Handbook on Cohesion Policy in

the EU

Edited by

Simona Piattoni
Professor of Political Science, Department of Sociology and Social
Research, University of Trento, Italy
Laura Polverari
Senior Research Fellow, European Policies Research Centre, University of
Strathclyde, UK

Cheltenham, UK • Northampton, MA, USA

© Simona Piattoni and Laura Polverari 2016

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or
otherwise without the prior permission of the publisher.

Published by
Edward Elgar Publishing Limited
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Cheltenham
Glos GL50 2JA
UK

Edward Elgar Publishing, Inc.

William Pratt House
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Massachusetts 01060
USA

A catalogue record for this book

is available from the British Library

Library of Congress Control Number: 2016938581

This book is available electronically in the

Social and Political Science subject collection
DOI 10.4337/ 9781784715670

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Contents

List of figuresviii
List of tables ix
List of boxes xi
List of contributors xii
Preface xvi
List of abbreviations xix
Maps xxv
ESI Funds 2014–2020 allocations xxx
Introduction1
Simona Piattoni and Laura Polverari

PART I HISTORY, PRINCIPLES AND THEORETICAL

IMPLICATIONS OF COHESION POLICY

  1 The history and evolution of Cohesion policy 17

Marco Brunazzo
  2 The institutions and procedures of Cohesion policy  36
Paul Stephenson
  3 The economic theory of Cohesion policy 50
Iain Begg
  4 Cohesion policy, multilevel governance and
democracy  65
Simona Piattoni
  5 Cohesion policy and Europeanisation 79
Marcin Dąbrowski and Paolo R. Graziano
  6 Quality of government, regional autonomy and Cohesion policy allocations
to EU regions 92
Nicholas Charron

PART II THE POLITICS AND INSTITUTIONS OF COHESION

POLICY

  7 The Commission and Cohesion policy 107

Ingeborg Tömmel
  8 Cohesion policy reform and the evolving role of the Council 121
John Bachtler and Carlos Mendez

v
vi  Handbook on Cohesion policy in the EU

  9 The European Parliament and Cohesion policy 140

Danuta Hübner
10 The European Committee of the Regions and EU Cohesion policy  156
Justus Schönlau
11 The European Court of Auditors and Cohesion policy 170
George Karakatsanis and Martin Weber
12 Cohesion policy, EU economic governance and the role of the European
Investment Bank 186
Rocco L. Bubbico, Angel Catalina Rubianes, Eugenia Kazamaki Ottersten
and Maria K. Sioliou
13 Cohesion policy and regional mobilisation 203
Eve Hepburn
14 The impact of Cohesion policy on regionalist parties’ positions on European
integration217
Emanuele Massetti and Arjan H. Schakel

PART III  COHESION POLICY AND THE MEMBER STATES

15 Cohesion policy in the southern periphery 231

Laura Polverari
16 Cohesion policy in the service economies of the north 250
David Charles
17 Cohesion policy in the rich central regions 268
Jörg Balsiger
18 Cohesion policy in the sparsely populated countries 285
Tatjana Muravska, Jānis Aprāns and Aleksandrs Dahs
19 Cohesion policy in Central and Eastern Europe: the challenge of learning 302
Ilona Pálné Kovács

PART IV COHESION POLICY AND BROADER EUROPEAN

STRATEGIES

20 Cohesion policy and rural development 325

Riccardo Crescenzi and Fabrizio De Filippis
21 Cohesion policy and transportation 339
J. Andres Faiña, Jesús López-­Rodríguez and Paulino Montes-­Solla
22 Smart specialisation in the reformed EU Cohesion policy 359
Philip McCann and Raquel Ortega-­Argilés
23 Cohesion policy and the green economy 369
Andrea Lenschow and Jörg Baudner
 Contents  ­vii

24 New strategic approaches to territorial cooperation in Europe: from

Euro-­regions to European Groupings for Territorial Cooperation (EGTCs)
and macro-­regional strategies 384
Stefan Gänzle
25 EU Cohesion policy in the Eastern Partnership region: a case of external
Europeanisation399
Attila Ágh and Attila Kovács
26 Cohesion policy and cities: an ambivalent relationship  413
Rob Atkinson and Karsten Zimmermann

PART V  CRITICAL PERSPECTIVES AND DEBATES

27 The ‘real’ principles of Cohesion policy 429

Robert Leonardi and Catalina Holguin
28 Impact assessment of EU Cohesion policy: theoretical and empirical issues 443
Ugo Fratesi
29 Does Cohesion policy lead to economic convergence? 461
Ton Notermans
30 The social dimension of Cohesion policy 475
Valeria Fargion and Stefania Profeti
31 The territoriality of Cohesion policy 491
Andreas Faludi
32 Multilevel governance and multiscalar forms of territorialisation 506
Enrico Gualini

Index 525
Figures

  6.1  The effect of QoG on Structural Funds at various levels of self-­rule 101
11.1 2007–2013 programming period: reporting and control obligations 174
11.2 The ‘single audit’ pyramid for Cohesion policy 176
12.1 Ex ante additionality targets (2014–2020) 193
19.1 Absorption of funding and project selection for the 2007–2013
programming period 315
21.1 Central regions at EU NUTS 2 level 347
21.2 Demand cones and market areas: the decline of demand with distance 348
21.3 Core and periphery areas 350
21.4 TEN-­T corridors 352
21.5 Distribution of papers and patents in the semiconductor sector,
1988–2004356
24.1 Types of territorial cooperation 386
24.2 Membership of the European Union Strategy for the Baltic Sea Region 391
30.1 Percentage of Structural Funds (ESF 1 ERDF) and Cohesion Fund
2007–2013 devoted to social cohesion priorities 480
30.2 Allocation of funding to social priorities in EU member states (% of total
Structural and Cohesion Funds) 481
30.3 Funds allocation to social cohesion priorities, TOs 8, 9 and 10, in the
Partnership Agreements (% of total funds) 485
30.4 Percentage of ESF allocated to social inclusion, TO9, in the Partnership
Agreements486
32.1 Multilevel and multiscalar territorial systems: scheme of analysis  519

viii
Tables

0.1 European Structural and Investment Funds allocations 2014–2020 in the

EU28 member states (€) xxx
6.1 Summary statistics of variables 98
6.2 Test of H1 and H2: OLS estimates 100
14.1 Regionalist party positions on European integration according to funding
period221
14.2 Regionalist party positions on European integration according to
Left–Right position 222
14.3 Structural funding and regionalist party positions on European
integration223
14.4 Structural funding and regionalist party positions on European
integration for three funding periods 224
14A.1 Regionalist parties 228
15.1 Number of Cohesion policy programmes, eligibility and implementation
approaches across programming periods 233
15.2 Commitment appropriations for Cohesion policy 1989–2020 (€ million,
constant 2010 prices) 236
15.3 Relative distribution of resources to Thematic Objectives in the national
Partnership Agreements (% values of TO allocations over total PA value) 238
16.1 Number of Cohesion policy programmes, eligibility and implementation
approaches across programming periods 251
16.2 Commitment appropriations for Cohesion policy 1989–2020 (€ million,
constant 2010 prices) 256
17.1 Number of Cohesion policy programmes, eligibility and implementation
approaches across programming periods 269
17.2 Cohesion policy funding, 1989–2020 (€ million, constant 2010 prices) 274
17.3 Share of national Cohesion policy funding allocated to the poorest
regions, 1989–2020 (% of total funding) 275
17.4 ERDF and ESF contributions, 2000–2020 (% of total Cohesion policy
funding)276
17.5 Thematic Objectives, 2014–2020 (% of national allocation) 277
18.1 Main data of NUTS regions in sparsely populated countries 286
18.2 Cohesion policy programmes, eligibility and implementation approaches
across programming periods 288
18.3 Commitment appropriations for Cohesion policy 1995–2020 (€, constant
2010 prices) 290
18.4 Priorities and Operational Programmes in sparsely populated countries in
2014–2020 according to Partnership Agreements  292
18.5 Relative distribution of resources to Thematic Objectives in the national
Partnership Agreements (% values of TO allocations over total PA value) 294

ix
x  Handbook on Cohesion policy in the EU

19.1 Number of Cohesion policy programmes, eligibility and implementation

approaches across programming periods 303
19.2 GDP per capita of regions, % of EU28 average and regional disparities,
2004–2011308
19.3 Cohesion policy funding, 1989–2020 (€ million, constant 2010 prices) 311
19.4 Budget allocation ratios by Thematic Objective in the 2014–2020
Partnership Agreements 314
20.1 Correlation analysis: per capita expenditure for regional policy, rural
development and PAC 1st Pillar 333
21.1 Key priorities and funding in Cohesion policy and Trans-­European
Networks for the 2014–2020 period 341
21.2 Cohesion policy funding by broad policy area in EU15 and acceding
countries342
25.1 The six countries of the Eastern Partnership (EaP) 400
25.2 ENPI: indicative average allocations by country, 2014–2020, 2014–2017,
2018–2020 (€ million) 402
25.3 EaP: historical milestones 403
25.4 The Eastern Partnership Index 406
25.5 Main economic indicators of EaP countries 407
26.1 Milestones of European urban policy 416
29.1 PPP per capita GDP relative to EU28 average in 2014 EKS dollars (%)  467
Boxes

  1.1 The five regulations of the 1989–1993 reform 22

  1.2 The five priority objectives of the 1989–1993 reform 23
  1.3 The six regulations of the 1994–1999 reform 25
  1.4 The five regulations of the 2000–2006 reform 27
  1.5 The seven regulations of the 2007–2014 reform 29
  1.6 The seven regulations of the 2014–2020 reform 32
21.1 Influence and sensibility: circular causation and leverage effect 344

xi
Contributors

Attila Ágh is Emeritus Professor at the Institute of Political Science, Corvinus University
of Budapest, Hungary.
Jānis Aprāns was Researcher and lecturer at the Centre for European and Transition
Studies, University of Latvia.
Rob Atkinson is Professor of Urban Policy in the Department of Geography and
Environmental Management, University of the West of England (UWE), Bristol, UK
and a member of the Centre for Sustainable Planning and Environments at UWE.
John Bachtler is Professor of European Policy Studies at the European Policies Research
Centre, University of Strathclyde, UK.
Jörg Balsiger is Swiss National Science Foundation Professor, Geneva School of Social
Sciences, Institute for Environmental Governance and Territorial Development, and
Institute for Environmental Sciences, University of Geneva, Switzerland.
Jörg Baudner is Assistant Professor in European Studies in the Department of Social
Sciences, University of Osnabrück, Germany.
Iain Begg is Professorial Research Fellow at the European Institute, London School of
Economics and Political Science, UK.
Marco Brunazzo is Associate Professor, Department of Sociology and Social Research,
University of Trento, Italy.
Rocco L. Bubbico, PhD, is Economist in the Economic Studies Division of the European
Investment Bank, Luxembourg.
Angel Catalina Rubianes is Policy Analyst in the Economic Analysis Unit of Directorate-­
General Regional and Urban Policy, European Commission, Belgium.
David Charles is Professor of Innovation and Strategic Management, Lincoln Business
School, University of Lincoln, UK.
Nicholas Charron is Associate Professor, Department of Business and Politics,
Copenhagen Business School, Denmark, and Research Fellow, Quality of Government
Institute, University of Gothenburg, Sweden.
Riccardo Crescenzi is Professor of Economic Geography at the London School of
Economics, UK, and a European Research Council (ERC) Grant Holder. He is a Visiting
Scholar at the Harvard Kennedy School of Government, Taubman Centre, USA, and
affiliated with the Rossi-­Doria Centre for Social and Economic Research, Roma Tre
University, Italy.
Marcin Dąbrowski, PhD, is Urban Studies Foundation Postdoctoral Research Fellow at
Delft University of Technology, the Netherlands.

xii
 xiii
Contributors  ­

Aleksandrs Dahs is Researcher, at the Centre for European and Transition Studies,
University of Latvia.
Fabrizio De Filippis is Professor of Economic Policy and member of the Board of
Directors of Roma Tre University, Italy. He is affiliated with the Rossi-­Doria Centre for
Social and Economic Research, Roma Tre University.
J. Andres Faiña is Professor of Economics and Jean Monnet Chair in European Industrial
Economics at the Department of Economic Analysis and Business Administration,
University of Coruña, Spain.
Andreas Faludi is Professor Emeritus of Spatial Policy Systems in Europe at Delft
University of Technology, the Netherlands.
Valeria Fargion is Associate Professor of Political Science and holder of a Jean Monnet
Chair in European Integration Politics at the University of Florence, School of Political
Science, Italy.
Ugo Fratesi is Associate Professor of Regional Economics within the Department of
Architecture, Built Environment and Construction Engineering of Politecnico di Milano,
Milan, Italy.
Stefan Gänzle is Associate Professor, Department of Political Science and Management,
University of Agder, Norway.
Paolo R. Graziano is Professor of Political Science at the University of Padua, Italy, and
Associate Fellow at the European Social Observatory, Brussels, Belgium.
Enrico Gualini is Professor of Planning Theory and Urban-­Regional Policy Analysis at
Technische Universität Berlin – Berlin University of Technology, Germany.
Eve Hepburn, PhD, is Senior Lecturer in Politics, at the School of Social and Political
Science, University of Edinburgh, UK.
Catalina Holguin is researcher at the Economic and Social Cohesion Laboratory,
London, UK.
Danuta Hübner, PhD, was EU Commissioner for Regional Policy in 2004–2009 and
Chair of the Committee on Regional Development in the European Parliament in 2009–
2014. She is currently Chair of the Committee on Constitutional Affairs in the European
Parliament (2014–2019).
George Karakatsanis, PhD, is Head of Private Office in the Audit Chamber dealing with
revenue, research and internal policies and EU’s institutions and bodies, European Court
of Auditors, Luxembourg.
Eugenia Kazamaki Ottersten, PhD, is Head of the Smart Development Division in
JASPERS, Advisory Services, European Investment Bank, Luxembourg.
Attila Kovács is a PhD candidate at the Department of Agricultural Economics and
Rural Development, Corvinus University of Budapest, Hungary, and visiting lecturer at
Tec de Monterrey, Campus Sonora Norte, Mexico.
xiv  Handbook on Cohesion policy in the EU

Andrea Lenschow is Chair of European Integration, University of Osnabrück, Germany.

