WIREDGOV

Yesterday the European Commission agreed to measures that should make a significant contribution to getting some of the EU's most troubled economies back on track.

Under the proposal, six countries would be asked to contribute less to projects that they currently co-finance with the European Union. The Commission makes available for Greece, Ireland, Portugal, Romania, Latvia and Hungary, supplementary EU co financing, vital for growth and competitiveness-boosting projects in each one of these countries. As a result, they will have to find less national match-funding at a time when their domestic budgets are under considerable pressure and therefore programmes that have not been executed so far for lack of national funding may be launched and inject fresh money in the economy.

The President of the European Commission José Manuel Barroso stated: "These proposals are an exceptional response to exceptional circumstances. Accelerating these funds, combined with the financial assistance programmes, demonstrate the Commission's determination to boost prosperity and competitiveness in the countries mostly hit after the financial crisis – thereby contributing to a kind of 'Marshall Plan' for economic recovery. This decision will inject essential funding into national economies, while reducing the pressure for the co-financing of the projects by the national budgets. I now call on the European Parliament and the Council to urgently approve the decision, in order to get money on the ground by early next year."

The measure does not represent new or additional funding but it allows an earlier reimbursement of funds already committed under EU cohesion policy, rural development and fisheries. The EU contribution would be increased to a maximum of 95% if requested by a Member State concerned. This should be accompanied by a prioritisation of projects focusing on growth and employment, such as retraining workers, setting up business clusters or investing in transport infrastructure. In this way level of execution can be increased, absorption augmented and extra money injected into the economy faster.

It concerns Member States that have been most affected by the crisis and have received financial support under a programme from the Balance of Payments mechanism for countries not in the Euro area (Romania, Latvia and Hungary) or from the European Financial Stabilisation Mechanism for countries in the Euro area (Greece, Ireland and Portugal).

The Commission will request that the Council and the European Parliament adopt the proposal in a fast-track legislative procedure by the end of 2011 to allow for the vital projects to get of the ground as soon as possible.

The top-up is an exceptional temporary measure, which ends as soon as the Member States stop receiving support under the financial assistance programmes.

To help with the absorption of the funds, the Commission is cooperating with the Member States concerned to remove bottlenecks, strengthen their administrative capacity and accelerate implementation and spending on the ground. In the specific case of Greece, the Commission has established a Task Force that will help it to implement the measures foreseen in the economic adjustment programme and take all necessary steps to ensure a quicker take-up of EU funds.

Background

The Commission is proposing to the European Parliament and the Council to adjust the current system of EU co-financing in cohesion, fisheries and rural development policies for Greece, Ireland, Portugal, Romania, Latvia and Hungary. Each Member State would need to submit a request to benefit from this new system. An expected maximal impact expressed in Millions of Euro is visualised in the table below.

Which funds are concerned and what are their aims?

European Regional Development Fund (ERDF)

The ERDF aims at strengthening economic and social cohesion in the European Union. It addresses regional imbalances and supports programmes on regional development, economic change, enhanced competitiveness and territorial cooperation throughout the Union. The Fund seeks to improve infrastructure, boost competitiveness, stimulate research and innovation and sustainable regional development. It invests in projects focussing on, for example, innovation and the knowledge economy, the environment and risk prevention, energy efficiency and the interconnectivity of transport and telecommunication.

Cohesion Fund (CF)

The Cohesion Fund focuses on transport and environment infrastructure, as well as on energy efficiency and renewable energy for those Member States with a Gross National Income (GNI) lower than 90% of the EU average. It serves to reduce their economic and social shortfall, as well as to stabilise their economy. The Fund invests in projects developing trans-European transport and energy networks, supporting energy efficiency and the use of renewable energy and strengthening public transport.

European Social Fund (ESF)

The European Social Fund supports programs dedicated to achievement of higher levels of employment and social inclusion in the EU. It helps Member States make Europe's workforce and companies better equipped to face new global challenges. The Fund helps, for example, workers to acquire new skills or businesses to undergo changes.

European Fisheries Fund (EFF)

The European Fisheries Fund provides financial assistance to promote a sustainable balance between resources and fishing capacity of the EU fleet, to promote sustainable development of inland fishing, strengthen the competitiveness of the fisheries and aquaculture sectors, enhance the protection of the environment linked to the fisheries or aquaculture activities, encourage the sustainable development and improvement of the quality of life in areas with activities in the fisheries and aquaculture sectors.

European Agricultural Fund for Rural Development (EAFRD)

The European Agricultural Fund for Rural Development aims at strengthening the EU’s rural development policy. The Fund contributes to improving (1) the competitiveness of agriculture and forestry (2) the environment and the countryside and (3) the quality of life and the management of economic activity in rural areas. The Fund complements national, regional and local actions, which contribute to Community priorities.

More information:

Financial Assistance Mechanisms

Balance of Payments (BoP) mechanism for non-Euro countries

http://ec.europa.eu/economy_finance/eu_borrower/balance_of_payments/index_en.htm

European Financial Stabilisation Mechanism (EFSM) for Eurozone countries

http://ec.europa.eu/economy_finance/eu_borrower/efsm/index_en.htm