European Structural and Investment Funds


The European Structural and Investment Funds are financial tools governed by a common rulebook, set up to implement the regional policy of the European Union, as well as the structural policy pillars of the Common Agricultural Policy and the Common Fisheries Policy. They aim to reduce regional disparities in income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes. The current framework is set for a period of seven years, from 2021 to 2027.

Overview

Five ESIFs currently exist, they are:
ESIFs constitute the great bulk of EU funding, the majority of total EU spending, and are among the largest items of the budget of the European Union. Apart from them, there are also other EU funds that have the potential to contribute to the regional development, in particular the European Agricultural Guarantee Fund, the Just Transition Fund, the Connecting Europe Facility, the LIFE programme, the InvestEU Programme, the Horizon Europe, or the Erasmus+.
It is up to the European Parliament and the Council of the European Union to define the tasks, priority objectives and the organisation of the Structural Funds, through the ordinary legislative procedure and consulting the Economic and Social Committee and the Committee of the Regions.
The key indicator for the division of regions under singular objectives is the Gross National Product per capita level. This is subject to criticism based on the fact that GDP p.c. is unable to reflect the real socio-economic reality of regions. Some groups and organisations propose the creation of a set of alternative indicators that could substitute the GDP and its derivates.

Funds management

The way the ESIFs are spent is based on a system of shared responsibility between the European Commission and the member state authorities:
  • The commission negotiates and approves the NSRFs and OPs proposed by the member states, and uses these as a basis for allocating resources.
  • The member states and their regions manage the programmes. This includes implementing the OPs by selecting individual projects, controlling and assessing them.
  • The commission is involved in overall programme monitoring, pays out approved expenditure and verifies the national control systems.
Prior to 1989, funding decisions were taken by the European Commission. This was followed by a period where EU member states tried to maximize control, with little systematic project appraisal and a focus on a small number of large projects. Since 1994 more systematic, co-ordinated and complex methods of allocating resources start to be introduced. For example, most funds within the 2004–06 Integrated Regional Operational Programme, and its 2007–13 successor, are allocated through largely need-based project-selection mechanisms. Regions with low GDP receive more funds. However, within these regions, more funds go to relatively rich local areas with the best institutions. It has been argued that part of this can be explained by the frequent need to co-fund projects, and the needed capacity to prepare applications.

The ESI Funds

The European Regional Development Fund (ERDF)

The ERDF supports programmes addressing regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU. Funding priorities include modernising economic structures, creating sustainable jobs and economic growth, research and innovation, environmental protection and risk prevention. Investment in infrastructure also retains an important role, especially in the least-developed regions.

The European Social Fund Plus (ESF+)

The ESF+ focuses on four key areas: increasing the adaptability of workers and enterprises, enhancing access to employment and participation in the labour market, reinforcing social inclusion by combating discrimination and facilitating access to the labour market for disadvantaged people, and promoting partnership for reform in the fields of employment and inclusion.

The Cohesion Fund

The Cohesion Fund contributes to interventions in the field of the environment and trans-European transport networks. It applies to member states with a gross national income of less than 90% of the EU average. As such, it covers the 13 new member states as well as Greece and Portugal.

The European Agricultural Fund for Rural Development (EAFRD)

The European Maritime, Fisheries and Aquaculture Fund (EMFAF)

Objectives for 2007–2013

Sections below present information about objectives that have been defined for the programming period, which runs from 1 January 2007 to 31 December 2013. The overall budget for this period is €347bn: €201bn for the European Regional Development Fund, €76bn for the European Social Fund, and €70bn for the Cohesion Fund. The objectives setup shapes the main focus of interventions and the overall allocations of funds from the EU budget.

Convergence objective (formerly Objective 1)

This objective covers regions whose GDP per capita is below 75% of the EU average and aims at accelerating their economic development. It is financed by the ERDF, the ESF and the Cohesion Fund. The priorities under this objective are human and physical capital, innovation, knowledge society, environment and administrative efficiency. The budget allocated to this objective is €283.3bn in current prices.

Regional Competitiveness and Employment objective (formerly Objective 2)

This objective covers all regions of the EU territory, except those already covered by the Convergence objective. It aims at reinforcing competitiveness, employment and attractiveness of these regions. Innovation, the promotion of entrepreneurship and environment protection are the main themes of this objective. The funding – €55bn in current prices – comes from the ERDF and the ESF.

European Territorial Cooperation objective (formerly Objective 3)

European Territorial Cooperation is an objective of the European Union's Cohesion Policy for the period 2007–2013, serving its ultimate goal to strengthen the economic and social cohesion of the Union. Regions and cities from different Member States are encouraged to work together, learning from each other and developing joint projects and networks. With the Convergence Objective and the Regional Competitiveness and Employment Objective it aims at contributing to reduce regional disparities across Union's territory.
The EUR 8.7 billion allocated to the European Territorial Cooperation objective represents 2.5% of the total budget for Cohesion Policy in 2007–2013 and is financed by the European Regional Development Fund. It supports cross-border, transnational and interregional cooperation programmes, helping Member States to participate in European Union external border cooperation programmes supported by other instruments.

History

The European Territorial Cooperation Objective replaced the previous INTERREG Community Initiative and thus many European Territorial Cooperation programmes bear the name INTERREG.
The "objectives" were introduced with the Single European Act as a criterion to make the Structural Funds spending more effective as Regional Policy started to be rationalised in a perspective of economic and social cohesion. The Single European Act, that entered into force in 1987, institutionalised the goal of completing the internal market with a total borders opening, by 31 December 1992. Regional competition would be tighter and a Cohesion Policy was needed to mitigate the negative side effects of market unification.
The "objectives" were then created to discipline the capture of funds in terms of economic and social cohesion across the Union's territory. In the first multiannual financial framework, 1988–1999, there were seven objectives, which have been progressively reduced.
Even though European Territorial Cooperation Objective is the smallest of the three Cohesion Policy objectives, it gained a critical importance to address the key challenges of the European Union, particularly with some redefinitions of the Treaty of Lisbon, and for contributing to achieve the goals of Europe 2020, the EU's growth strategy.

Institutional and legal framework

In its title on Economic, Social and Territorial Cohesion, the Treaty on the Functioning of the European Union establishes that 'the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion'. By introducing the concept of territorial cohesion, the Treaty of Lisbon recognised a strong territorial dimension for the cohesion policy. This territorial approach requires a unique and modern governance system, combining different levels of government.
Member States thus conduct their economic policies and coordinate them for the promotion of the 'economic, social and territorial cohesion'. European Territorial Cooperation is a component of the economic policy framework of the Union.
The current Regional Policy framework, sustained by Structural Funds, is set for a period of seven years, from 2007 to 2013. For this period, the following regulations are especially important in defining the organisation of European Territorial Cooperation:
  • Regulation No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation No 1783/1999.
  • Council Regulation No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation No 1260/1999.
  • Commission Regulation No 1828/2006 of 8 December 2006, setting out rules for the implementation of Council Regulation No 1083/2006, laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund.
The European Territorial Cooperation Objective is financed by the European Regional Development Fund, whereas the remaining two objectives of the Cohesion Policy set for the 2007–2013 period are also financed by the European Social Fund, and, in the case with the Convergence Objective, also the Cohesion Fund.