DRAFT POSITION OF THE CZECH REPUBLIC ON THE FUTURE OF COHESION POLICY AND

1. Czech Republic and Future of Cohesion Policy Prague, 29 November 2010 DRAFT POSITION OF THE CZECH REPUBLIC ON THE FUTURE OF COHESION POLICY AND THE FIFTH COHESION REPORT by Fabrizio Barca* * Italian Ministry of Economy and Finance. Special Advisor to the European Commission

2. A MUCH NEEDED REFORM • The EU is facing todaymultiple challenges: maintaining/strengthening its comparative advantages in the global competition and bouncing back from the crisis; designing an exit strategy from deteriorated public finances without depressing the economy; fulfilling its promise to all EU citizens that they will be given adequate social and economic opportunities (social inclusion) wherever they live in the Union. • Several steps need to be taken to tackle those challenges: • Member States need to improve the effectiveness of public spending; • Member States also need to push foreword structural and institutional reforms and to concentrate their policy efforts on the common measurable objectives of Europe 2020; • At EU level the Single Market must be re-launched: • And the EU budget must be made much more effective. • In this context, a reform and modernization of cohesion policy is a “must”.

3. THE COMMISSION HAS LAUNCHED THE REFORM • The Budget review (BR) and the Commission Communication on the “Future of cohesion policy” (CC) have launched the reform. It is centered on 3 drivers • CONCENTRATION Greater concentration “can be achieved by identifying a limited number of priorities of European importance, linked through the Europe 2020 Strategy to sectoral policy objectives”: a menu of thematic priorities (BR); • CONDITIONALITIES “For each thematic priority CSF would establish the key principles which interventions should follow”. “Binding conditionality in the area directly linked to cohesion policy would be agreed with each Member State and/or Region” (CC) • MEASURABLE OBJECTIVES The “targets to be achieved would be expressed in terms of “measurable… outcome indicators”. “Much greater use [should be made] of rigorous methods in line with international standards, including impact evaluation” (CC)

4. MEMBER STATES, REGIONS AND ALL PARTNERS NOW HAVE THE OPPORTUNITY TO RISE TO THE CHALLENGE • The European Commission has responded to the strong request for change. In doing so it has been innovative but not adventurous. The proposal of reform is “based on strengths of the existing well-proven model” (as Czech Republic asked in the October document) and makes use of tools which have been tested in Europe (in other policies) and all over the world. • But the final resultis still unsure. The reform upsets established patterns, threatens all public and private actors that have carved in the policy a niche for extracting rents, and calls for an investment in human resources by all sides. • Whether the design of cohesion policy will be truly improved will strongly depend: • on the quality and openness of the debate that will now start, • on the capacity of Member States and Regions to rise to the challenge and contribute to the detailed shaping of those proposals. • The “preliminary position paper” of the Czech Republic on the future of cohesion policy offers a very interesting opportunity to explore how far the position of an important Member State matches that of the European Commission. And to establish the ground for a fruitful debate.

5. MATCHING POSITIONS Czech Republic European Commission A DEVELOPMENT POLICY • “CP is a development instrument” aligned with the EU 2020 strategy • “Development contract” • “alignment … with Europe 2020” FOCUSSED ON LESS DEVELOPED REGIONS • “however, the primary mission [is] reducing disparities” • keeping the current “eligibility criteria” • understanding the necessity of “transition mechanisms” • “all regions” eligible, but “differentiation [according to]… GDP per capita” • “soften the transition”

6. MATCHING POSITIONS Czech Republic European Commission A MULTISECTORAL COORDINATED FUND • CSF “would cover CF, ERDF, ESF, EAFRD, EFF” • ESF “refocused”, with “greater visibility and predictable funding” • “coordinated approach with all relevant EU policies” • PLUSa stronger coordination with sectoral DGs • “integrated approach” • no to the CP “sectorization” • “preservation [of ESF] within the architecture of CP” • “strengthening coordination of CP with other EU and national policies” • agreement “on common interpretation across DGs of the European Commission” • “setup task forces with geographical units, relevant sectoral DGs and experts” CONCENTRATION (AND FLEXIBILITY) • “concentration on a limited number of clearly defined priorities” with a “sufficient degree of flexibility… [in] defining policy mix” • “preserving” the possibility to finance “basic infrastructures” • extending eligibility of CP to “research and development infrastructure” • “negotiations with the EC [is] a crucial stage” • “concentration on a small number of priorities” and on a list of thematic priorities”. “certain priorities would be obligatory” • “the contract will be the fruit of the discussion between MS and the EC”. Conditionalities will be “agreed”. • PLUS extending/homogenizing eligibility criteria

