Mr Schmidhuber, Member of the Commission responsible for the budget, the Cohesion Fund and fraud prevention, appeared before Parliament's Committee on Regional Policy yesterday to answer questions about the progress made on the Cohesion Fund. Mr Schmidhuber began by outlining the main decisions reached at the European Council in Edinburgh and the follow-up action taken by the Commission. - Over a 7-year period the Cohesion Fund will receive an aggregate ECU 15.15 billion (rising from an annual ECU 1.5 billion in 1993 to ECU 2.6 billion in 1999). - The beneficiaries will be those Member States whose per capita GNP is less than 90% of the Community average (currently Greece, Portugal, Ireland and Spain). - Only transport and environment projects qualify for support. The Cohesion Fund will provide 80 to 85% of the funding. No project may receive support from both the Cohesion Fund and the Structural Funds. - The European Council suggested the following "indicative allocation" of funds: Spain: 52-58% Greece: 16-20% Portugal: 16-20% Ireland: 7-10% - A temporary instrument in the form of a "provisional Cohesion Fund", will be set up pending ratification of the Maastricht Treaty, to enable a start to be made on the practical work and the selection and funding of projects. - The Commission adopted its proposals for the Cohesion Fund and the termporary instrument on 23 December 1992. Mr Schmidhuber then turned his attention to three issues: - the difference between the Cohesion Fund and the temporary instrument; - the difference between the objectives of the Cohesion Fund and those of the Structural Funds; - the Commission's plans for the coming weeks. 1) Cohesion Fund and temporary instrument compared The first and most obvious difference is that the temporary instrument will, as its name suggests, be shortlived: as soon as the Maastricht Treaty is ratified the temporary instrument will be replaced by the Cohesion Fund. The second is a legal one: because the Maastricht Treaty is not yet in force, the temporary instrument will be based on Article 235 of the Treaty of Rome. The third is that the temporary instrument imposes no macroeconomic conditions on the recipient countries, whereas conditionality is one of the distinctive features of the Cohesion Fund. 2) Structural Funds and Cohesion Fund compared The aim of the Structural Funds is to reduce economic and social disparities between the regions of the Community, by means of a wide range of activities. The approach is primarily regional, and the competent authorities in the regions play a pre-eminent role in managing the programmes. The funds (ECU 20 billion in 1993) are allocated to programmes; the choice of individual projects generally rests with the national or regional authorities. The budget for the Cohesion Fund will be significantly smaller (ECU 1.5 billion in 1993) and its objective more modest: to help the four countries concerned to achieve convergence, with a view to EMU, by enabling them to upgrade their transport infrastructures and improve environmental protection. The approach is thus entirely sectoral and relates to four Member States rather than specific regions. Conditionality is another essential difference: grants from the Cohesion Fund are conditional upon application of convergence programmes, thereby underlining the close link between the Cohesion Fund and the objective of EMU. Finally, unlike the Structural Funds, the Cohesion Fund will not be used to support programmes but to provide grants for specific projects. Each project (or group of projects) must be approved by the Commission and the Member States. 3) Activities in the short term Mr Schmidhuber outlined the Commission's current efforts to ensure that the project got off the ground quickly: "The Commission has already had informal contacts with the Member States to accelerate the preparation of projects. The aim is to be in a position to approve projects as soon as the Council adopts the temporary instrument. Over the next few weeks I intend to visit the capitals involved to meet members of the government and explore ways of ensuring that the temporary instrument gets off to a good start. The Commission will shortly be presenting a proposal on the practical workings of the Cohesion Fund. At a later stage it will be necessary to determine the precise distribution of funds among the Member States. However, for the time being, the percentage ranges suggested by the European Council will be sufficient for launching projects". * * *