Robert Leonardi is Visiting Professor in the School of Government of the LUISS
University in Rome, Italy, and Director of the Economic and Social Cohesion Laboratory,
London, UK.
Jesús López-­Rodríguez is Associate Professor of Economics at the Department of
Economic Analysis and Business Administration, University of Coruña, Spain.
Philip McCann is Professor at the Department of Economic Geography, Faculty of
Spatial Sciences, University of Groningen, the Netherlands.
Emanuele Massetti is Assistant Professor in the Department of Political Science and
Public Administration at Gediz University, Izmir, Turkey.
Carlos Mendez, PhD, is Senior Research Fellow at the European Policies Research
Centre, University of Strathclyde, UK.
Paulino Montes-­Solla, PhD, is Associate Researcher in Economics at the Jean Monnet
Research Group on Competition and Development (C1D), Department of Economic
Analysis and Business Administration, University of Coruña, Spain.
Tatjana Muravska is Professor of Regional and European Integration Studies, Director
of the Centre for European and Transition Studies, Jean Monet Chair Ad Personam,
University of Latvia.
Ton Notermans is Associate Professor and Acting Chair of European Studies at the
School of Economics and Business Administration, Department of International
Relations, Tallinn University of Technology, Estonia.
Raquel Ortega-­Argilés is Chair of Regional Economic Development at Birmingham
Business School, formerly Rosalind Franklin Research Fellow and Assistant Professor
at the University of Groningen, the Netherlands, Department of Global Economics and
Business, Faculty of Economics and Business.
Ilona Pálné Kovács is Research Professor of the Institute for Regional Studies, Centre for
Economic and Regional Studies, Hungarian Academy of Science; full-­time Professor at
the Department for Political and International Studies of University of Pécs, Hungary;
and corresponding member of the Hungarian Academy of Sciences.
Simona Piattoni is Professor of Political Science at the Department of Sociology and
Social Research, University of Trento, Italy.
Laura Polverari, PhD, is Senior Research Fellow at the European Policies Research
Centre, School of Government and Public Policy, University of Strathclyde, UK.
Stefania Profeti is Assistant Professor at the Department of Political and Social Sciences
of the University of Bologna, Italy.
Arjan H. Schakel is Assistant Professor in the Department of Political Science at
Maastricht University, the Netherlands.
Justus Schönlau, PhD, is Political Advisor within the Party of European Socialists Group
Secretariat in the Committee of the Regions, Belgium.
 xv
Contributors  ­

Maria K. Sioliou, PhD, is a Policy Officer in the Better Implementation Unit of the
Directorate General Regional and Urban Policy, European Commission, Belgium.
Paul Stephenson is Assistant Professor at Department of Politics at the Faculty of Arts
and Social Sciences, University of Maastricht, the Netherlands.
Ingeborg Tömmel is Professor Emeritus in International and European Politics and Jean
Monnet Chair at the University of Osnabrück, Germany.
Martin Weber is Director of the Audit Chamber dealing with Structural policies, trans-
port and energy, European Court of Auditors in Luxembourg.
Karsten Zimmermann is Professor at the Faculty of Spatial Planning at Technical
University of Dortmund, Germany, where he holds the Chair for European Planning
Cultures.
Preface

As remarked by former European Commissioner for Regional Policy, Johannes Hahn,

Cohesion policy is probably ‘the most evaluated EU policy’.1 Since it is implemented via
rules that require the European Commission and member state authorities to monitor its
implementation systematically across all stages of the policy cycle, there exist abundant
data upon which assessments can be based.
It is also one of the most studied policies of the European Union (EU). The scientific
articles, research papers, graduate and undergraduate student dissertations and academic
volumes published on this policy since the early 1990s (that is, after the landmark reform
of 1988) are too many to be counted. What is possibly even more striking is that this aca-
demic interest has not waned with time, but is continuing with great momentum to the
present day. In only the last three years (2013–2015) there have been at least four mono-
graphs dedicated exclusively to EU Cohesion policy, not to mention the innumerable
scientific publications on this topic in edited volumes and peer-­reviewed journals, and the
scientific papers presented at academic conferences and policy events.
Because of its developmental and redistributive potential, Cohesion policy is also one
of the best-­known policies of the EU and one which elicits the spontaneous interest of
individuals beyond the policy or academic community. For the same reason, it is also
closely scrutinised, its effectiveness is frequently assessed and its resources have been
diverted to many different uses. It is therefore not just scholars across the widest range
of disciplines – first and foremost political science – that have an interest in this policy,
but also public authorities, interest groups, non-­governmental organisations and citizens
at large.
Against this backdrop, then, why another book on EU Cohesion policy? What could it
possibly contribute in the midst of such abundance of sources and perspectives?
At the beginning of this journey, there were a number of objectives that we intended
to achieve. A first, overarching aim was to provide in a single source of reference all the
information necessary to understand what Cohesion policy is about, how it operates and
the impacts that it has on the stated objectives it is meant to serve, making this Handbook
a useful tool for scholars, students and practitioners alike.
We were, second, keen to offer different perspectives, an ambition which is reflected in
the choice of authors as well as topics. The ‘outsider’ views by those who study Cohesion
policy – the academics who have signed the majority of chapters – have been comple-
mented by the insights of policy ‘insiders’ who provide their take on the policy from their
first-­hand experience of it (notably the chapters on the European Parliament, Committee
of the Regions, EIB and ECA, which were drafted by members and officials from those
institutions).2 The cross-­sectoral character of the policy is also reflected in the variety of
disciplinary approaches that can be found across the volume (primarily from political
science, but also from economics, geography and spatial planning), some of them provid-
ing new cutting-­edge research.
Finally, we intended to capitalise on a varied typology of sources: not just academic

xvi
 xvii
Preface  ­

references, but also policy documents, evaluations and primary data which provide a rich
(but often unused in academic texts) source of evidence to better appreciate the policy
and its achievements.
When we were approached by Edward Elgar to edit a Handbook on Cohesion policy
in the EU, we accepted the invitation with enthusiasm. Whilst not being naïve enough
to nurture the ambition of providing a systematic review of all the available knowledge
on the topic, we were as convinced as the publishers that it was time for a comprehensive
stocktaking exercise. The policy has been evolving constantly since its inception and we
wished to provide both a long-­term, summative view of the more established perspectives
and research topics, and a critical review of the most recent themes and developments to
package a product that would become a comprehensive source of reference for the variety
of actors who – in different guises and with different levels of prior knowledge – share
an interest in it. In this light, we did not want the volume to speak only the language of
political science, or indeed of academia, but rather to reflect the variety of idioms that
have developed around Cohesion policy, crossing in this way both disciplinary and pro-
fessional boundaries.
We leave it to the reader to judge whether our ambitions were justified and, indeed,
met. On our part, after almost two years of work, the publication of this volume feels
like the end of a journey whose itinerary had been carefully planned at the outset but
which, as often happens with travels, at the same time took us in new directions, to cover
more and different ground than we had initially anticipated. This journey was an enrich-
ing experience for us and for this reason we would like to thank a number of people who
shared it with us and made it possible.
First, we would like to thank Edward Elgar for inviting us to engage in this adventure,
and the editorial team led by Alex O’Connell and Rebecca Stowell for their constant
support, flexibility and responsiveness. Second, we would like to thank our travel com-
panions: the many contributors to this volume who have chosen to make time in their
already very busy schedules to provide their insights for this collection. We are very
grateful for the dedication that they showed in delivering contributions of the highest
quality and intellectual value, and for their patience in accommodating two very demand-
ing editors. The elaboration of financial appropriations data in the chapters of Part III
would not have been possible without the clarifications on DG Regio data3 provided by
John Walsh (via Veronica Gaffey), and the methodological advice received from Ugo
Fratesi and Rocco Bubbico, to all of whom goes our recognition. We obviously remain
responsible for eventual factual and editorial mistakes that should still appear even after
several rounds of careful fact-­checking. We would also like to thank Hugo Poelman (DG
Regio) for providing us with the maps of Cohesion policy eligibility for all program-
ming periods since 1989 and Wolfgang Petzhold for directing us to him, as well as the
European Union for permission to use illustrative material in this book reproduced under
its copyright.

NOTES
1. Johannes Hahn (2010) Speech/10/167 ‘Evaluation of ERDF Objectives, 2000–2006. Debate on Synthesis
Report at Bibliothèque Solvay’, Brussels 19 April 2010.
xviii  Handbook on Cohesion policy in the EU

2. Although not claiming to represent the view of the institution they belong to, but only their own.
3. With particular reference to the data on 2000–2006 and 2007–2013 commitment appropriations published
by DG Regio on this page, http://ec.europa.eu/regional_policy/index.cfm/en/policy/evaluations/data-­for-­
research/ (under the heading ‘Basic Financial Information – EU budget commitments by fund, by year
and by programme’).
Abbreviations

AA Association Agreement
AA audit authority
AER Assembly of European Regions
AGRI Committee on Agriculture and Rural Development (European
Parliament)
ALMP active labour market policies
AMECO Annual Macroeconomic Database (European Commission)
BMW Border, Midlands and West
BUDG Committee on Budgets (European Parliament)
CA Court of Auditors
CA certification authority
CAP Common Agricultural Policy
CBC cross-­border cooperation
CBSS Council of the Baltic Sea States
CEE Central and Eastern Europe
CEECs Central and Eastern European countries
CEF Connecting Europe Facility
CEMR Council of European Municipalities and Regions
CEPS Centre for European Policy Studies
CEU Council of the European Union
CF Cohesion Fund
CFP Common Fisheries Policy
CI Community Initiative
CiU Convergence and Union
CLLD Community-­Led Local Development
CLRAE Congress of Local and Regional Authorities
CO2 carbon dioxide
COESIF Coordination Committee for the European Structural and
Investment Funds
CONT Committee on Budgetary Control (European Parliament)
CoR Committee of the Regions
COREPER Committee of Permanent Representatives
COTER Territorial Cohesion Policy and EU Budget
CP Cohesion policy
CPI climate policy integration
CPMR Conference of Peripheral Maritime Regions
CPR Common Provisions Regulation
CRIS Special Committee on the Financial, Economic and Social Crisis
CSF Community Support Framework
CSF Civil Society Forum (EaP)

xix
xx  Handbook on Cohesion policy in the EU

CSF Common Strategic Framework

CSG Community Strategic Guidelines
CSU Christian Social Union
DCFTA Deep and Comprehensive Free Trade Area
DG Directorate-­General
DG AGRI Directorate-­General for Agriculture and Rural Development, DG
AGRI
DG BUDG Directorate-­General for Budget
DG CONNECT Directorate-­General for Communications Networks, Content and
Technology
DG ECFIN Directorate-­General for Economic and Financial Affairs
DG EMPL Directorate-­General for Employment, Social Affairs
and Inclusion
DG ENV Directorate-­General for Environment
DG REGIO Directorate-­General for Regional and Urban Policy
EAFRD European Agricultural Fund for Rural Development
EAGF European Agricultural Guarantee Fund
EAGGF European Agricultural Guidance and Guarantee Fund
EAP Environmental Action Programme
EaP Eastern Partnership
EBRD European Bank for Reconstruction and Development
EC European Commission
EC European Communities
ECA European Court of Auditors
ECB European Central Bank
ECG Euroregional Cooperation Grouping
ECJ European Court of Justice
EE Eastern Europe
EEAS European External Action Service
EEC European Economic Community
EED European Endowment for Democracy
EEIG European Economic Interest Grouping
EES European Employment Strategy
EESC European Economic and Social Committee
EFA European Free Alliance
EFSF European Financial Stability Facility
EFSI European Fund for Strategic Investments
EGTC European Grouping of Territorial Cooperation
EHC education and human capital
EIAH European Investment Advisory Hub
EIB European Investment Bank
EMFF European Maritime and Fisheries Fund
EMPL Committee on Employment and Social Affairs (European
Parliament)
EMS European Monetary System
EMU Economic and Monetary Union
 xxi
Abbreviations  ­

ENE-­MA European Network of Environmental Authorities – Managing

Authorities
ENI European Neighbourhood Instrument
ENP European Neighbourhood Policy
ENPI European Neighbourhood and Partnership Instrument
EPC European Policy Centre
EPPO European Public Prosecutor’s Office
EQI European Quality of Government Index
EP European Parliament
EPI environmental policy integration
ERDF European Regional Development Fund
ERM Exchange Rate Mechanism
ESC Economic and Social Committee
ESDP European Spatial Development Perspective
ESF European Social Fund
ESIF European Structural and Investment Funds
ESM European Stability Mechanism
ESPON European Spatial Planning Observatory Network
ETC European Territorial Cooperation
EU European Union
EU10 EU member states entering the EU in 2004: Czech Republic,
Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland,
Slovenia, Slovakia
EU12 The EU10 plus Bulgaria and Romania (2007)
EU13 EU12 plus Croatia (2013)
EU15 EU MSs before 2004 enlargement (EU6 plus: Denmark, Ireland,
UK, Greece, Spain, Portugal, Austria, Finland and Sweden)
EU25 EU15 plus EU10 (2004)
EU27 EU15 plus EU12
EU28 EU27 plus Croatia
EU6 Belgium, Germany, France, Italy, Luxembourg, the Netherlands (the
initial six EU MSs)
EUA European Units of Account
EUKN European Urban Knowledge Network
EUMRS EU Macro-­Regional Strategies
EUSAIR EU Strategy for the Adriatic and Ionian Region
EUSALP Alpine Region
EUSBSR EU Strategy for the Baltic Sea Region
EUSDR EU Strategy for the Danube Region
EUSF European Solidarity Fund
FDI foreign direct investment
FEAD Fund for European Aid to the Most Deprived
FF Financial Framework
FI financial instrument
FIFG Financial Instrument for Fisheries Guidance
FOCJs functional, overlapping and competing jurisdictions
xxii  Handbook on Cohesion policy in the EU

FUA functional urban area

GAC General Affairs Council
GDP gross domestic product
GIS geographic information system
GMR Geographic Macro and Regional (model)
GNI gross national income
GO-­NE Government Office of the North East Region
GVA gross value added
HELCOM Helsinki Commission
HSR high-­speed rail
IB intermediate bodies
ICPDR International Commission for the Protection of the Danube River
ICT information and communication technology
IFIs international financial institutions
IGC Intergovernmental Conference
IMF International Monetary Fund
IMP Integrated Mediterranean Programme
IPA Instrument for Pre-­Accession Assistance
IPTS Institute for Prospective Technological Studies
ISPA Instrument for Structural Policies for Pre-­Accession
ISSAI International Standard of Supreme Audit Institutions
ISUD Integrated Sustainable Urban Development
IT information technology
ITI Integrated Territorial Investment
JAP Joint Action Plan
JASPERS Joint Assistance to Support Projects in European Regions
JASMINE Joint Action to Support Micro-­finance Institutions in Europe
JCC Joint Consultative Committee
JEREMIE Joint European Resources for Micro and Medium Enterprises
JESSICA Joint European Support for Sustainable Investment in City Areas
LAU Local Administrative Units
LEP Local Enterprise Partnership
LN Lega Nord
MA managing authority
MEP Member of the European Parliament
METREX Network of European Metropolitan Regions and Areas
MFF Multiannual Financial Framework
MLG multilevel governance
MOP Multiregional Operational Programme
MS member state
NDC Northern Development Company
NDP National Development Plan
NEET not in education, employment or training
NEG New Economic Geography
NGO non-­governmental organisation
NIB Nordic Investment Bank
 xxiii
Abbreviations  ­

NMS new member states

NOP National Operational Programme
NPM New Public Management
NSRF National Strategic Reference Framework
NUTS Nomenclature of Territorial Units
OECD Organisation for Economic Co-­operation and Development
OLAF European Anti-­Fraud Office
OLS ordinary least squares
OMC Open Method of Coordination
OP Operational Programme
PA Partnership Agreement
PAC Priority Area Coordinator
PDS Partei des Sozialismus
PECH Committee on Fisheries (European Parliament)
Phare Programme of Community Aid to the Countries of Central and
Eastern Europe
PMC Programme Monitoring Committee
PNV Basque Nationalist Party
PPP purchasing power parity
Psd’Az Partito Sardo d’Azione
QMV qualified majority voting
QoG quality of government
R&D research and development
RAI Regional Authority Index
RCD Regional Competitiveness and Employment
RDA Regional Development Agency
RDI research, development and innovation
RDP Rural Development Plan
REGI Committee on Regional Development (European Parliament)
RICAP Regional Impact of CAP
RIS3 Research and Innovation Strategies for Smart Specialisation
ROP Regional Operational Programme
RSA Regional Studies Association
RTDI research, technological development and innovation
SAI supreme audit institution
SAPARD Special Accession Programme for Agriculture and Rural
Development
SAWG Structural Affairs Working Group
SCE Société Coopérative Européenne (European Cooperative Society)
SCF Structural and Cohesion Funds
SCGE spatial computable general equilibrium
SD sustainable development
SE Société Européenne (European Company)
SEA Single European Act
SFs Structural Funds
SGP Stability and Growth Pact
xxiv  Handbook on Cohesion policy in the EU

