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EU Structural and Cohesion Funds
EU Structural and Cohesion Funds
EIGHTH edition
Since 2000, Regional Policy has provided considerable assistance to the economic development of the countries applying for accession to the EU. On 1 May 2004, 10 new Member States joined the EU.This major event was a historic opportunity for Europe and a challenge for Regional Policy. On that day, the range of disparities within the EU was enlarged. It is necessary for the EU to respond to the enormous needs of the new Member States and also to the difficulties that remain in the rest of the Union. The monies used for implementing Regional Policy and boosting economic development are the Structural and Cohesion Funds.
THREE OBJECTIVES
Regions within the EU are classified for financial support depending on the economic difficulties they encounter.There are three types of regions (Objectives) that receive financial support from Structural Funds. The most significant Objective (in terms of resources allocated) is Objective 1. Objective 1 Helping regions whose development is lagging behind to catch up, i.e., providing them with the basic infrastructure or encouraging investments in business economic activity. Some 50 regions, representing 22% of the EUs population are included.
EU Structural Funds
The Structural Funds were created to help those regions within the EU whose development is lagging behind. The Structural Funds aim to:
develop infrastructure, such as transport and energy; aid regions affected by industrial decline; support the development of rural areas; extend telecommunications services; provide training for workers; combat long-term unemployment; disseminate the tools and know-how of the information society; and promote research and development.
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Objective 2 Supporting economic and social conversion of industrial, rural, urban, or fisheries-dependent areas facing structural difficulties. Approximately 18% of the EUs population live in these areas. Objective 3 Modernising systems for training and promoting employment. Objective 3 covers the whole EU, except for the 50 Objective 1 regions where funding for training and employment are included in the funds already allocated.
IRISH REGIONS
In previous rounds of funding, the whole of Ireland was classified as an Objective 1 area. Given the countrys good economic performance, parts of Ireland have now exceeded the eligibility criteria for Objective 1 status. Therefore, for the NDP 2000-2006, Ireland has been divided into two regions: 1. Border, Midlands, and Western Region (BMW) 2. Southern and Eastern Region (S&E)
For example, the National Roads Authority is responsible for expenditure under the National Roads measure, FS has responsibility for social economy projects, and the Department of Environment & Local Government for water services. Therefore, to apply for grants in a relevant sector, an individual, company, or organisation should contact the appropriate Government Department or State Agency.
FUTURE POLICY
The current round of EU Structural Fund supported programmes will finish at the end of 2006. The debate on the next round of programmes has already commenced. In February 2004, the European Commission presented the Third Report on Economic and Social Cohesion, which sets out its vision for the period 20072013. The European Commission has also outlined its proposal for the next financial perspectives for the period 2007-2013, which included 336bn for Cohesion Policy. Member States and the EU now need to reach agreement on the budget, eligible regions, and priorities for funding for the next period of Structural and Cohesion Funds.
EU funding is not provided to allow countries make savings in their own national budgets. Member States must follow guidelines that apply throughout the EU. In order to receive Structural Funds, Member States must submit a plan to the European Commission outlining: The social and economic situation in the region The priorities and strategy for use of Structural Funds The financial resources of the applicant Member State. The submitted plan forms the basis of negotiations between the Member States and the European Commission and results in an agreement known as a Community Support Framework document or a Single Programming Document. These documents set out the actions, objectives, targets, anticipated financial resources, monitoring, evaluation, and control systems to be set in place to manage the EU funds. There have been three programming periods for EU Structural Funds 1989-1993, 1994-1999, and the current period 2000-2006. The next period will run from 2007-2013.
The Cohesion Fund was established in 1993 to complement the Structural Funds. It was intended to help the EUs poorer countries prepare for economic and monetary union. At that time, the four Member States whose GNP per capita was less that 90% of the EU average - Greece, Ireland, Portugal, and Spain originally qualified for the fund. Today, the Cohesion Fund covers projects in all new Member States: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, and Slovenia. Following a review of the Cohesion Fund in 2003, Ireland no longer qualifies for support due to the improvements in our economy. The Cohesion Fund assists individual projects in the fields of environment and transport infrastructure e.g., roads, ports, airports, water supply, and waste water treatment projects.
Glossary
Gross National Income: The total value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation.
Like other Member States, the Irish Government submitted plans outlining investment priorities for each funding period. Irelands plan is known as a National Development Plan (NDP). The current NDP is Irelands third investment plan.Total investment under the two previous plans amounted to approximately 30bn, with the Structural Funds and Cohesion Funds contributing 11.3bn and the balance sourced from the Irish Exchequer.This financial support has enabled Ireland to proceed with its planned upgrade of the roads network, education and training, and the support for industry. Under the current NDP, Ireland will receive 3.35bn from the Structural Funds. The Cohesion Fund contributed 586m to Ireland during the period 2000-2003.The current NDP differs from previous plans in that it is not designed just to obtain EU funds. The NDP involves planned investment of 57bn with the majority of the funding coming from the Exchequer.The NDP uses the EU approach to planned investment and has applied it to a wide range of Government expenditure.
Business 1 "Like any business entity the European Union is obliged to budget on an annual basis." From the study above or otherwise: (a) Identify the main sources of EU revenue (income). (b) Identify the main sources of EU expenditure. Economics 1 Describe the main elements of: (a) European Regional Policy. (b) European Structural Funds. 2 "A key element of all EU legislation since the Treaty of Rome has been the desire to redistribute income to the less well off regions of the community." (a) From your reading of the above study describe how the Objectives (Regions) system redirects funds to the less well off areas of the EU. (b) How has Ireland benefited from EU funding?
www.ndp.ie www.eustructuralfunds.ie
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