Economic and social cohesion is of great significance, especially after the Enlargement of the EU from 15 to 25 and soon to be 27 members. Disparities between the regions of an enlarged Europe have become more visible, seriously influencing the negotiations for the Structural Funds Regulations for 2007-2013. Of course, the Regulations and the agreement on the distribution of the funding among the Member States are not sufficient. The most important factor is the absorption capacity, especially for the new MS, and the best use of the money available. Up to now, there have been some absorption problems concerning both old and new MS. These problems, undermining the effectiveness of EU funding, do not appear to be more significant in the new MS, despite their lack of experience. Nevertheless, this may be a misguiding conclusion, especially for the new programming period. Why is that?
Firstly, the funding distributed to new members for 2000-2006 was minimal in comparison to the funding they shall receive from 2007 onwards. Therefore, absorbing this funding was a much easier task than the one that lies ahead. Almost half of the new Structural Funds budget is allocated to them. Even though the required structures have been established, I am not fully convinced about their effectiveness and their sufficient comprehension behind the funding philosophy in a way that would not affect negatively the national authorities’ absorption capacity.
Secondly, new MS, plus Portugal and Greece, may have managed an exemption from the N+2 rule until 2010, they have however to comply with an N+3 rule. Even less time-restrictive, these rules on the use of allocated funds may have a negative effect on the absorption capacity. In other words, authorities should pay attention to the possible problems caused due to cumbersome bureaucratic procedures and inefficient administrative structures.
Lastly, the new MS have achieved an exemption from the newly introduced Lisbon-focused targets. While the old members will comply with an additional set of spending targets for Convergence, Competitiveness and Employment, new members may continue focusing on infrastructure and other less innovative measures. Such measures may facilitate their absorption capacity, but they may also undermine the effectiveness of the EU funding to the members’ regional development in the long term. The real challenge for the poorest MS is not only to absorb EU funding -something which should not be taken for granted- but to achieve what is known as ‘value for money’.
The new MS have both to absorb and use Brussels’ funding in the most efficient way. In this respect, new MS should not always follow the example of the old cohesion countries. The latter have to avoid the mistakes committed in the past, improve their administrative capacity and invest the money -being the last substantive financial support to them- in a way that will have multiplying effects to their GDP. This is the picture. The European Parliament and the Council adopted the Regulations. The whole funding process will be much simpler. But the outcome is not yet guaranteed. What lies ahead now depends on the MS and regions actions, especially the poorest ones.