SM single market
SMEs small and medium-­sized enterprises
SMFS single market in financial services
SNA subnational authority
SNG subnational government
SNP Scottish National Party
South-­5 Italy, Spain, Portugal, Greece, Cyprus
SPL Structural Programme Loan
SURE Special Committee on the Policy Challenges and Budgetary
Resources for a Sustainable European Union
TEN Trans-­European Network
TEN-­T Trans-­European Transport Network
TEU Treaty on European Union
TFP total factor productivity
TFEU Treaty on the Functioning of the European Union
TO Thematic Objective
TRAN Committee on Transport and Tourism (European Parliament)
UCLG United Cities and Local Governments
UK United Kingdom
ulc unit labour cost
UPP Urban Pilot Project
WGI World Governance Indicators
WWF World Wide Fund for Nature
YEI Youth Employment Initiative
Maps

xxv
xxvi  Handbook on Cohesion policy in the EU
Maps  ­xxvii
xxviii  Handbook on Cohesion policy in the EU
Maps  ­xxix
ESI Funds 2014–2020 allocations

Table 0.1 European Structural and Investment Funds allocations 2014–2020 in the EU28
member states (€)

Country Cohesion policy1 EAFRD EMFF ETC2

Austria 978 349 432 3 937 551 997 6 965 000 1 061 990 384
Belgium 2 020 742 087 647 797 759 41 746 051 1 378 392 541
Bulgaria 7 422 791 277 2 366 716 966 88 066 622 701 131 995
Croatia 8 463 255 776 2 026 222 500 252 643 138 1 201 084 956
Cyprus 702 401 708 132 244 377 39 715 209 526 153 917
Czech Republic 21 643 218 575 2 305 673 996 31 108 015 1 144 024 031
Denmark 413 231 682 918 803 690 208 355 420 748 186 649
Estonia 3 534 560 285 823 341 558 100 970 418 449 819 256
Finland 1 304 456 595 2 380 408 338 74 393 168 605 853 163
France 14 763 176 455 11 384 844 248 587 980 173 2 893 698 773
Germany 18 269 459 134 9 445 920 050 219 596 276 2 821 002 898
Greece 15 275 247 163 4 718 291 793 388 777 914 984 699 568
Hungary 21 544 112 983 3 430 664 493 39 096 293 1 106 996 669
Ireland 1 019 788 509 2 190 592 153 147 601 979 1 135 072 901
Italy 31 686 254 105 10 444 380 7673 537 262 559 1 996 244 281
Latvia 4 418 233 214 1 075 603 782 139 833 742 577 852 961
Lithuania 6 709 396 130 1 613 088 240 63 432 222 555 079 008
Luxembourg 39 558 626 100 574 600 n/a 535 936 988
Malta 707 989 554 97 326 898 22 627 422 486 688 291
Netherlands 1 014 636 456 765 285 360 101 523 244 1 300 772 210
Poland 76 866 461 337 8 697 556 814 531 219 456 1 563 425 602
Portugal 21 342 542 314 4 058 460 374 392 485 464 1 189 200 304
Romania 22 541 107 909 8 127 996 402 168 421 371 824 705 627
Slovakia 13 768 317 148 1 559 691 844 15 785 000 1 019 287 563
Slovenia 3 011 899 768 837 849 803 24 809 114 1 104 803 616
Spain 27 941 949 230 8 297 388 821 1 161 620 889 1 378 541 701
Sweden 1 763 510 980 1 763 565 250 120 156 004 981 326 308
United Kingdom 10 974 276 104 5 199 666 491 243 139 437 1 991 080 334

Notes:
1. The figure for Cohesion policy includes, where applicable, Cohesion Fund and Youth Employment
Initiative (YEI) allocations.
2. The figure for ETC represents the sum of EU funding to the ETC programmes in which the country
participates.
3. Includes €14 670 000 corresponding to a transfer from the First Pillar (capping).
ESIF 5 European Structural and Investment Funds. EAFRD 5 European Agricultural Fund for Rural
Development. EMFF 5 European Maritime and Fisheries Fund. ETC 5 European Territorial Cooperation.

Source:  European Commission (2015) Communication from the Commission Investing in jobs
and growth – maximising the contribution of European Structural and Investment Funds, Brussels,
14.12.2015 COM(2015) 639 final ANNEX II: Country fiches http://ec.europa.eu/contracts_grants/pdf/esif/
invest-­progr-­details-­each-­ms_en.pdf

xxx
 Introduction
Simona Piattoni and Laura Polverari

RATIONALE AND AMBITIONS OF THE VOLUME

Cohesion policy (CP) is arguably one of the most important policies of the European
Union (EU) and historically one of the most financially significant, today still rep-
resenting roughly one-­third of the EU budget. Beyond its financial dimension, CP is
important also because through it the Community/Union has addressed some of its
most vital challenges, from economic development to social and territorial cohesion;
and has facilitated the attainment of some of its most defining goals, from the comple-
tion of the single market to eastern enlargement. It could be argued that all these goals
were implicitly and synthetically captured in the original formulation of the Preamble
of the Treaty of Rome, whose felicitous formulation of ‘harmonious development’ is
contained in all subsequent treaties, albeit with varied emphasis on the expected drivers
and the complementary aims of this development.1 The nature of these drivers and the
compatibility between the several objectives simultaneously pursued through CP, hence
the many interpretations that can be given of this policy, are the objects of our analysis.
This Handbook, therefore, will not only chart what the EU is and does today, but also
give a sense of the many aspects of EU integration that have been addressed through
CP during its 40 years of existence. In particular, we will seek to highlight how CP has
been used to elicit a sense of joint purpose and common direction among the territories
of Europe, in an effort to draw them towards increasingly converging economic, social
and administrative standards, thus favouring both a sense of community and a spirit
of solidarity. Whether or not CP has achieved these ambitious objectives is obviously
questionable, as it is questionable whether these were the ‘real’ objectives of this policy.
What, according to us, is unquestionable is that CP is a highly political policy that tends
to mobilise a large number of institutional and non-­institutional actors, at supranational,
national and subnational levels.
As already remarked, interpretations of CP abound. According to some, the funds
distributed through CP have been a side-­payment for the anticipated or unantici-
pated hardship that the completion of the single market would create for some of the
more peripheral regions (Moravcsik 1993, 1998). For others, it has sugar-­coated the
bitter pill of successive rounds of enlargement, which created additional competitive
pressures for some regions and countries while favouring others by lending them a
new geographical centrality (Marks 1993; Pollack 1995). For others still, CP was the
lever through which EU supranational institutions were disarticulating the territorial
composition of the member states in an effort to achieve a direct connection between
the new centre and its ‘periphery’ (Tömmel 1998; Smyrl 1998). Yet again for others,
cohesion is the language through which the EU seeks to create a sense of solidar-
ity and goodwill and glosses over some of the real tensions that beset it (Diez 1999;
Schimmelfennig 2001).

1
2  Handbook on Cohesion policy in the EU

What this debate unequivocably reveals is the highly political nature of this policy. This
feature of CP should not come as a surprise, particularly to those who work in the public
policy analysis tradition: redistributive policies normally arouse many different interests
and mobilise both collective and individual actors (Lowi 1972; Wilson 1973). But also those
who work in the EU integration study tradition and who look at the polity structuring effect
of EU policies will concur that CP has constitutional aspects which cannot but activate
many diverse institutional actors in defence or for the promotion of their institutional or
constitutional prerogatives (Bartolini 2005; Scharpf 2010).
Given the varied nature of the interests affected, in this Handbook we decided to place
particular emphasis on the institutional and social dynamics activated by CP, dedicating an
entire part of the book (Part II) to them. For the same reason, we ­provided an ample range
of interpretive keys and engaged the (sometimes rather critical) debates that have been
prompted by CP (Parts I and V). We also decided to address the interrelations between
CP and other EU policies with the aim of offering a more rounded comprehension of this
policy (Part IV) and we correspondingly decided to limit the analysis of Cohesion policy
‘on the ground’ to one part of the book only (Part III). Consequently, and contrary to most
existing books and edited volumes which focus only on one or two country cases (Bache
1998; Börzel 2002; Gualini 2004) or on a subset of member states (e.g. Bache and Andreou
2011; Baun and Marek 2008; Bachtler and Turok 1997; Hooghe 1996; Paraskevopoulos
and Leonardi 2004), we do not provide country-­by-­country analyses of the implementa-
tion and impact of CP in a selection of countries, but rather chapters dedicated to groups
of countries which can be argued to face similar (never identical) problems. Nevertheless,
by so doing, we do cover all of the EU28 member states, an effort that we have not seen in
any other preceding edited volume. We realise that these are unconventional choices but we
are confident that we have provided an accessible, but not banal, overview of CP.
Despite our long-­term and ongoing interest in CP, we have learnt a lot from the contri-
butions contained herein. In the remainder of this Introduction we offer the reader not
just an overview of the arguments of this Handbook, but also ‘itineraries’ through some
of the cross-­cutting themes that link several chapters, and tips for the beginner as well as
for the experienced traveller.
We believe that this Handbook may be of interest to a variety of readers: students will
be able to learn about the essential elements and fundamental milestones of EU CP, while
scholars with an interest in this policy will be able to delve into some of the most sophis-
ticated debates. Finally, practitioners will find reference to some of the more technical
aspects of CP, as well as theoretical grounding for their daily activities and an update
on the more recent policy developments. Our intended readership, however, is not only
confined to those with an interest in Cohesion policy. Students and scholars interested
in other EU policies, European integration, public policy dynamics, actor mobilisation
in multilevel contexts, and in the role of EU institutions in EU policy-­making will find in
this resource useful content too.

OVERVIEW OF THE CHAPTERS

We offer here an overview of the main parts of the Handbook and a brief account of
what is contained in each chapter. Part I covers the evolution, structure and rationale of
 3
Introduction  ­

CP. Even as we tackled the birth and evolution of this policy, we privileged a theoretically
informed reading over a merely descriptive one. Therefore we asked our contributors
not only to reconstruct with as much precision as possible the main stages of CP evolu-
tion, from its origins in the Treaty of Rome to the present day, but also to give us a sense
of the many different objectives simultaneously pursued through this policy. Brunazzo
(Chapter 1) offers a complete overview of evolution of the regulations governing this
policy area – which is complemented by the maps enclosed in this Handbook showing
the progressive territorial coverage of Cohesion policy – and Stephenson (Chapter 2)
maps the institutions and procedures activated by this policy, thus jointly providing the
coordinates necessary to navigate the rest of the Handbook. From the third chapter
onward we equip the reader with the necessary gear to trek the difficult landscapes of the
various economic theories which informed this policy during its life. The reader is thus
alerted to the fact that the principles and regulations governing the policy have changed
through time and that the ideas and theories driving it have also changed, drawing inspi-
ration from standard trade theory, regional economics, New Economic Geography and
developmental economics, and that the more recent emphasis on technology and human
capital may even work against economic convergence across regions (Begg, Chapter 3).
Part I also hosts chapters that interpret Cohesion policy from other vantage points
and address wide bodies of literature that have developed in connection with this policy.
One important question is whether the multilevel governance (MLG) structures that
govern Cohesion policy contribute to or detract from overall EU democratic legitimacy
(Piattoni, Chapter 4). The chapter argues that, by adopting a notion of democracy as
‘delegation cum accountability’, this literature cannot but emphasise the breaks that
occur in the chains of delegation and accountability when multiple principals and mul-
tiple agents are taken into account, and suggests that a different notion of democracy  –
multilevel or transnational democracy – should be adopted for interconnected settings
like the EU. A second major body of literature that has addressed Cohesion policy,
among others, is that on Europeanisation (Dąbrowski and Graziano, Chapter 5). The dif-
ficulties that are observed in the implementation of this policy in several member states
are caused mainly by different policy traditions and by incompatible or shifting interin-
stitutional relations causing various degrees of fit or misfit between the regulations that
govern it and member state institutional capacities and, consequently, triggering reac-
tions that range from resistance to adaptation. This problématique directly feeds into the
question that animates the chapter on the ‘quality of government’ (Charron, Chapter  6),
which asks whether institutional capacities have an impact not only on the utilisation of
Structural and Cohesion Funds, but also on their allocation across regions. The answer
is that it does.
Part II of the Handbook is dedicated to the institutional, political and societal mobili-
sation that is triggered by Cohesion policy: the politics of Cohesion policy. A distributive
policy with clear redistributive and constituent implications, which moreover tends to
upset existing domestic territorial and administrative arrangements, Cohesion policy is
highly political and arouses a great variety of institutional and non-­institutional inter-
ests, injecting a disordering dynamic in both national and EU interinstitutional relations.
After all, this is the essence of multilevel governance (Piattoni 2010), the expression that
best describes the politics of Cohesion policy. For this reason, we decided to dedicate an
entire part of the Handbook to the exploration of these interests and to the ways in which
4  Handbook on Cohesion policy in the EU

institutional and non-­institutional actors mobilise to influence the policy. In this way, we
aimed at providing a more nuanced, but also more problematic, view of Cohesion policy
as seen from the vantage point of the main EU institutional and non-­institutional actors.
The first five chapters of Part II are dedicated to those EU institutions which are
directly involved in decision-­ making. These chapters offer a multifaceted view of
Cohesion policy, refracted as it were through the prism of each institution’s role and
interest. The European Commission has been at the centre of this policy since the begin-
ning, having spearheaded its creation and successive strengthening and having gained
enormous room for political manoeuvre from it (Tömmel, Chapter 7). The Council of
the European Union and, increasingly, with the augmented politicisation of the peri-
odic EU multiannual financial framework exercise, the European Council have equally
been central to Cohesion policy policy-­making, offering governmental representatives
and heads of state and government the opportunity to promote their own agenda of
what this policy should accomplish. A vivid account of the negotiations surrounding
the 2014–2020 common provisions regulations (Bachtler and Mendez, Chapter 8) gives
the full flavour of the often divergent interests that the MSs try to promote through
Cohesion policy.
An ‘insider’ view of the role of the European Parliament in shaping this policy is pro-
vided by Hübner (Chapter 9). This chapter puts a great emphasis on the interinstitutional
trialogues between Commission, Council and Parliament, and on the intense interactions
between Commission’s directorates-­general (DGs) and parliamentary committees, first
and foremost the European Parliament’s dedicated Committee on Regional Development
(EP REGI), giving the reader the full sense of the enormous political significance of this
policy. A less frequently studied, but nevertheless crucial, minor EU institution is the
Committee of the Regions (Schönlau, Chapter 10), which has managed to shape salient
features of Cohesion policy ‘from below’ by interacting closely with the Commission and
the European Parliament and by placing its bets on its capacity to offer these institutions
knowledge of how Cohesion policy exerts its effects on the ground.
Even less commonly studied are the two following institutions, which are however
crucially important for the success of the policy: the European Court of Auditors (ECA)
and the European Investment Bank (EIB). The ECA has acquired increasing centrality
in the assessment of the regularity of Cohesion policy expenditure and, more recently,
of its effectiveness in achieving its stated objectives. It also provides opinions on new
legislation, supporting the legislative process with hard evidence. These activities have
made the ECA a key interlocutor for both the European Commission and the European
Parliament, and an important actor across the entire policy cycle (Karakatsanis and
Weber, Chapter 11). Contradicting previous research, the chapter highlights that the
strengthening of internal control and external audit has considerably reduced the level of
error in Cohesion policy expenditure, noting nevertheless the high administrative costs
associated with this and the limited uptake (and effectiveness) of the simplification meas-
ures recently introduced to curb them.
The EIB has supported Cohesion policy since the beginning by providing affordable
credit to national and regional governments for the required co-­funding of investments.
More recently, this institution has become even more pivotal due to the effect of the
crisis on domestic budgets. Starting with an analysis of the macroeconomic and territo-
rial impact of the economic crisis, and with a review of the changes introduced in the
 5
Introduction  ­

