies for Pre-Accession Sector: it finances large projects in the fields of environmental protection and transport infrastructures; it will be replaced by the Cohesion Fund Yearly budget:1040 mln EUR Managing Authority: DG Regional Policy

  27. THE STRUCTURAL INTERVENTIONS (13) E. The Pre-Accession Instruments (4): SAPARD Special Accession Programme for Agriculture&Rural Develop. Sector: it supports the efforts of the CEECs to join the EU Common Agricultural Policy; it includes a wide range of mea-sures concerning the adjustment of agricultural structures, the quality of food products and consumer protection, rural development, etc., in anticipation of EAGGF interventions Yearly budget: 520 mln EUR Managing Authority: DG Agriculture

  28. THE MAIN PROGRAMMING PRINCIPLES (1) • Complementarity: Community actions shall complement or contribute to corresponding national operations • Partnership: Community actions shall be drawn up in close consultation between the Commission and the Member States, together with the authorities and bodies designated by the Member States, such as regional and local autho-rities, economic and social partners. • Partnership shall cover the preparation, financing, moni-toring and evaluation of assistance. • Member States shall ensure the association of the relevant partners at the different stages of programming.

  29. THE MAIN PROGRAMMING PRINCIPLES (2) • Subsidiarity: Structural Funds are not directly allocated to projects chosen by the Commission. The main priorities of a development programme are defined by national / regional authorities in co-operation with the Commission, but the choice of projects and their management are sole-ly under the responsability of the national and regional authorities • Additionality: Community aid may not replace public or other equivalent structural expenditure by the Member State. Programme budgets shall include both EU funds and national funds raising from public or private sources

  30. THE MAIN PROGRAMMING PRINCIPLES (3) • Compatibility: operations financed by SF shall be in con-formity with the provisions of the Treaty and with EU policies and actions, including rules on competition, public contracts award, environmental protection, elimination of inequalities, promotion of equality between men&women • Programming: the joint action of the Community and the Member State shall be implemented on a multiannual basis through an organising, decision-making and financing process based on the formulation of integrated and coherent multi-annual strategies and the definition of concrete objectives to be achieved

  31. THE MAIN PROGRAMMING PRINCIPLES (4) • Concentration: Structural Funds are concentrated on few priority objectives; as a matter of fact, large part of SF covers a limited number of extended areas, which need support for their development, whereas the remaining resources are dedicated to particular social groups facing difficulties throughout the Union, without satisfying any particular geographical criteria

  32. HORIZONTAL PRIORITIES • The Structural Fund programmes are subject to three horizontal priorities, which must be incorporated into the definition and implementation of measures supported by the Structural Funds and the Cohesion Fund: • sustainable development, ie. compliance with the Community environmental and nature protection legislation; • equality between men and women; • information society.

  33. THE PROGRAMMING PROCESS (1) 1. At the beginning of each programming period, the European Union decides on the budget dedicated to Structural Funds and it defines the basic rules applying to their use. Structural Funds are broken down by Country and by Objective: the areas which may benefit from SF funding are defined by the Commission in agreement with the Country concerned. The Commission proposes common thematic guidelines.

  34. THE PROGRAMMING PROCESS (2) 2. Following these EU decisions, each Member State – with the involvement of relevant economic and social actors – identifies its less-favoured areas and/or vulnerable social groups. The Member State elaborates its development strategies and proposals and it summarises them in a National Development Plan (NDP). 3. Once the National Development Plan is completed, the Member State sends it to the Commission.

  35. THE PROGRAMMING PROCESS (3) 4. The Member State and the Commission discuss upon the contents of the National Development Plan and they define the appropriate breakdown of national and Community funds to be used for its implementation. 5. When both sides have reached an agreement, the Com-mission adopts the resulting plan (Community Support Framework - CSF) and its regional or thematic program-mes (Operational Programmes - OPs).

  36. THE PROGRAMMING PROCESS (4) When the contents required by the CSF and by the OPs are prepared at the same time and included in one single document for Commission approval, the approved document is called “Single Programming Document”. 6. The national or regional authorities draw up and ap-prove the operational details of these programmes into documents called Programme Complement. The Commission is kept informed about the results. Once the Complements are approved, the programmes become operational.

  37. THE IMPLEMENTATION PROCESS (1) 1. Once the Programme Complement is approved, the national / regional authorities can launch the programme and start its implementation according to their operating procedures (calls for tender, calls for project proposals..). 2. The managing authorities carry out a selection of the projects, according to the goals of the programme and to the criteria identified in the Programme Complement. The Managing Authorities inform the tenderers of their choice.

  38. THE IMPLEMENTATION PROCESS (2) 3. The selected bodies can implement their projects, which must be completed before the deadline laid down in the programme, since the timetable for the disbursement of Community aid is fixed at the start. 4. On a regular basis, the competent authorities monitor the progress of the programme, they keep the Commis-sion informed on the progress and they provide it with the certification of expenditure (ie. the proof that money is being used in the best possible way).