7. MATCHING POSITIONS Czech Republic European Commission A PLACE-BASED APPROACH • “development model on place-based approach” • “strengthening territorial cohesion [also]… on the level of local self-administration units” • PLUS reinforcing partnership • reinforcing “local development approaches” • developing “an ambitious urban agenda” • “Programs could be designed and managed … at the level of groups of towns…” • “reinforcing partnership” HOW? A NEW METRIC OF RESULTS • “setting up of measurable objectives and relevant indicators” • “measurable parameters of results” • “ex-ante setting of clear and measurable targets and outcome indicators”, satisfying given requisites • “submission of accurate information on indicators and progress towards targets central to the annual reports”

8. MATCHING POSITIONS Czech Republic European Commission CONDITIONALITY • disagreement on “decreasing contribution … as a result of delay in the transposition of directives in the area of the single market” • de facto support of a conditionality principle (“the following analytical steps should be consistently taken …”) on “drafting and preparing future programmes” • CP is an “instrument … also contributing to structural reforms in individual MS and Regions” • “the CSF would establish key principles for interventions” “to ensure effective use of resources” and “leaving room for adaptation to national/regional contexts” • conditionality principles must be “enforceable, non-prescriptive, credible, shared • Both MS/R and the Commission would assess if and what is needed to implement conditionalities principles • “specific binding conditionality would be agreed with each MS / Region” • PLUS: therefore conditionality principles are needed INSTITUTION AND CAPACITY BUILDING • “CP funds should also be used for strengthening the efficiency of institutions and professionalization of public administration” • conditionalities “would be completed by support to develop administrative and institutional capacity” • “to support implementation of pre-conditions, CP could provide MS with greater means to target support on specific institutional and structural reforms”

9. MATCHING POSITIONS Czech Republic European Commission IMPACT EVALUATION • “emphasis on results of evaluation”” • “greater use of rigorous methods in line with international standards” • “whenever possible, impact evaluations would be designed at an early stage” • “on-going evaluation would become a obligation” • PLUSinvesting in adopting impact evaluation ADDITIONALITY • “simplification and clarification" of additionality • defining and assessing “the principle of additionality… [by] using indicators already provided in the Stability and Convergence Programmes”

10. MATCHING POSITIONS Czech Republic European Commission SANCTION/INCENTIVES FOR MACRO PERFORMANCE • support to “macro-economic conditionality (link between SGP and CP) only if equal and symmetric impact on all MS is ensured” • suspension on cancellation of future appropriations linked to “non-compliance with the rules of the SGP” • “application of sanctions to cohesion policy needs to meet two pre-conditions: a) sanctions are necessary to ensure effectiveness of CP, b)… equal and fair treatment of all MS” INSTITUTION AND CAPACITY BUILDING • PLUS simultaneity of approval of Financial Perspectives and strategic parts of Regulation • PLUS simultaneity of presentation and approval of DC and OP • end 2012: CFS and Regulation • end 2013: Operational Programmes

11. THE WAY AHEAD • Matching between the proposal of the European Commission and the position of Czech Republic is, in general, remarkable • Still, a great amount of work needs to be done: • to clarify positions where ambiguities or doubts exist, • to explore alternative ways in which some planned changes can be implemented, • to turn some general ideas into operational tools • The Commission has clearly shown that it is not planning to move forward by “dumping” on Member States, Regions and all partners some pre-cooked Regulations. On the contrary, it has opened a technical debate on some fundamental principles, imposed by the challenges of the Union. • Now, it is first of all up to Member States, coherently with their own vision, to rise to this challenge on both a political and technical level.