relationship between Cohesion policy and the EU’s macroeconomic governance, Bubbico
et  al. (Chapter 12) show how the EIB’s operations, services and instruments have become
more strongly interlinked with the policy, making this institution a crucial interlocutor
for member states and regional authorities alike.
The two last chapters of Part II tell us about subnational mobilisation around
Cohesion policy, whether from subnational authorities or from regional and regional-
ist parties. Regional authorities and societies have been involved in and activated by
Cohesion policy since its early days. Hepburn (Chapter 13) goes beyond the established
argument about the role that this policy has played for the empowerment of regional
authorities as constituent actors in EU decision-­making to show how these actors have
themselves used it instrumentally to meet their own political aims domestically (see Smyrl
1997). The chapter charts the way in which Cohesion policy has been intrinsically linked
with first a rise, and subsequently a fall, of a ‘Europe of the Regions’, ultimately leading
many parties to abandon an autonomy agenda in favour of an outright independentist
one. As Massetti and Schakel (Chapter 14) demonstrate, however, this shift has not neces-
sarily translated in a decline of pro-­EU stances. With a focus on regionalist parties, and
based on an original dataset of 31 regionalist parties’ positioning on European integra-
tion (1989 to 2006), the authors conduct a first comprehensive examination of the degree
to which a region’s Cohesion policy receipts appear to affect the level of Europeanism (or
indeed Euroscepticism).
In Part III, as already noted, we decided to group country cases. We have done so
according to whether the policy addressed mainly the southern periphery (Polverari,
Chapter 15), the service economies of the north (Charles, Chapter 16), the rich central
regions (Balsiger, Chapter 17), the sparsely populated countries (Muravska et al.,
Chapter  18), and Central and Eastern Europe (Pálné Kovács, Chapter 19). While this
choice may disappoint those who look for an in-­depth study of ‘their’ member state, we
think that by imposing a comparative spin onto the empirical chapters we have enriched
the usual analysis without impoverishing its empirical depth. In this way, our contribu-
tors could highlight common challenges and still identify distinct responses to them.
In structuring Part III, we have aimed to achieve a balance within each chapter between
country-­specific coverage and discussion of commonalities and trends, while granting
flexibility for the authors to develop those topics that are particularly relevant for their
group of countries whilst at the same time providing key information for each country (in
order to allow country comparisons across chapters and country groupings). To achieve
these aims, the chapters in Part III have been structured along a common template, with
each chapter reviewing: (1) the regional disparities and the regional policy background
of the group of countries considered; (2) the evolving Cohesion policy eligibility and
coverage; (3) the financial resources allocated to each country across each programming
period from 1989; (4) the strategies pursued across the five programming periods; (5) the
outcomes and impacts achieved (according to existing evaluation evidence); and (6) a
critical appraisal of implementation challenges and successes.
The chapters do not focus only on the most recent and current programmes, but
discuss the long-­term evolution of CP in the countries considered. To facilitate this lon-
gitudinal view and allow cross-­country comparisons, some standard tables are included
in each chapter, providing the details of the number of programmes and implementation
arrangements in each country and period; national commitment appropriations in each
6  Handbook on Cohesion policy in the EU

programming period; and thematic concentration and European Regional Development

Fund (ERDF) and European Social Fund (ESF) share in the current, 2014–2020, period,
whereas a table describing the financial resources allocated to the 2014–2020 Partnership
Agreements of all 28 EU member states is provided at the beginning of the Handbook.
We are of course aware of the limitations of the way in which we have grouped countries:
no EU member state is identical or faces exactly the same regional development problem
as any other. Yet, as the reader will appreciate when exploring this part of the Handbook,
the way countries have been grouped has allowed interesting trends and key messages to
surface – for example, the importance of institutional and administrative capacities and
of policy continuity for policy performance – providing empirical and analytical insights
that complement other chapters in this volume.
Although singularly important, Cohesion policy obviously impacts upon and is
affected by other equally relevant EU policies and strategies. Part IV is therefore dedi-
cated to these interactions and to the exploration of whether they work towards the
same goals or rather aim in different directions, creating effectiveness problems for one
another.2 Agricultural and rural development policy, the second-­largest EU budget item
and oldest Community policy, has an independent redistributive impact on EU regions
and powerfully shapes member states’ calculations at each budgetary round. By taking
a ‘place-­based’ territorial approach and by questioning the economic theories that have
been summoned to explain local development, Crescenzi and De Filippis (Chapter 20)
show how indeed common agricultural and rural development policies often work at
cross-­purposes with Cohesion policy. Even more ‘damaging’ is the impact of infrastruc-
ture policy and, particularly, of transportation policy (Faiña et al., Chapter 21) since
building better transport connections among EU regions increases regional specialisation
and reinforces the differential accumulation of factors of economic development across
regions.
A few more recent but equally (and increasingly) crucial policy strategies interact with
Cohesion policy in ways that deserve to be studied, among them ‘smart specialisation’
(McCann and Ortega-­Argíles, Chapter 22), the green economy (Lenschow and Baudner,
Chapter 23), macroregional strategies (Gänzle, Chapter 24), ‘external Europeanisation’
(Ágh and Kovács, Chapter 25), and urban development (Aktinson and Zimmermann,
Chapter 26). One of the ex ante conditionalities of 2014–2020 programming, ‘smart spe-
cialisation’, is now a cornerstone of Cohesion policy. McCann and Ortega-­ Argíles
(Chapter 22) show how this concept has evolved from a mainly theoretical, and non-­
spatial, notion to an important tool supporting policy-­makers in the difficult task of
policy prioritisation when translating the different and often conflicting interests of
different constituencies into an operational framework for action. Another key theme in
the current Cohesion policy, in line with the Europe 2020 strategy, is that of the green
economy. Lenschow and Baudner (Chapter 23) trace the evolution of the environmental
dimension in Cohesion policy, from the emergence of the concept of sustainable devel-
opment and a focus on compliance with environmental law in the 1980s and 1990s, to
the current emphasis on climate change mitigation and adaptation, ‘green growth’ and
a low-­carbon economy, concluding that, despite the successful discursive framing, the
seemingly fading commitment in the current European Commission may hinder the
realisation of these ambitious goals.
Territorial cooperation in the EU has taken different organisational forms and
 7
Introduction  ­

f­ unctions over time, including for example city twinning, Euro-­regions and, more recently,
macro-­regional strategies as well as European Groupings of Territorial Cooperation
(EGTCs). Gänzle (Chapter 24) explores these institutional frameworks as tools for
implementing EU Cohesion policy, which have been framed as important factors con-
tributing to broader EU policy objectives, such as fostering innovation and sustainable
economic growth. Ágh and Kovács (Chapter 25) argue that the EU is fundamentally
concerned about ‘wider Europe’ and has a vital interest in a wider ‘cohesive Europe’,
which it pursues through Cohesion policy in Eastern Europe. This Eastern Partnership-­
specific Cohesion policy needs a new conceptual framework based on: (1) external
Europeanisation and/or external governance; (2) a Deep and Comprehensive Free Trade
Area (DCFTA); and (3) the largest possible operationalisation of the meaning of security
as its three main analytical pillars.
Since the early 1990s the European Commission has launched several urban initiatives
as part of Cohesion policy which helped cities cope with challenges such as social exclu-
sion and the regeneration of deprived areas. Atkinson and Zimmermann (Chapter  26)
argue that, although the notion of integrated sustainable urban development is promi-
nent in the current Cohesion policy programmes and a predefined share of each member
state’s ERDF funds must now be invested in urban areas, the urban dimension has
become somewhat blurred in this latest programming round.
Finally, we wanted to conclude in Part V by raising even more fundamental questions
and reporting on a few critical debates spurred by Cohesion policy. Thus Leonardi and
Holguin (Chapter 27) question the conventional principles of Cohesion policy (which
are found in Chapter 1, by Brunazzo) and suggest that other ‘real’ principles actu-
ally inspired this policy during its evolution. More importantly, these principles were
often contentiously debated even within EU institutions, thus making Cohesion policy
less coherent and effective than it could have been. The debate on the effectiveness of
Cohesion policy is tackled head on by Fratesi in Chapter 28, which addresses the many
facets of assessment, spanning from mere accounting rigour to the leveraging effect that
the European Structural and Investment Funds resources have on regional development.
The author argues that Cohesion policy evaluation, despite the wealth of cross-­sectional
and longitudinal data, is hampered by the sheer number of variables which must be taken
into account, the complex interactions among different policies, the possible existence
of threshold effects, and other more technical issues linked to the models used for the
assessment. Notermans (Chapter 29) questions the capacity of EU Cohesion policy to
engender the economic convergence of the peripheral member states towards the devel-
opment levels (as measured by per capita gross domestic product) of the core member
states and questions the interaction between Cohesion policy and other macroeconomic
policies, first and foremost Economic and Monetary Union (EMU). Rather, economic
cohesion has deteriorated as income convergence has given way to economic polarisation
between the north-­western core and the southern and eastern periphery. Fargion and
Profeti (Chapter 30) discuss the nature and relevance of the social dimension in both the
regulations and operational programmes of Cohesion policy, with a specific focus on the
2007–2013 and 2014–2020 programming periods, examining in particular employment
support and social inclusion. Although, particularly after 2012, EU institutions have
taken several initiatives aimed at reinforcing the social and anti-­poverty dimensions of
Europe 2020, social inclusion is still apparently caught between the entrepreneurial role
8  Handbook on Cohesion policy in the EU

of socially oriented EU bodies and the ordinary political bargaining between EU institu-
tions and national governments.
The two final chapters create a sort of small debate among themselves by raising criti-
cisms from a ‘critical economic geography’ point of view. Faludi (Chapter 31) discusses
the notion of territoriality, which is historically and conceptually linked to the rise of the
nation-­states, and highlights how CP has called it into question, propounding instead
a ‘place-­based’ approach to cohesion regardless of the administrative boundaries that
parcel out the EU territory. Underlying the tensions that inevitably arise is the issue
of whether representative democracy, operating on the assumption of ‘absolutistic
­territorialism’, can deal with functional interdependencies implying new cross-­border
configurations, and with it relativist constructionism. Gualini (Chapter 32) takes this
critique one step forward by exploring in detail the notion of multilevel governance and
questioning its appropriateness in capturing the spatial dimension on Cohesion policy,
and suggests that multiscalarity may be a more apt way of conceptualising the space in
which to realise economic and social cohesion.

KEY THEMES AND ‘READING ITINERARIES’

The scope and scale of this Handbook is quite ambitious, with 32 chapters and about
300 000 words. However, we do not anticipate that the Handbook be read cover to
cover, but rather that the table of contents be taken as a menu from which readers can
pick and choose what to focus on, based on their specific interests. For example, those
new to Cohesion policy, including students, could start with Brunazzo (Chapter 1) and
Stephenson (Chapter 2), who explain the policy’s nuts and bolts, and continue with
the country-­grouping chapters of Part III (Polverari, Charles, Balsiger, Muravska et
al., and Pálné Kovács, Chapters 15 to 19), for a review of coverage, strategies, achieve-
ments  and implementation challenges, and finish with the chapters by Begg and by
Leonardi and Holguin (Chapters 3 and 27) for a more critical examination of the eco-
nomic rationale and underlying principles of the policy.
Those interested in the political dynamics activated by Cohesion policy may read the
chapters on territoriality and territorialisation (Faludi and Gualini, Chapters 31 and 32
respectively), the critical perspectives on a new model of democracy in interconnected
settings offered by Piattoni (Chapter 4), the chapters on regional mobilisation and
regionalist parties by Hepburn and by Massetti and Schakel (Chapters 13 and 14), as well
as some of the chapters on the EU institutions (Tömmel, Bachtler and Mendez, Hübner,
and Schönlau, Chapters 7 to 10).
Those who should wish to follow the thread of multilevel governance may find the
chapters by Faludi (Chapter 31), Gualini (Chapter 32), Piattoni (Chapter 4), as well
as those on macroregional strategies and the cities (by Gänzle, and by Atkinson and
Zimmermann, Chapters 24 and 26) especially relevant; whilst readers with an interest in
topics related to administrative capacity and implementation efficiency will find useful
the arguments developed by Charron (Chapter 6) and by Dąbrowski and Graziano
(Chapter 5), and in the country-­groupings chapters (Chapters 15 to 19).
Further cross-­cutting themes include the appraisal of policy results and effective-
ness, and the interrelation with other EU policies. Issues related to policy results and
 9
Introduction  ­

e­ ffectiveness – whether overall, related to the goals of the policy and of its programmes,
or in relation to methodological or specific dimensions – are discussed in about half of
the chapters, thus not only in Fratesi’s contribution (Chapter 28), but also in the country-­
groupings chapters of Part III (that provide a summary of policy achievements), and in
the chapters on the relationship with other EU policies and strategies (smart specialisa-
tion, the green economy, the social dimension, Chapters 22, 26 and 30).