  39. THE IMPLEMENTATION PROCESS (3) 5. The Commission monitors the audit systems imple-mented by the managing authorities and it gradually disburses the remaining instalments from the Structural Funds. Besides, the Commission analyses the development of the monitoring indicators, it examines the evaluation studies, it promotes thematic exchanges and it informs the compe-tent authorities about the new EU priorities affecting regional development.

  40. THE TARGET BENEFICIARIES (1) • A. Less-favoured regions (1) • Regions whose development is lagging behind, charac-terised by a per capita GDP not exceeding 75% of the Community average, low investment levels, high unem-ployment rate, lack of business and social services, poor basic infrastructures (Objective 1); • Regions undergoing social and economic conversion, facing difficulties caused by the restructuring of indu-strial and/or service sectors, loss of traditional activities in rural areas, declining of urban areas, difficulties in the fishery sector (Objective 2);

  41. THE TARGET BENEFICIARIES (2) • A. Less-favoured regions (2) • Regions whose per capita GDP is inferior to 90% of the Community average (Cohesion Fund). • B. Areas with specific handicaps (1) • Border areas, in order to improve cross-border coope-ration between adjacent regions, to establish cross-border zones of economic and social activity, to develop common strategies for spatial development (Interreg III strand A);

  42. THE TARGET BENEFICIARIES (3) • B. Areas with specific handicaps (2) • Declining urban areas, in order to enforce the introduc-tion of innovative strategies for economic and social regeneration (Urban II); • Rural areas outside Objective 1 and 2 regions, by investing in rural farms, environment and promotion of local products (EAGGF-Guarantee) and by supporting innovative rural projects promoted by local groups (Leader+);

  43. THE TARGET BENEFICIARIES (4) • B. Areas with specific handicaps (3) • Fisheries areas, in order to rationalise and modernise fishery industry and to improve the quality of fishery products (FIFG). • C. Vulnerable social groups (1) • People facing difficulties in the labour market, inclu-ding young and long-term unemployed, people suffer-ing from social exclusion and under-skilled workers, by supporting the adjustment of systems and structures of education, training and employment (Objective 3);

  44. THE TARGET BENEFICIARIES (5) • C. Vulnerable social groups (2) • People suffering discrimination and inequalities in the labour market, caused by gender, race or ethnic origin, religion, physical or mental handicaps, age or sexual orientation, by supporting new social integration me-thodologies proposed by public, private and associative partners (EQUAL).

  45. THE TARGET BENEFICIARIES (6) • D. Local and regional authorities • Transnational co-operation between national, regional and local authorities, in order to promote better inte-gration within the Union and to improve the spatial planning of large areas (Interreg III Strand B); • Interregional co-operation, in order to improve the effectiveness of regional development policies and instruments through large-scale information exchange and experience sharing (Interreg III Strand C).

  46. THE TARGET BENEFICIARIES (7) • E. Applicant Countries • Instrument for Structural Policies for Pre-Accession (ISPA) to improve environmental and transport infrastructure, as a precursor of the Cohesion Fund; • PHARE programme to support institution-building and economic development policies, as a precursor of Structural Funds; • Special Accession Programme for Agriculture and Rural Development (SAPARD) to support rural development, as a precursor of EAGGF interventions.

  47. THE BUDGETARY RESOURCES 2000-2006 (1) • In the period 2000-2006 the EU Regional policy accounts for 1/3 of the Community budget (EUR 213 bln): • EUR 195 bln spent by SFs (ERDF, ESF, EAGGF, FIFG) • EUR 18 bln spent by the Cohesion Fund • The Structural Funds concentrate on the 3 priority objecti-ves, with a significant concentration on Objective 1 regions: • Objective 1: EUR 135,9 bln (69,7%) • Objective 2: EUR 22,5 bln (11,5%) • Objective 3: EUR 24,05 bln (12,3%)

  48. THE BUDGETARY RESOURCES 2000-2006 (2) Community Initiatives (Interreg III, Equal, Leader+ and Urban II) account 5,35% (EUR 10,4 bln) of the Structural Fund commitments. Innovative Actions and Technical Assistance receive 0,65% of SF funding. A special allocation of funds to the Financial Instrument for Fisheries Guidance (FIFG) covers the adjustment of fisheries structures outside the Objective 1 regions, at support of the Common Fisheries Policy (0,5%=EUR 1,1 bln).

  49. THE BUDGETARY RESOURCES 2000-2006 (3) Total annual receipts in any Member State from the SFs, in combination with assistance provided under the Cohesion Fund, should not exceed 4% of national GDP. Performance reserve (1) For each priority Objective, the Commission draws up an indicative breakdown of funds per Member State. In order to improve programme performance, 4% of commitment appropriations under each national indicative breakdown is held in reserve at the beginning of the programming period.

  50. THE BUDGETARY RESOURCES 2000-2006 (4) Performance reserve (2) In the mid-term review, each Member State, in close con-sultation with the Commission, shall assess the performance of each OP or SPD on the basis of a limited number of monitoring indicators reflecting effectiveness, management and financial implementation and measuring the mid-term results in relation to their specific initial targets. The Commission, in close consultation with the MSs concerned, shall allocate the reserve to the OPs or SPDs or their priorities which are considered to be successful.

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