Annual Report of the Cohesion Fund 1996
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% ζ·:· j-r ''■'■" European Union • 2· Regional Policy ι· * Ι and Cohesion ··· Ι ·-·-· Annual report of the Cohesion Fund 1996 European Commission European Union Regional Policy and Cohesion Annual report of the Cohesion Fund 1996 European Commission PREFACE The present annual report on the activities of the Cohesion Fund covers the calendar year 1996. It has, however, been necessary to include some remarks on activities in earlier years as well as comments on planned measures for the future in order to give the reader the full picture of the current affairs of the Fund. The reporting format is largely unchanged from previous reports and reflects the detailed requirements of the Annex to Annex II to the Cohesion Fund Regulation. Nevertheless, comments made by the European Parliament, the Economic and Social Committee and the Committee of the Regions on earlier reports have been duly taken into account and adjustments made in the presentation. In particular attention has been given to a detailed explanation of how the conditionality principle has been implemented and to the Commission Decision on information and publicity measures. The specific requests for a section on ultra-peripheral regions and for a developed section on evaluation have also been met. The report fulfils the legal requirements of the Cohesion Fund Regulation. It is hoped that it will also serve as a useful reference for all who are interested in the promotion and furtherance of the economic and social cohesion of the Union. Annual report of the Cohesion Fund 1996 EXECUTIVE SUMMARY Economic and Social Cohesion is one of the main objectives of the Treaty on European Union. During 1996 the Cohesion Fund continued and reinforced its contribution to the achievement of this objective. 1996 was in many ways a key year for the Cohesion Fund: the teething troubles of a new instrument for cohesion had been dealt with and the Fund was fully operational; experience gained since the first operations in 1993 formed the backbone of current management practices and the first ex post evaluations, i.e. the assessment of the effects of completed projects, could be undertaken. The importance of this last point can hardly be overstated: the weight of the Cohesion Fund as an instrument to favour economic and social cohesion depends on its ability to demonstrate the usefulness of the completed projects, be it in terms of better transport facilities, shorter travel distances, savings in transport time, more efficient goods handling, reduced air pollution and better environment in the towns and cities concerned, improved fresh water management ranging from catchment, supply and distribution of drinking water for human consumption to proper treatment of used water and sewage and environmentally friendly handling of solid waste, to mention but a few examples. In the coming years, more and more Cohesion Fund projects will be completed, thus providing the basis for an overall evaluation of the efforts of the Union and the Member States. 1996 was also the mid-point year between 1993, the year of the fírst project decisions, and 1999, the last year covered by the present Fund Regulation. Appropriately, therefore, a mid• term review of Member State eligibility with respect to the GNP criterion was carried out in 1996. All four Member States continue to be eligible. Furthermore, 1996 was the first year in which the Commission undertook an examination of Member States' compliance with their economic convergence programmes in the field of public deficits; the conditionality principle was applied by Commission decisions in June and November concerning Spain, Portugal and Greece. On each occasion, all three Member States were considered to have a budgetary performance within the targets recommended by the Council. The financing strategy of the Fund was further consolidated in 1996 in line with the provisions of the Cohesion Fund Regulation. The balance between the two areas of assistance - transport infrastructure and environment - reached an almost perfect 50/50 distribution. This reflects the determination of the Commission, which is fully supported by the European Parliament, the Economic and Social Committee and the Committee of the Regions, to achieve an equal level of financing for the two areas of Cohesion Fund financing for the whole period. The result in 1996 brings this objective clearly within reach. In line with remarks made by the European Parliament in its opinion on the 1994 Cohesion Fund Annual Report and reiterated concerning 1995 and by the Committee of the Regions and the Economic and Social Committee, the efforts to allocate a higher proportion of finance within the transport sector to rail transport facilities continued. Annual report of the Cohesion Fund 1996 Furthermore the projects financed in the most remote regions received special attention in 1996; a separate section of this annual report gives more details (see point 2.3.5). The Fund finances transport infrastructure projects only where they are either part of the trans-European Transport Network (TEN - transport) or feed the network directly. This represents the strategy for setting priorities for the Cohesion Fund in the field of transport infrastructure, a strategy which has already shown its usefulness in relation to completing missing parts of the TEN. The directives concerning the supply of drinking water, waste-water treatment and the treatment of sewage continue to set the priorities for assistance in the field of environment. Other environment measures, which may be seen as improving environmental levels, may also be eligible and may receive part-financing from the Fund. Some examples concern projects relating to coastal protection, reafforestation and desertification, habitat protection and nature conservation. The polluter-pays principle is applied whenever a project is part-financed by the Cohesion Fund. Through a procedure of double consultation of the responsible departments in the Commission, every project is submitted to detailed examination and verification of compliance with Community legislation. This procedure also aims at assuring that the best evaluation practices available are applied. The Commission stated in the 1995 report on the Cohesion Fund that there is room for improvement of analytical methods and their practical application. In line with this statement the Commission has carried out a study with external consultants on the Application of the Polluter-Pays-Principle in Cohesion Fund Countries to gain further insight into the practical and theoretical issues involved. The main results of this study are presented in Chapter 2. The combating of unemployment and the creation of new job opportunities is a high priority for the Commission. The 1995 annual report on the Cohesion Fund presented some first estimates of the short and long term employment effects of funded projects. The present report develops these estimates further and also outlines some key findings from the study carried out for the Commission by the London School of Economics into the overall socio-economic effects of projects. The section on employment is also a direct response to the requests from the European Parliament, the Economic and social Committee and the Committee of the Regions for more information on the job-creation generated by the Cohesion Fund. The European Investment Bank continues, under the agreement with the Commission, to be consulted for its financial and technical expertise on major projects presented by the Member States. This increases the quality of assessment of the proposals beyond what the Commission itself can provide and therefore gives added value. Budgetary implementation for the year was, once again, close to 100% - an impressive f gure considering that each individual project must be fully scrutinised before commitments and payments can be made and that continuous monitoring and checks on physical indicators are made prior to any further release of funding. Annual report of the Cohesion Fund 1996 The monitoring and follow-up of projects has continued on a high level throughout the year. The Monitoring Committees have held regular meetings and have included representatives from local and regional bodies as well as national level. It is important to underline that no cases of fraud have been reported on Cohesion Fund projects; the responsible authorities of the Member States and the Union have carried out numerous inspections and checks in this respect, as described in Chapter 5.4. Some cases of irregularities have been detected and the necessary corrective measures taken. In June 1996 the Commission adopted, after having received the observations of the European Parliament, a Decision on information and publicity measures. The Decision includes details on the use of bill-boards, brochures, audio-visual presentations, TV and other media. Each project part-financed by the Cohesion Fund must be given appropriate information and publicity. These measures may be included in the request for Fund financing, which will make modern and efficient publicity attractive for the promoter of a project. Annual report of the Cohesion Fund 1996 CONTENTS PREFACE EXECUTIVE SUMMARY CHAPTER 1 - IMPLEMENTATION OF COHESION FUND PRINCIPLES 9 1.1 Background 9 1.2 Conditionality 9 1.3 Mid-term review 11 1.4 Information and publicity measures 11 1.5 First Cohesion Report 13 CHAPTER 2 - FINANCIAL ASSISTANCE COMMITTED AND PAID BY THE FUND 14 2.1 Budget available 14 2.2 Breakdown by Member State 15 2.3 Budget implementation