CONCLUSION

At the end of this journey, we want to reflect on the broader significance that Cohesion
policy is acquiring in the context of today’s Union. While this is the policy that most of
all translates in practice the idea of solidarity across member states, the recent economic
crisis has revealed its limited effectiveness in the absence of a renewed pledge by the
member states to solidarity and a veritably common investment policy. Cohesion policy
is supposedly favoured by a stable and sustainable macroeconomic context, which is
ostensibly EMU’s main goal. However, the particular emphasis given to stability over
growth during the current crisis – which began in 2008 and for some member states
is still ongoing at the time of writing – is causing distinctive problems to the national
and regional governments of the most troubled countries in raising sufficient matching
funds.
Even though some of the innovative liquidity operations of the ECB make co-­
financing easier for some of the Cohesion countries, at the same time the stringent
conditions that accompany these liquidity operations restrict their ability to then use
the funds towards Cohesion policy investments. Even worse is the provision which
allows the Commission to request revisions to Partnership Agreements or Operational
Programmes in order to comply with European Financial Stability Facility or European
Stability Mechanism conditions and recommendations (Begg et al. 2014: 35–9).
Particularly worrisome is the possibility of imposing suspensions of Cohesion policy
funding as a disciplinary mechanism for those countries that exceed the stability
parameters. We consider these provisions deflections, if not veritable perversions, of the
original goals of Cohesion policy and a significant betrayal of the principle of solidarity
which originally inspired it.
If anything, the crisis has shown how Cohesion policy continues to be an important
financial resource for public investments, compensating for cuts in domestic capital
spending and providing relief against joblessness. Questions have been raised as to
whether this policy should be deployed to face contingent emergencies or, reversely, to
sustain wider EU policy strategies (such as Europe 2020 through the Common Strategic
Framework). This policy approach undermines the ability to pursue the structural,
long-­term goals assigned to Cohesion policy by the Treaty and turns this policy into a
financial resource for other, not necessarily congruent, goals. Are the resources devoted
to Cohesion policy truly sufficient to sustain the harmonious development of the EU,
through a reduction of economic disparities between regions, or do they not run the risk
of mixing countercyclical and procyclical, short-­term and long-­term objectives, eventu-
ally reaching none?
As we have seen, concerns have been raised about the efficiency of policy delivery
10  Handbook on Cohesion policy in the EU

and the policy’s effectiveness in reaching its (unclear) goals – a rhetoric that appears to
inevitably push Cohesion policy towards ever growing cuts. Whether linked to the com-
plexities of the shared management system, to the inadequate levels of institutional and
administrative capacity in the member states, or to the lack of adequate leadership by
the European Commission, it is apparent that the simplification agenda, heralded as a
slogan at each policy reform since 1999, have yet to materialise (Davies 2015). Moreover,
the administrative burden associated with policy implementation is not only eroding
value for money, but is also acting as a disincentive to engage with the policy for those
member states, regions or beneficiaries that can afford not to do so. Further, the latest
round of reform has sought to address a number of performance-­related factors, which
are external to the policy but which condition its success, via a number of thematic and
general conditionalities linked to sanctions (Bachtler et al. 2016): it remains to be seen
whether attaching sanctions to factors over which the actors who deliver the policy often
have little or no control will yield the desired effects.
We think that this is a self-­defeating course and that the moment has come to take
a fresh look at this policy and decide whether it should keep giving ‘something to
everyone’  – thus engendering the impression of achieving nothing at all – or, rather, be
openly and exclusively used to help disadvantaged regions to catch up with the relatively
advantaged ones. In other words, we wonder whether Cohesion policy should be openly
branded as a redistributive policy. While the task of moving the Union towards a path of
sustained growth could be entrusted to a veritable common macroeconomic policy – with
specific measures in support of strategic investment – Cohesion policy could instead be
charged with the more specific (but not for this any simpler) task of favouring the struc-
tural catching-­up of disadvantaged regions.
This way, Cohesion policy could deliver important material and immaterial goods,
crucial for the continued sustainability of the Union. First, it would finally give sub-
stance to the idea of economic, social and territorial cohesion, that is, the expectation
that whatever else the Union (the Single Market) does to its various regions, it does not
deepen their inequalities, but rather works towards their growing convergence. This, in
itself, is a powerful legitimacy booster. Second, Cohesion policy directly contributes to
a new notion of democracy that brings the particular ideas and interests of different
scales and places of aggregation to bear on the process of European integration. The
involvement of subnational authorities and local expressions of civil society should not
be interpreted as a symbolic nod towards the much trumpeted but often neglected part-
nership principle, but as the opportunity to collect intelligence on local needs and as the
necessary ingredient of multilevel democracy. Finally, the European Union can hardly
win the hearts and minds of EU citizens unless it is seen to create, through communi-
ties of practice, a sense of belonging and a feeling of identification with the European
project.
Perhaps due to the highly political and intergovernmental nature of the simultane-
ous negotiations on the EU budget and on the content of EU Cohesion policy, and
the related necessity to reach consensus across multiple and diverse constituencies, the
reforms have often ended up in regulatory frameworks that did not resolve the key
controversies on the policy’s overarching goals, territorial coverage and financial status
relative to other EU policies. They have instead delivered incremental changes and
­compromise solutions, principally on the more practical aspects of implementation, that
 11
Introduction  ­

leave sufficient room for manoeuvre for member states and regions to make the policy fit
with domestic agendas without necessarily addressing the problems that beset it. Whilst
this has guaranteed the survival of the policy in nominal terms, it has come at the price of
a loss of purpose. We are left wondering whether the ‘real’ objectives of Cohesion policy
have become too many and too contradictory, ultimately condemning this policy to an
ancillary role which bears no resemblance with the higher ideals that inspired it in the
beginning. Against a quickly evolving and considerably altered political and economic
scenario, the next round of reform, on which debates are now starting, should tackle the
most divisive issues that have proven intractable in the past and should re-­state what the
ultimate goal of Cohesion policy is.
To conclude, we hope that EU institutions, member states’ representatives, subnational
authorities, social partners, non-­governmental organisations and EU citizens at large
will seize the opportunity represented by the current crisis and the impending nego-
tiation round to tackle, without preconceptions, the debate on the post-­2020 reform of
Cohesion policy in a systematic and forward-­looking manner, abandoning the exclusive
(and reductive) focus on the problems of policy implementation and addressing openly
the fundamental questions of the role and purpose of Cohesion policy (Begg 2010), its
position in the context of the wider EU policies and strategies, and what this would imply
in budgetary terms (rather than start from the threat of budget cuts to then remodel the
policy in its application).
If at the beginning of this century Joshka Fisher raised the question ‘Quo vadis
Europa?’ (Fischer, 2000), it is now time to openly ask ‘Quo vadis Cohesion policy?’ in the
acknowledgement that, from the point of view of cultivating both a sense of identifica-
tion with Europe and a truly multilevel democracy in addition to convergent growth, we
could say, paraphrasing the words of another German politician, Angela Merkel (Merkel
2011): ‘If Cohesion policy fails, then Europe fails.’ We hope that this Handbook will
provide the reader with the background to appreciate the political and territorial ques-
tions raised by cohesion, the challenges that the forthcoming policy reform may have to
face, as well as the opportunities that exist for capitalising on the many successes, innova-
tions and lessons learnt from the past 30 years.

NOTES

1. In the Preamble of the Treaty of Rome, the signatories declare themselves ‘anxious to strengthen the
unity of their economies and to ensure their harmonious development by reducing the differences existing
between the various regions and the backwardness of the less-­favoured regions’. A few lines later (Art. 2),
the Treaty states that: ‘The Community shall have as its task, by establishing a common market and pro-
gressively approximating the economic policies of member states, to promote throughout the community
a harmonious development of economic activities, a continuous and balanced expansion, an increase in
stability, an accelerated rising of the standard of living and closer relations between the states belonging
to it’. The Treaty of Amsterdam leaves the Preamble untouched, but expands Art. 2, stating that: ‘The
Community shall have as its task, by establishing a common market and an economic and monetary
union and by implementing common policies or activities referred to in Articles 3 and 4, to promote
throughout the Community a harmonious, balanced and sustainable development of economic activities,
a high level of employment and of social protection, equality between men and women, sustainable and
non-­inflationary growth, a high degree of competitiveness and convergence of economic performance, a
high level of protection and improvement of the quality of the environment, the raising of the standard of
living and quality of life, and economic and social cohesion and solidarity among Member States.’
12  Handbook on Cohesion policy in the EU

2. We regret only not being able to include in this group of policies, through no fault of our own, ­competition
policy.

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Introduction  ­

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 PART I

HISTORY, PRINCIPLES AND

THEORETICAL IMPLICATIONS
OF COHESION POLICY
1.  The history and evolution of Cohesion policy
Marco Brunazzo

INTRODUCTION

Cohesion policy targets the regions and cities in the European Union (EU) and aims
at fostering business competitiveness, job creation, economic growth, sustainable
development, and improving citizens’ quality of life. Nowadays, almost a third of the
total EU budget is set aside for this policy. However, this is a relatively recent policy:
it was founded in the second half of the 1980s and, since then, its aims and resources
have periodically changed. The purpose of this chapter is twofold. On the one hand, it
describes and analyses the main turning points of EU Cohesion policy. Starting from
its origin, it goes through its subsequent reforms and concludes by emphasising some
of the challenges this policy has to face today. On the other hand, it explores some of
the political dynamics that have characterised this important policy. More specifically,
along with its official purposes, Cohesion policy has also served unofficial and unde-
clared functions as its spending has often been used to create support for further inte-
gration, broaden the consensus for widening the EU or for deepening its competences
(Baun and Marek 2014: 5). In the wake of new enlargements or new treaty reform,
or during the negotiations on the EU Multiannual Financial Framework (MFF),
Cohesion policy reform has been used as a compensatory mechanism for the more
reluctant member states (MSs).

THE ORIGINS: 1957–1975

The main aim of Cohesion policy is to reduce regional economic and social disparities
across EU states and regions. Given the great regional imbalances characterising the EU
in the 1950s, the Preamble of the Rome Treaty declared that the signatory states were
‘anxious to strengthen the unity of their economies and to ensure their harmonious
development by reducing the differences existing between the various regions and the
backwardness of the less favoured regions’, and fostering in so doing ‘a harmonious
development of economic activities’ throughout the European Economic Community
(European Economic Community 1957, Art. 2).
However, the Rome Treaty did not create a proper European Cohesion policy, since
it was considered at that time politically divisive, unnecessary and too ambitious. As
Manzella and Mendez (2009) state, the governments of several MSs were reluctant to
attribute competences in this policy area to the recently founded EU institutions for four
main reasons: (1) regional development policy was still nascent at national level; (2) it
touched on issues related to the organisation of the states and the relation between state
and enterprises; (3) it was considered unnecessary because MSs shared confidence in the
creation of interregional trade as a way to reduce economic and social imbalances; and

17
18  Handbook on Cohesion policy in the EU

(4) in the early 1950s there were great expectations about the capacity of the World Bank
(created in 1944) to foster the dynamics of growth in underdeveloped contexts.
These impediments remained substantially unaltered for about 20 years. In 1969, even
the European Commission argued that: ‘even more than other branches of economic
policy, regional policy is clearly the concern of the public authorities in the MSs. The
measures it involves fall directly under the political, cultural, administrative, sociological
and budgetary organization of the States’ (CEC 1969: 13).
As a consequence, only three instruments addressing regional imbalances were included
in the Rome Treaty. The European Investment Bank (EIB), whose task was to grant loans
and supply guarantees for the financing of development projects in developing and restruc-
turing regions, was the first. The second instrument was the European Social Fund (ESF),
which was set up to sustain and improve mobility in the European labour market through
education and requalification initiatives for workers in areas experiencing industrial
decline. Art. 124 TEC stated that this fund should be administered by the Commission,
assisted in this task by a committee presided over by a member of the Commission and
composed of representatives of governments, trade unions and employers’ organisations.
The third instrument was the Guidance section of the European Agricultural Guidance
and Guarantee Fund (EAGGF), which provided support for underdeveloped rural areas.
The EAGGF was based on several measures, including agricultural product marketing,
farm modernisation and rural development measures.
These instruments worked inadequately. As stated by Commissioner George Thomson
in the mid-­1970s, ‘Forms of Community aid, useful and well justified as individual acts
of policy, when looked at as a whole . . . appear to be actually widening the regional gap
rather than closing it’ (quoted in Swift 1978, cit. in Bache 1998: 35). However, in the
1950s and 1960s national governments paid more attention to national regional policies,
and the creation of a truly common Cohesion policy remained a controversial issue at
least until the beginning of the 1970s.
When the enlargement to the United Kingdom (UK) and Ireland entered the
EU   agenda, the European Commission tried to promote the adoption of a different
approach. In 1961, it organised a major conference in Brussels attended by regional
policy officials where a reflection on the different national experiences started. The several
working groups organised for that conference significantly contributed to the outline of
the future configuration of the Community Cohesion policy (Bache 1998: 35; Manzella
and Mendez 2009: 6). In 1968 the Commission created the new Directorate-­General for
Regional Policy (DG XVI), underlining once more the attention paid to a policy area still
under definition and accounting only for 3 per cent of the EU budget. The European
Parliament also supported the European Commission in its efforts by adopting a series
of resolutions in favour of the institutionalisation of Cohesion policy (see Manzella and
Mendez 2009: 7, fn. 15).
At the beginning of the 1970s, Cohesion policy definitively made it into the European
Community policy agenda for two reasons. First, the oil crisis of the 1970s persuaded
the national governments of the need of coordinated actions to cope with regional dis-
parities in Europe. A resolution approved by the Conference of the Heads of State and
Government in Paris in 1972 emphasised the intention to ‘give top priority to correcting
the structural and regional imbalances in the Community which could hinder the achieve-
ment of the Economic and Monetary Union’. For this reason, ‘The Heads of State and
 The history and evolution of Cohesion policy  ­19

Government invite the Commission to prepare as soon as possible a report analysing the
regional problems of the enlarged Community and offering suitable proposals’ (Heads of
State and Government 1972). Second, accession of Denmark, the UK and Ireland in 1973
exacerbated regional disparities (Gilbert 2003: 123). From the political point of view, the
entrance of the United Kingdom and Ireland enlarged the coalition of national govern-
ments that was in favour of the establishment of a common regional policy. Moreover,
the fact that the UK became a net contributor to the Community budget upon accession
required the adoption of (partial) economic compensation to persuade a British public
opinion sceptical about the benefits of European integration (Bache 1998: 37).
In May 1973, the European Commission published the Report on the Regional
Problems in the Enlarged Community (CEC 1973), known as the Thomson Report,
named after the British Commissioner for Regional Policy George Thomson (see also
Chapter 27, Leonardi and Holguin, this volume). According to this, reducing regional
imbalances and favouring the development of the backward regions was ‘a human and
moral requirement of the first importance’ because ‘No Community could maintain
itself nor have a meaning for the people which belong to it so long as some have very dif-
ferent standards of living and have cause to doubt the common will of all to help each
MS to better the condition of its people’ (CEC 1973: 4).
In July 1973, the European Commission drafted a legislative proposal concerning the
creation of the European Regional Development Fund (ERDF). The main objective of
the ERDF was the promotion of industry and infrastructure. The fund would address
the problem of unequal development across regions. The ERDF would function accord-
ing to ‘objective community indicators’. However, the national governments would
retain the right to determine the eligible regions. Negotiations showed how deep the
divisions between national governments were. On the one hand, the UK, Ireland and
Italy – the likely main beneficiaries of ERDF – were strongly in favour of this initia-
tive; on the other, Germany, as a net contributor, was against the creation of a big fund
(Halstead 1982, cit. in Bache 1998: 39). Other divisions were related to the distribution
of the fund: Germany, Denmark and the Netherlands were in favour of a small and
concentrated fund; Italy and Ireland supported the idea of a bigger and concentrated
fund; while the UK and France spoke in favour of a great geographical flexibility and
national autonomy in the identification of the areas to be targeted (Baun and Marek
2014: 15–17).
The context changed with the election of the new German government led by Helmut
Schmidt and the new French President Valéry Giscard d’Estaing in 1974, who declared that
they were available to reconsider the position expressed by their predecessors. Moreover,
the threats expressed by Italy and Ireland of non-­attendance of the Paris summit in
December also played a role. As a consequence, in December 1974 the EU leaders
approved the creation of the ERDF, which was formally established in March 1975.
Initially, the ERDF achieved only modest results for three main reasons: it was consid-
ered a compensatory measure for net contributors to the Community budget; its budget
of 1.3 billion EUA (European Units of Account) (around 5 per cent of the Community
budget) was too small to play a significant role; the Council of Ministers was in charge of
defining the budget on the basis of national quotas annually negotiated between the MSs,
without targeting regions that were lagging behind in terms of development (Bourne
2006: 294–295). In other words, MS governments dominated ERDF management.
20  Handbook on Cohesion policy in the EU

THE DEVELOPMENT: 1975–1987

In 1979 and in 1984, two minor reforms took place. In 1979, the national governments
approved a 50 per cent increase of the ERDF budget as a response to the growth of
regional imbalances due to the Greek accession. As a consequence, regional policy
accounted for about 6 per cent of the Community budget. In 1979, a ‘non-­quota’
section was also added. Even if this section was economically irrelevant, it was politi-
cally salient: the Commission could use these funds more autonomously, to support
development projects in areas not designated by the national governments. This
reform also created the possibility of ‘integrated’ development programmes, sup-
ported by different funds with a regional dimension, such as the ERDF, the ESF, the
EAGGF Guidance section and the EIB loans. The new legislation also granted to the
Commission a strategic role: this institution was charged to write periodic reports on
the economic and social conditions of the regions, eventually suggesting new regional
priorities and guidelines.
The following 1984 reform progressively increased the economic resources allocated
to the ERDF (from about 7.5 per cent of the European Community budget in 1984 to
9.1 per cent in 1986). The old system of national quotas was replaced by a system of
indicative (minimum and maximum) ranges, although a minimum amount of ERDF
funding was guaranteed to the MSs able to submit a sufficient number of acceptable
applications within a specific deadline. Integrated programmes were further strength-
ened. Moreover, the possibility to open a negotiation with MSs to finance specific
National Programmes of Community Interest was also granted to the Commission.
Although these reforms enhanced the Community orientation of the policy and gave
the Commission greater autonomy in deciding which regions to target, European
Community regional policy essentially remained a transfer-­of-­payment system until
1988 (Baun and Marek 2014: 19).
By doubling the number of citizens living in less-­developed regions (for example, with
a per capita gross domestic product (GDP) lower than 75 per cent of the Community
average), the accession of Spain and Portugal in 1986 was regarded with great concern
by some MSs. Greece, in particular, threatened to veto the enlargement if the EU did
not adopt measures to protect its agricultural production. As a consequence, in 1985
the Council of Ministers created the Integrated Mediterranean Programmes (IMPs),
a budgetary commitment established for seven years (1986–1992) in order to help ‘the
southern regions of the present Community’ – defined as the whole of Greece, parts
of southern France and most of southern Italy –‘to adjust under the best conditions
possible to the new situation created by enlargement’ (Council of Ministers 1985: 11).
The IMPs were based on provisions that would become the core of Cohesion policy in
1988, such as the leading role of the Commission and the active involvement of regional
actors in co-­financing and co-­deciding the programmes (Leonardi 1995; Hooghe 1996;
Heinelt 1996).
With the Single European Act (SEA), in 1986 regional policy became a Community
competence and social and economic cohesion a Community goal: ‘In order to promote
its overall harmonious development, the Community shall develop and pursue its
actions leading to the strengthening of its economic and social cohesion. In particular,
the Community shall aim at reducing disparities between the levels of development of
 The history and evolution of Cohesion policy  ­21

the various regions and the backwardness of the least-­favoured regions, including rural
areas’ (Art. 130a SEA).
Art. 130b SEA established that the achievement of these objectives should be sup-
ported through the Structural Funds, the EIB and the other existing financial instru-
ments, and that ‘The Commission shall submit a report to the European Parliament,
the Council, the Economic and Social Committee and the Committee of the Regions
every three years on the progress made towards achieving economic and social
cohesion’. In other words, the approval of the IMPs and the adoption of the SEA
completed the process of reform announced on 12 March 1985 by the Commission
President Jacques Delors in the Programme of the Commission (CEC 1985, point
15), which stated explicitly that: ‘The Commission aims to reverse the trend towards
­treating these [structural] Funds as mere redistribution mechanisms’, and instead to
treat them as instruments for the support and structural conversion of ‘regions in
difficulty’.
In February 1987 the Commission presented an ambitious reform of the EU budget
(the so-­called Delors I package), and recalled that the SEA asked the Commission to
submit to the Council:

a comprehensive proposal . . . [on] the structure and operational rules of the existing Structural
Funds . . . to clarify and rationalize their tasks in order to contribute to the achievement of the
objectives (of cohesion) . . . to increase their efficiency and to coordinate their activities between
themselves and with the operations of the existing financial instruments (Art. 130d SEA)

The Commission reported mainly two problems with the management of the
Structural Funds. The first was the lack of complementarity between national action
and Community support. The second problem was the insufficient apparent utility of
Community support: ‘Community action through the Structural Funds is justified if it
gives a genuine additional boost to national measures’. For these reasons, the reform was
meant to ensure that resources would be concentrated in the truly most needy regions,
whether backward or deindustrialising (CEC 1987).
The detailed proposal elaborated by the Commission was consequently presented
in April 1987. However, the debate between governments only concerned the amount
of Structural Funds spending and not the new architecture of the policy. The UK and
France opposed the reform, fearing that it would have an impact on their position as
net contributors to the Community budget, while the poorer MSs linked their support
for further economic liberalisation to an increase in regional spending. This complicated
negotiation ended only in February 1988, when the UK was assured that its special
budget rebate was not jeopardised and when Germany agreed to substantially increase
its budgetary contribution (Bache 1998: 54–66). Other intergovernmental considera-
tions played a role in this reform: ‘The more prosperous MSs strongly supported the
completion of the single market and wanted this market extending to include Spain and
Portugal. In this context, the doubling of the structural funds was accepted by the likely
paymaster governments as the trade-­off securing general agreement on issues of greater
importance’ (Bache 1998: 79).
22  Handbook on Cohesion policy in the EU

THE 1988 REFORM: THE BIRTH OF COHESION POLICY

The year 1988 marked the beginning of the fully-­fledged Cohesion policy. Aiming
at improving the efficiency of regional policy, this reform also provided a significant
increase in regional funding by doubling the Structural Funds commitments, which by
1993 would amount to 30.7 per cent of the total European budget (14 billion ECU).
The reform was based on five new regulations, becoming effective in January 1989
(Box 1.1).
The new regulations introduced four basic principles:

1. Concentration: the EU assistance shall be focused on a limited number of objectives

in the least-­developed regions.
2. Programming: the EU assistance supports multi-­ annual programmes based on
analysis, strategic planning and evaluation.
3. Additionality: the EU funds shall be added (and not substituted) to MSs
expenditure.
4. Partnership: Community operations shall be established through close consultations
between the Commission, the MSs concerned and the competent authorities desig-
nated by the latter at national, regional, local or other level, with each party acting as
a partner in pursuit of a common goal.

Five priority objectives were agreed in 1988, financed by different funds (Box 1.2).
Objectives 1, 2 and 5b had an explicit regional focus, while Objectives 3, 4, and 5a
were concentrated on specific problems, independently from their specific localisation.
In other words, this second group of objectives covered the entire Union. Objective 1
absorbed about 70 per cent of the Structural Funds allocated for the programming period
1989–1993. The entire territory of Greece, Ireland and Portugal, as well as the majority
of Spain and southern Italy, the French overseas départements and Northern Ireland

BOX 1.1  THE FIVE REGULATIONS OF THE 1989–1993 REFORM

●● Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural
Funds and their effectiveness and on coordination of their activities between themselves
and with the operations of the European Investment Bank and the other existing financial
instruments.
●● Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for
implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the
different Structural Funds between themselves and with the operations of the European
Investment Bank and the other existing financial instruments.
●● Council Regulation (EEC) No 4254/88 of 19 December 1988, laying down provisions
for implementing Regulation (EEC) No 2052/88 as regards the European Regional
Development Fund.
●● Council Regulation (EEC) No 4255/88 of 19 December 1988, laying down provisions for
implementing Regulation (EEC) No 2052/88 as regards the European Social Fund.
●● Council Regulation (EEC) No 4256/88 of 19 December 1988, laying down provisions for
implementing Regulation (EEC) No 2052/88 as regards the EAGGF Guidance Section.
 The history and evolution of Cohesion policy  ­23

BOX 1.2  THE FIVE PRIORITY OBJECTIVES OF THE 1989–1993 REFORM

● Objective 1 Promoting the development and adjustment of the regions whose

development is lagging behind (i.e. where per capita GDPs less
than, or close to, 75% of the Community average) (list revised
every five years).
● Objective 2 Converting the regions, frontier regions or parts of regions
(including employment areas and urban communities) seriously
affected by industrial decline (criteria: average unemployment rate
above the Community average, industrial employment rate above
the Community average, decline in industrial employment) (list
revised every three years).
● Objective 3 Combating long-­term unemployment (above the age of 25, unem-
ployed for more than 12 months).
● Objective 4 Facilitating the occupational integration of young people (job-­
seekers below the age of 25).
● Objective 5(a) Reform of the Common Agricultural Policy by adapting produc-
tion, processing and marketing structures in agriculture and
forestry.
● Objective 5(b) Reform of the Common Agricultural Policy by promoting the
development of rural areas. Criteria: agricultural employment
accounting for a high proportion of total employment; low level of
agricultural income; low level of socio-­economic development in
terms of per capita GDP.

Source:  adapted from CEC (1988: 14).

could profit from these funds. In total, about 21.7 per cent of the population lived in
areas covered by Objective 1, and 43 per cent of the EU inhabitants lived in areas covered
by one of the territorially concentrated objectives.
The 1988 reform also created the so-­called Community Initiatives (CIs), accounting
for about 8 per cent of the structural fund budget for the period 1989–1993. These were
managed directly by the Commission and focused on issues like economic and social con-
version of the coal-­mining areas, the improvement of the environment, the strengthening
of the innovation capacity and technological development, cooperation between regions
on different sides of national borders and others.
Initially, the power acquired by the Commission in the 1988 reform did not encoun-
ter important opposition from the MSs. The wealthier MSs, in particular, looked at the
Commission as a guardian of the efficient spending in the poorer MSs, where the bulk
of Structural Funds was being spent (Pollack 1995: 372), and considered the increased
importance of the Commission as a natural side-­effect of the doubling of financial
resources dedicated to the policy.
In short, the 1988 reform promoted the creation of a truly European regional
policy, transforming it ‘from an essentially budgetary transfer to . . . a genuine regional
development tool with the potential to provide effective solutions to the problems
faced by the Community’s regions’ (Manzella and Mendez 2009: 13). Moreover,
since 1988 Cohesion policy assumed not only an economic connotation, but also a
24  Handbook on Cohesion policy in the EU

political dimension, pointing to a greater involvement of subnational institutions in

Community policy-­making (Hooghe 1996: 6–7). The new policy was based on an ‘inte-
grated approach’: a reduction in territorial disparity was possible only if subnational
institutions, especially regional authorities, were involved in decision-­ making and
implementation processes. For this reason, the Commission promised that it would
promote all possible initiatives ‘to align agents before the race starts’ (Bailey and De
Propris 2002: 409). At the same time, however, it also became clear to the Commission
that involving regional actors in decision-­making would help to strengthen its own
position in this specific policy area as a broker of agreements between the actors
involved (Ansell et al. 1997; Hooghe 1996).

THE 1993 REFORM: COHESION POLICY AS A KEY TOOL FOR

THE EMU

The 1993 reform took place in the context of the coming into force of the Maastricht
Treaty. This treaty (signed in February 1992) set the scene for the construction of the
Economic and Monetary Union (EMU) and confirmed the centrality of Cohesion policy
for reducing socio-­economic disparities among the European regions whilst easing the
structural constraints that might otherwise impact upon the adoption of the single cur-
rency. Moreover, this reform also referred to the need to address MSs’ concerns about
the operation of the funds (particularly in view of the substantial increase in structural
funding), and the enlargement to include Finland, Sweden and Austria (which would
take place in 1995).
The Maastricht Treaty further expanded the role of the Commission in Cohesion
policy, confirming its right to make appropriate proposals in order to strengthen EU eco-
nomic and social cohesion (Art. 159 TEC). Moreover, the treaty created a new structural
instrument, the Cohesion Fund, aimed at MSs whose gross national income (GNI) per
inhabitant was less than 90 per cent of the EU average. This decision followed a threat by
Spain, Portugal, Greece and Ireland to veto the Treaty approval unless a financial instru-
ment was established to help less-­developed countries which were facing serious difficul-
ties in fulfilling the single market criteria (Ross 1995: 152, 182, 190).
The Objectives were consequently slightly revised (Box 1.3). If, on the one hand,
Objective 1 and 2 remained unaltered, the new Objective 3 combined the previous
Objectives 3 and 4, introducing special attention for the ‘integration . . . of those threat-
ened with exclusion form the labour market’. At the same time, the new Objective 4 gave
effect to the tasks laid down for the ESF in the Maastricht Treaty, aiming at facilitat-
ing workers’ adaptation to industrial changes and to changes in production systems.
Objective 5a maintained its initial goals, but also included aid to modernise and restruc-
ture fisheries, while Objective 5b facilitated the ‘development and structural adjustment
of rural areas’. Due to new territorial challenges in view of the Union’s enlargement,
a new Objective 6 for developing sparsely populated Nordic regions was introduced.
Finally, a new regulation was added, laying down provisions regarding the Financial
Instrument for Fisheries Guidance (FIFG).
The new regulations also promoted new measures to increase partnership, foster
transparency, simplify fund allocation procedures, and specify the role of national
­
 The history and evolution of Cohesion policy  ­25

BOX 1.3  THE SIX REGULATIONS OF THE 1994–1999 REFORM

●● Framework Regulation: Council Regulation (EEC) No. 2081/93 of 20 July 1993 amending
Regulation (EEC) No. 2052/88 on the tasks of the Structural Funds and their effectiveness
and on coordination of their activities between themselves and with the operations of the
European Investment Bank and the other existing financial instruments.
●● Coordination Regulation: Council Regulation (EEC) 2082/93 of 20 July 1993 amending
Regulation (EEC) No. 4253/88 laying down provisions for implementing Regulation (EEC)
No. 2052/88 as regards coordination of the activities of the different Structural Funds
between themselves and with the operations of the European Investment Bank and the
other existing financial instruments.
●● ERDF Regulation: Council Regulation (EEC) No. 2083/93 of 20 July 1993 amending
Regulation (EEC) No. 4254/88 laying down provisions for implementing Regulation (EEC)
No. 2052/88 as regards the European Regional Development Fund.
●● ESF Regulation: Council Regulation (EEC) No. 2084/93 of 20 July 1993 amending
Regulation (EEC) No. 4255/88 laying down provisions for implementing Regulation (EEC)
No. 2052/88 as regards the European Social Fund.
●● EAGGF (Guidance) Regulation: Council Regulation (EEC) No. 2085/93 of 20 July
1993 amending Regulation (EEC) NO 4256/88 laying down provisions for implement-
ing Regulation (EEC) No. 2052/88 as regards the European Agricultural Guidance and
Guarantee Fund (EAGGF) Guidance Section.
●● FIFG Regulation: Council Regulation (EEC) No. 2080/93 of 20 July 1993 laying down provi-
sions for implementing Regulations (EEC) No. 2052/88 as regards the Financial Instrument
for Fisheries Guidance.

governments, subnational institutions and the European Commission in light of the

subsidiarity principle (CEC 1993), and provided for an extension of partnership from
subnational governments to economic and social partners.
On 16 June 1993 the Commission published a Green Paper on the Community
Initiatives suggesting five main aims for future CIs: cross-­border, transnational and
interregional cooperation and networks; rural development; assistance to the outermost
regions; employment promotion and development of human resources; and manage-
ment of industrial change. After the consultation debate (CEC 1994), two new priorities
were added: development of urban areas hit by a crisis; and restructuring of the fishing
industry. As a consequence, in June 1994 new CIs were adopted. In addition, in 1995 the
Commission launched a new initiative called Peace, to support the peace and reconcilia-
tion process in Northern Ireland (CEC 1996).

THE 1999 REFORM: IMPROVING EFFECTIVENESS IN VIEW OF

ENLARGEMENT

The 1999 reform was framed by the EU’s commitment to support the accession of
the Central and Eastern European (CEE) countries, and the introduction of EMU.
Enlargement, in particular, prompted changes to regional policy, allowing for the accom-
modation of new members whose levels of wealth were considerably lower than those of
the EU15 (Begg 1999). Eastern enlargement represented a more serious challenge for the
26  Handbook on Cohesion policy in the EU

EU than previous enlargements. In fact, the richest candidate country, Slovenia, had a
per capita income around 70 per cent of the EU average. In other words, almost the entire
territory of the candidate countries would be eligible for Objective 1 assistance.
The economic context was also important. The launch of EMU took place in a period
of slow economic growth for many MSs, with Germany struggling to pay the costs of
the ‘internal’ enlargement to the eastern Länder. Moreover, the Amsterdam Treaty set
the achievement of a ‘high level of employment’ as one of the main aims of the EU.
For all these reasons, in November 1997 the European Council expressed its ‘hope that
the forthcoming reform of the Structural Funds . . . [would] make optimum use of the
Funds to serve employment needs wherever possible in the framework of the objectives
assigned   to them while respecting their primary purpose, which is to enable regions
lagging behind to catch up’ (European Council 1997).
The Commission outlined its plan for addressing these challenges in the ‘Agenda 2000:
For a Stronger and Wider Union’, a document offering a vision of the future of the
EU on the threshold of the twenty-­first century. The document highlighted a number
of priorities, such as the need to: maintain Cohesion policy; pursue the reform of the
Common Agricultural Policy (CAP); strengthen growth, employment and living condi-
tions through the EU internal policies; and to allow the accession of new members, while
maintaining budgetary discipline. In fact, the 1999 reform did not foresee increasing
spending on the Structural Funds but it was instead focused on the stabilisation of total
expenditures. Concentration, efficiency and simplification became the cornerstones of
this reform, which included a reduction to three of the number of the Objectives (thus
reducing the scope of the Structural Funds), the reduction of the CIs from 13 to four,
stricter eligibility rules, and the addition of a new efficiency principle to the existing five
principles. A timely and efficient use of Structural Funds was promoted by the so-­called
N12 rule: funds would be automatically ‘de-­committed’ by the end of the second year
following the year of commitment. Moreover, a performance reserve was also introduced:
the 4 per cent of the indicative allocation for each MS held back at the beginning of the
period was allocated as a ‘performance reserve’ to the programmes whose performance
the Commission, on the basis of proposals from the MS, considered to be successful. A
greater role was to be delegated to domestic actors in the implementation and monitoring
of programmes, thus reducing the Commission’s sphere of action and conferring greater
room for manoeuvre on national and subnational governments (Hooghe 2002; Sutcliffe
2000).
MSs looked at the Commission proposals with some concern. If, on the one hand, they
agreed on the need of a major reform, on the other hand they tried to reduce the loss of
the Structural Funds for their own regions. As a consequence, the Commission’s formal
legislative proposals presented in March 1998 explicitly introduced specific assistance
for areas affected by the loss of Structural Funds and provisions for a ‘safety net’. The
MSs were deeply divided over the budgetary figures. The net contributors to the EU
budget (primarily Germany and the Netherlands) opposed any significant increase in
EU Cohesion policy spending, while the net beneficiaries of regional policy (Spain and
Italy) argued that it would be unfair to pay for the eastern enlargement by reducing the
resources previously devoted to the Structural Funds. In the late spring and early summer
of 1999 the new regulations were finally approved (Box 1.4).
Following the Commission’s proposals, the new regulations reduced the number of
 The history and evolution of Cohesion policy  ­27

BOX 1.4  THE FIVE REGULATIONS OF THE 2000–2006 REFORM

●● Council Regulation (EC) No. 1260/1999 of 21 June 1999 laying down general provisions on
the Structural Funds.
●● Regulation (EC) No. 1783/1999 of the European Parliament and of the Council of 12 July
1999 on the European Regional Development Fund.
●● Regulation (EC) No 1784/1999 of the European Parliament and of the Council of 12 July
1999 on the European Social Fund.
●● Council Regulation (EC) No. 1263/1999 of 21 June 1999 on the Financial Instrument for
Fisheries Guidance.
●● Council Regulation (EC) No. 1257/1999 of 17 May 1999 on support for rural development
from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending
and repealing certain Regulations.

priorities from seven to three: Objective 1, promoting the development and structural
adjustment of regions whose development is lagging behind; Objective 2, supporting the
economic and social conversion of areas facing structural difficulties; and Objective  3,
supporting the adaptation and modernisation of policies and systems of education,
training and employment.
As said before, under the new regulations, regions that were eligible for regional assis-
tance under the Objectives in 1994–1999, but which were no longer eligible in 2000–2006,
qualified for an appropriate level of digressive transitional assistance in order to avoid
an abrupt cessation of Community funding. Among those regions which were no longer
eligible for Objective 1 funding, a distinction was made between those which, in 1999, met
the basic eligibility criteria for funding under the new Objective 2 and those that did not.
The former were entitled to transitional assistance from the four Structural Funds until
31 December 2006, whereas ERDF funding for the latter stopped on 31 December 2005.
Since Objective 1 continued to receive the large majority of the resources, the MSs more
privileged in funding allocation were Spain, Italy, the German eastern Länder, Greece
and Portugal.
Concentration affected also the CIs, whose number was reduced to four: Interreg III,
promoting cross-­border, transnational and interregional cooperation intended to encour-
age the harmonious and balanced development and spatial planning of the European
territory; Leader1 aiming at the promotion of the rural development via integrated
programmes and cooperation between local action groups; Equal, focused on fighting all
forms of discrimination and inequalities in connection with access to the labour market;
and Urban II, fostering social and economic regeneration of towns and neighbourhoods
in crisis, with a view to promoting sustainable urban development.

THE 2007 REFORM: MATCHING AN ENLARGED UNION AND

WIDER EU GOALS

According to Baun and Marek (2014: 49), ‘the regulatory package that was approved
in July 2006 represented the most radical reform of cohesion policy since 1988’ (see
28  Handbook on Cohesion policy in the EU

also Manzella and Mendez 2009: 19). Two factors explained these major changes: the
adaptation of Cohesion policy to the EU’s eastern enlargement, and the need that this
policy focuses on the goals established by the new Lisbon Agenda. In its Third Report on
Economic and Social Cohesion, the Commission suggested that the enlargement would
lead ‘to a widening of the economic development gap, a geographical shift in the problem
of disparities toward the east and a more difficult employment situation: socio-­economic
disparities will double, and the average [per capita] GDP of the Union will decrease by
12.5 percent’ (CEC 2004: xxv). This perspective caused growing concern among the MSs
that feared the shift of resources from the wealthiest MSs to the new ones. From a politi-
cal point of view, the new situation polarised the debate around two big coalitions: on
the one side, there were the MSs favouring a greater spending on Cohesion policy; on the
other, the wealthier states that opposed any significant increase of their contribution to
the EU budget.
The so-­called Lisbon Strategy was the second factor influencing the reform. In March
2000, the European Council launched an ambitious programme of reforms in order to
make the EU by 2010 ‘the most competitive and dynamic knowledge-­based economy
in the world, capable of sustainable economic growth with more and better jobs and
greater social cohesion’ (European Council 2000). To achieve this objective, measures at
Community level should concentrate on key actions and areas such as supporting knowl-
edge and innovation in Europe; reforming state aid policy; better regulation; developing
the internal market for services; completing the Doha round of international trade nego-
tiations; removing obstacles to mobility; developing a common approach to economic
migration; managing the social consequences of economic restructuring. Even if the
Lisbon Strategy was difficult to implement and presented many limits, it contributed to a
profound reframing of Cohesion policy.
The new regulations (Box 1.5) suffered from the long bargaining process between the
Commission and national governments taking place over the adoption of a new Financial
Perspective for 2007–2013. With discussions starting in the autumn of 2004, a political
agreement concerning the new EU budget was only achieved during the European
Council meeting of December 2005, and the allocation made available to Cohesion
policy was decided only in April 2006 when, in the framework of an interinstitutional
agreement, the EU decided to convey to Cohesion policy 35.7 per cent of the total EU
budget, or €308 billion (in 2004 prices). In absolute terms, this amount represented an
increase from the past; however, as a percentage of EU GDP it represented a decrease
compared to the previous period.
As of 2007 three new (or revised) Objectives defined Cohesion policy: Convergence,
Regional Competitiveness and Employment, and European Territorial Cooperation. The
Convergence Objective aimed to stimulate growth and employment in the least-­developed
regions. It highlighted innovation and the knowledge-­ based society, adaptability to
economic and social changes, and the quality of the environment and administrative
efficiency. The areas eligible for the Convergence Objective combined the regions with a
GDP less than 75 per cent of the Community average and MSs eligible for the Cohesion
Fund on a national criteria basis (GNI less than 90 per cent of the European average).
The Regional Competitiveness and Employment Objective aimed to reinforce the
regions’ competitiveness and attractiveness as well as employment, by anticipating
economic and social changes. It covered all the areas of the EU not eligible for the
 The history and evolution of Cohesion policy  ­29

BOX 1.5  THE SEVEN REGULATIONS OF THE 2007–2014 REFORM

●● Council Regulation (EC) 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 (EC) No. 1260/1999
●● Commission Regulation (EC) No. 1828/2006 of 8 December 2006 setting out rules for
the implementation of Council Regulation (EC) No. 1083/2006 laying down general provi-
sions on the European Regional Development Fund, the European Social Fund and the
Cohesion Fund and of Regulation (EC) No. 1080/2006 of the European Parliament and of
the Council on the European Regional Development Fund
●● Regulation (EC) No. 1080/2006 of the European Parliament and of the Council of 5 July
2006 on the European Regional Development Fund and repealing Regulation (EC) No.
1783/1999
●● Regulation (EC) No. 1081/2006 of the European Parliament and of the Council of 5 July
2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999
●● Regulation (EC) No. 1082/2006 of the European Parliament and of the Council of 5 July
2006 on a European grouping of territorial cooperation (EGTC)
●● Council Regulation (EC) No. 1084/2006 of 11 July 2006 establishing a Cohesion Fund and
repealing Regulation (EC) No. 1164/94
●● Council Regulation (EC) No. 1085/2006 of 17 July 2006 establishing an Instrument for Pre-­
Accession Assistance (IPA).

Convergence Objective. This was the unique provision established for defining territorial
eligibility. In other words, contrary to the previous Objective 2, there would no longer be
any Community zoning for the Regional Competitiveness and Employment Objective.
Finally, a new Objective for European Territorial Cooperation supported cross-­
border cooperation through joint initiatives by local and regional authorities, whilst at
the same time fostering transnational and interregional cooperation and exchanges of
best practice. More specifically, this Objective aimed to promote common solutions in
domains such as urban, rural and coastal development, the development of economic
relations, and the setting up of small and medium-­sized enterprises (SMEs). The focus of
­cooperation was on research, development, the knowledge-­based society, risk prevention
and integrated water management. Three programmes were established to support this
objective: Interact, which encouraged organisations involved in cooperative programme
management; Urbact, which was a thematic city network; and ESPON, an observation
network for spatial planning. Eligibility criteria changed accordingly to the main aims of
the proposed projects: for cross-­border cooperation, NUTS 3 level regions were eligible,
along all the land-­based internal borders and some external borders, along maritime
borders separated by a maximum distance of 150 km; for transnational cooperation, all
the regions were eligible but in the framework of the 13 cooperation zones identified by
the Commission; for interregional cooperation, and setting up networks and exchanges
of experience, non-­specific eligibility criteria were established.
About 81.5 per cent of all financial allocations were devoted to the Convergence Objective;
16 per cent supported the Regional Competitiveness and Employment Objective; and 2.5
per cent was allocated to the European Territorial Cooperation Objective. In absolute
terms, the MSs which benefited most were Poland, Portugal, Spain, Italy, the Czech
Republic, Germany and Hungary.
30  Handbook on Cohesion policy in the EU

The reform further confirmed the operational principles defined for the 2000–2006
programming period, but with some adaptations. The scope of the partnership principle
was widened to any appropriate organisation representing civil society, environmental
partners, non-­governmental organisations and organisations responsible for promoting
equality between men and women: they are entitled to participate in all stages concerning
the use of Structural Funds, from the setting up to the evaluation phases. Secondly, the
principle of additionality was applied differently: if, on the one side, it was confirmed that
the Structural Funds must not substitute a state’s spending, on the other side a financial
corrective mechanism was introduced in the event of this principle not being respected.
Moreover, a new proportionality principle was defined in order to modulate the MSs’
obligations to the total amount of expenditure on an operational programme. This rule
concerns the choice of indicators used to assess a programme, the obligations in terms of
evaluation, management and reporting; and the control and monitoring obligations: if
the programme does not exceed €750 million and if the contribution of the Commission
does not exceed 40 per cent of public expenditure, the state has less obligations.
Finally, the new Cohesion policy was more closely linked to other EU policies such
as the CAP and the Common Fisheries Policy. Moreover, cooperation with non-­EU
countries was no longer part of Cohesion policy, as two new initiatives, the European
Neighbourhood and Partnership Instrument (ENPI) and the Instrument for Pre-­
Accession Assistance (IPA) provide funds to that end. Finally, three new instruments
were introduced to help regions and MSs manage their funds more effectively and to
make good use of the financial resources given by the EIB and by other financial institu-
tions: JASPERS (Joint Assistance to Support Projects in European Regions), which aims
to support cooperation between the European Commission, the EIB, and the ERDF in
order to pool expertise and to assist MSs and regions in the preparation of major pro-
jects; JEREMIE (Joint European Resources for Micro and Medium Enterprises) which
is promoted by the Commission, the EIB and the European Investment Fund in order
to increase accessibility to EU funds for micro, small and medium-­sized enterprises;
and JESSICA (Joint European Support for Sustainable Investment in City Areas),
which coordinates the efforts of the Commission, the EIB, and the Council of Europe’s
Development Bank in the field of sustainable investment in urban areas (see Bubbico
et al. Chapter 12, this volume).

THE 2014 REFORM: RESPONDING TO A MUTATED

ECONOMIC CONTEXT

The last reform of Cohesion policy was also framed in a period of changes. More spe-
cifically, the approval of the Lisbon Treaty in December 2007 established the new legal
context in which the 2014 reform occurred (European Union 2007). Article 174 TFEU,
for instance, recognised Cohesion policy as one of the main instruments of the EU
aiming at promoting the EU ‘overall harmonious development’. Moreover, Art. 4 TFEU
categorised Cohesion policy as a shared competence between the Union and the MSs,
and Art. 175 TFEU changed the legislative process in the field of Cohesion policy from
the traditional ‘assent procedure’ to the new ‘ordinary legislative procedure’, attributing
to the European Parliament a more decisive role (see Hübner, Chapter 9, this volume).
 The history and evolution of Cohesion policy  ­31

And, once again, the economic context was also important. The dramatic economic
crisis that originated in the United States in 2008 had a great impact on the eurozone, and
especially on Greece, Ireland, Portugal, Italy and Spain. The debate on possible solutions
divided the MSs between those in favour of the adoption of austerity measures and those
in favour of solidarity. The severe economic recession afflicting the EU raised unemploy-
ment to an unprecedented level, particularly in Southern Europe. Deprived of a real
anticyclical EU policy, Cohesion policy was then used to mobilise new resources for the
national economies facing difficulties. The Commission adopted measures along three
main lines of interventions: secure greater flexibility, give regions a head start (increasing
cash flow, helping with major projects, simplifying state aid rules) and target Cohesion
policy smart investment. Greater flexibility has also been introduced in the calculation of
the final EU contribution. Moreover, the Commission proposed measures to simplify the
financial management of the Cohesion policy programmes to reduce the administrative
burden, such as the introduction of lump-­sum or flat-­rate payments for reimbursement.
The Commission (backed by the European Council) also approved the advance payments
(about €6.25 billion in 2009) for investment of the 2007–2013 programmes in order to
boost public investment. Finally, the Commission approved a series of measures to accel-
erate the development of major projects (CEC 2010a). In this context, in March 2010
the European Council approved the new document, Europe 2020, delineating a ten-­year
strategy to obtain jobs and growth in the EU. Five headline targets were agreed for the
EU to achieve by the end of 2020: employment; research and development; climate and
energy; education; and social inclusion and poverty reduction.
The Commission’s new approach to Cohesion policy was presented in November 2010
within the Fifth Report on Economic and Social Territorial Cohesion (CEC 2010b). In
this report, the Commission presented the benefits of Cohesion policy not only for the
poorest MSs, but for the entire EU. The Commission presented its formal legislative
proposals in October 2011. These proposals emphasised the importance of the invest-
ment for growth and jobs and of European territorial cooperation, the promotion of the
new partnership contracts in which MSs would specify the actions to be taken to achieve
Europe 2020 goals with the help of Cohesion policy, and proposed a new distinction
between regions: more-­developed regions, with a per capita GDP above 90 per cent of
the EU27 average; transition regions, with a per capita GDP between 75 and 90 per cent
of the EU27 average; less-­developed regions, with a per capita GDP less than 75 per cent
of the EU27 average.
MSs reacted differently. On the one side, the MSs less affected by the economic crisis
supported the idea of a reduction in Cohesion policy spending, while the others were
critical on this reduction. Moreover, the regions in the latter states were also against
the automatic disbursement of EU funds in the MSs failing to adhere to EU economic
governance rules on public deficits and debt, the so-­called ‘macro-­conditionality’ (Baun
and Marek 2014: 61). Negotiations over new regulations and the Multiannual Financial
Framework (MFF) began in 2011 and were very difficult. They lasted until February
2013 for the MFF, when the European Council agreed to grant €325 million to Cohesion
policy, about 34 per cent of an EU budget amounting to 1 per cent of the EU GNI. Added
to the allocation provided for the youth employment initiative, rural development and the
European Maritime and Fisheries Fund (EMFF), the total figure amounted to about
€450 million. The successive tensions with the European Parliament, whose consent was
32  Handbook on Cohesion policy in the EU

BOX 1.6  THE SEVEN REGULATIONS OF THE 2014–2020 REFORM

●● Regulation (EU) No. 1303/2013 of the European Parliament and of the Council of 17

December 2013 laying down common provisions on the European Regional Development
Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund
for Rural Development and the European Maritime and Fisheries Fund and laying down
general provisions on the European Regional Development Fund, the European Social
Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing
Council Regulation (EC) No. 1083/2006.
●● Regulation (EU) No. 1301/2013 of the European Parliament and of the Council of 17
December 2013 on the European Regional Development Fund and on specific provisions
concerning the Investment for growth and jobs goal and repealing Regulation (EC) No.
1080/2006.
●● Regulation (EU) No. 1304/2013 of the European Parliament and of the Council of 17
December 2013 on the European Social Fund and repealing Council Regulation (EC) No.
1081/2006.
●● Regulation (EU) No. 1299/2013 of the European Parliament and of the Council of 17
December 2013 on specific provisions for the support from the European Regional
Development Fund to the European territorial cooperation goal.
●● Regulation (EU) No. 1302/2013 of the European Parliament and of the Council of 17
December 2013 amending Regulation (EC) No. 1082/2006 on a European Grouping of
Territorial Cooperation (EGTC) as regards the clarification, simplification and improvement
of the establishment and functioning of such groupings.
●● Council Regulation (EU) No. 1300/2013 of 17 December 2013 on the Cohesion Fund and
repealing Council Regulation (EC) No. 1084/2006.
●● Regulation (EU) No. 1305/2013 of the European Parliament and of the Council of
17 December 2013 on support for rural development by the European Agricultural
Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No.
1698/2005.

necessary for the final approval of the EU budget, left these figures unaltered. The new
regulations for Cohesion policy were then approved in December 2013 (Box 1.6).
These regulations created the premises of what has been called European Structural
and Investment Funds (ESIF): the European Regional Development Fund, the European
Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development
and the European Maritime and Fisheries Fund. These funds had to cope with 11 new
thematic objectives related to Europe 2020 priorities:

  1. Strengthening research, technological development and innovation.

 2. Enhancing access to, and use and quality of, information and communication
technologies.
  3. Enhancing the competitiveness of SMEs.
  4. Supporting the shift towards a low-­carbon economy.
  5. Promoting climate change adaptation, risk prevention and management.
  6. Preserving and protecting the environment and promoting resource efficiency.
  7. Promoting sustainable transport and improving network infrastructures.
  8. Promoting sustainable and quality employment and supporting labour mobility.
 The history and evolution of Cohesion policy  ­33

  9. Promoting social inclusion, combating poverty and any discrimination.

10. Investing in education, training and lifelong learning.
11. Improving the efficiency of public administration.

According to the Commission’s proposals, two new goals also replaced the previous
three Objectives (investment for growth and jobs, and European territorial cooperation)
and a new three-­tier classification of EU regions was approved. The operational prin-
ciples remained substantially unchanged, but more results-­oriented. More specifically,
concentration touches upon three aspects: concentration of resources (70 per cent of
structural fund resources for 2014–2020 are concentrated on the poorest regions and
countries); concentration of effort (four thematic objectives – research and innovation,
information and communication technology, competitiveness of SMEs, transition to a
low carbon dioxide, CO2, emissions economy – absorb a large majority of resources);
and concentration of spending (at the beginning of each programming period, annual
funding is allocated to each programme; according to the N13 rule, these funds must be
spent by the end of the third year after their allocation). Moreover, new conditionality
measures have been introduced to reinforce the results-­orientation emphasis. A so-­called
ex ante conditionality was set up, introducing a number of framework conditions which
must be in place before the funds are disbursed to ensure that investments can be made
in the most effective manner and that the selected thematic objectives and investment pri-
orities are properly implemented. Also, progress towards the achievement of these objec-
tives is now closely monitored and measured against a set of milestones agreed as part
of a performance framework. Moreover, macroeconomic conditionalities are intended to
ensure that the effectiveness of the funds is not undermined by unsound m ­ acroeconomic
­policies. Last but not least, each MS has to negotiate with the Commission a new
Partnership Agreement which outlines the country’s strategy and proposes a list of
programmes.

CONCLUSIONS

This chapter presented the main turning points of the EU Cohesion policy, from its origin
to the most recent reforms. During its history, this policy has changed considerably, espe-
cially in the 1988 and in 2006 reforms: from a budgetary transfer to the MSs, Cohesion
policy is today a genuine regional development tool. Moreover, Cohesion policy is now
integrated with the most important EU policies and supports all the actions and objec-
tives established in the most comprehensive strategic documents, such as Europe 2020.
This policy is relevant not only from the economic and social point of view, but also from
a political perspective, since it has been used as an instrument to broaden support for EU
integration, especially in the more reluctant MSs. This political dimension is particularly
salient: it explains why this policy has seen its financial means growing since the mid-­
1980s and why its organisation has been so difficult to reform.
34  Handbook on Cohesion policy in the EU

REFERENCES

Ansell, C.K., C.A. Parsons, and K.A. Darden (1997), ‘Dual networks in European regional development
policy’, Journal of Common Market Studies, 35 (3), 347–375.
Bache, Ian (1998), The Politics of European Union Regional Policy: Multi-­ Level Governance or Flexible
Gatekeeping?, Sheffield: Sheffield Academic Press.
Bailey, D. and L. De Propris (2002), ‘The 1988 reform of the European Structural Funds: entitlement or
empowerment?’, Journal of European Public Policy, 9 (3), 408–428.
Baun, Michael and Dan Marek (2014), Cohesion Policy in the European Union, London: Palgrave.
Begg, Iain (1999), ‘Reform of the Structural Funds after 1999’, European Policy Paper Series, 5.
Bourne, Angela K. (2006), ‘Regional Europe’, in Michelle Cini (ed.), European Union Politics, Oxford: Oxford
University Press, pp. 287–303.
Commission of the European Communities (CEC) (1969), A Regional Policy for the Community, COM (69)
950, 15 October, Brussels.
CEC (1973), Report on Regional Problems of the Enlarged Community, COM (73) 550 def., Brussels.
CEC (1985), ‘Programme of the Commission for 1985’, Bulletin of the European Communities, Supplement
4/85.
CEC (1987), The Commission’s Programme for 1987, Communication from the Commission (COM(87) 100) to
the Council, Strasbourg, 18 February.
CEC (1988), Guide to the Reform of the Community Structural Funds, Luxembourg.
CEC (1993), Community Structural Funds 1994–1999: Revised Regulations and Comments, Luxembourg.
CEC (1994), The Future of Community Initiatives under the Structural Funds: Follow-­up to the Green Paper,
COM (94) 46 final/2, 25 March.
CEC (1996), Structural Funds and Cohesion Fund 1994–1999: Regulations and Commentary, January.
CEC (1997), Agenda 2000: For a Stronger and Wider Union, Document drawn up on the basis of COM (97)
2000 final, 13 July.
CEC (2004), Third Report on Economic and Social Cohesion: A New Partnership for Cohesion Convergence
Competitiveness Cooperation, February.
CEC (2010a), Commission Staff Working Paper ‘Cohesion Policy: Responding to the economic crisis’, A Review
of the Implementation of Cohesion Policy Measures Adopted in Support of the European Economic Recovery
Plan, Brussels, 25.10.2010 SEC(2010) 1291 final.
CEC (2010b), Fifth Report on Economic and Social Territorial Cohesion, Luxembourg: Publications Office of
the European Union.
Council of Ministers (1985), ‘Presidency Conclusion, European Summit Conference, Brussels, 29–30 March
1985’, Bulletin of the European Communities, 2-­1985.
European Council (1997), Extraordinary European Council Meeting on Employment, Luxembourg, 20 and
21 November 1997, Presidency Conclusions, C/97/300.
European Council (2000), European Council Meeting, Lisbon, 23 and 24 March 2000, Presidency Conclusions.
European Union (2007), Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing
the European Community, OJEU 2007/C 306/01.
Gilbert, Mark (2003), Surpassing Realism: The Politics of European Integration since 1945, Lanham, MD:
Rowman & Littlefield.
Halstead, Peter J. (1982), ‘The development of the European regional Fund since 1972’, PhD thesis, University
of Bath.
Heads of State and Government (1972), ‘Final communiqué of the Conference of the Heads of State
or Government of the Member States of the Enlarged Community, Paris’, Bulletin of the European
Communities, No. 10-­1972.
Heinelt, Hubert (1996), ‘Multilevel governance in the European Union and Structural Funds’, in Hubert
Heinalt and Randall Smith (eds), Policy Networks and European Structural Funds, Aldershot: Avebury, pp.
9–25.
Hooghe, Liesbet (1996), ‘Introduction: reconciling EU-­wide policy and national diversity’, in Liesbet Hooghe
(ed.), Cohesion Policy and European Integration: Building Multi-­Level Governance, Oxford: Oxford University
Press, pp. 1–24.
Hooghe, Liesbet (2002), ‘The mobilisation of territorial interests and multilevel governance’, in Richard Balme,
Didier Chabanet and Vincent Wright (eds), L’Action Collective en Europe, Paris: Presses de Sciences Po, pp.
347–374.
Leonardi, Robert (1995), Convergence, Cohesion and Integration in the European Union, London: Macmillan;
and New York: St Martin’s Press.
Manzella, Gian Paolo and Carlos Mendez (2009), ‘The turning points of EU Cohesion Policy’, Report
Working Paper, European Policies Research Centre, University of Strathclyde, January.
 The history and evolution of Cohesion policy  ­35

Pollack, Mark (1995), ‘Regional actors in an intergovernmental play: the making and implementation of EC
Structural Policy’, in Carolyn Rhodes and Sonia Mazey (eds), The State of the European Union, Vol. 2,
Boulder, CO: Lynne Rienner, pp. 361–390.
Ross, George (1995), Jacques Delors and European Integration, Oxford: Oxford University Press.
Sutcliffe, J.B. (2000), ‘The 1999 reform of the structural regulations: multi-­level governance or ­renationalization?’,
Journal of European Public Policy, 7 (2), 290–309.
Swift, M. (1978), ‘A regional policy for Europe’, Young Fabian Pamphlet, 48.
2.  The institutions and procedures of Cohesion
policy
Paul Stephenson

INTRODUCTION

Cohesion policy engages a multiplicity of actors over successive programming periods

in both renegotiating the Structural Funds regulations and interpreting them within
the new design of the operational programmes financed by the three main funds.
The main actors are the European Commission (EC), member states’ representatives
in the Council of the European Union (CEU) and the European Council, and the
European Parliament (EP). Member states’ officials – at the national and subnational
levels – are also obviously involved in the implementation of Cohesion policy on the
ground. Other important actors are the Committee of the Regions (CoR) and the
Economic and Social Committee (ESC), although only in a consultative capacity, and
the Court of Auditors (CA) and the European Investment Bank (EIB). Many other
non-­institutional actors, such as regional associations and lobby groups, also mobilise
around Cohesion policy. This chapter offers a descriptive overview of the role that
each of these actors plays in negotiating, implementing and evaluating Cohesion
policy, leaving to successive chapters the more detailed analysis of these actors and
their interactions.
This chapter first maps the actors and institutions in Cohesion policy. It then examines
the financing, rules and procedures in operation, before discussing the legal provisions
for technical assistance and the governance arrangements of the policy. The chapter seeks
to equip the reader with the essential background knowledge in order to appreciate the
intellectual contributions of the following chapters of this Handbook.

THE ACTORS AND INSTITUTIONS OF COHESION POLICY

European Commission

Cohesion policy is delivered through shared management between the Commission

and the member states. At the moment of writing (September 2015), Corina Creţu,
Romanian Vice-­President of the Commission, is Commissioner for Regional Policy
in the Juncker Commission (since June 2014). Her most recent predecessors have
included Michel Barnier (1999–2004), Danuta Hübner (2004–2009) and Johannes
Hahn (2010–2014). The Commissioner heads a department (Directorate-­General, DG)
for Regional and Urban Policy, commonly known as DG REGIO, which employs
around 700 people, and is organised into two parts, with eight vertical streams. The
first part deals with policy, performance and compliance (budget and general affairs,

36
 37
The institutions and procedures of Cohesion policy  ­

policy, audit), while the larger second part works on implementation, with each stream
having both an issue-­based and geographical focus (territorial cooperation and macro-­
regions, and North-­ West Europe; administrative capacity-­ building and South-­ East
Europe; operational efficiency and Central Europe; smart and sustainable growth, and
Southern  Europe; inclusive growth, urban and territorial development, and Northern
Europe). DG REGIO works with member states and regions to assess policy needs,
finance investments and oversee the monitoring and evaluation of results. It is respon-
sible for the European Regional Development Fund (ERDF) and Cohesion Fund (CF),
whilst the European Social Fund (ESF) is administered under the responsibility of
another Directorate-­General within the Commission, DG Employment, Social Affairs
and Inclusion (known as DG EMPL).
Studying administrative reform and institutional change in the Commission,
­Schön-­Quinlivain (2008, 2011) found that DG REGIO has transformed from a depart-
ment with highly centralised financial management – with DG Financial Control giving
the green light for every Commission transaction – to one that is decentralised, which
engendered an increased sense of responsibility on the part of officials. Yet, organi-
sational reform has also led to an explosion in staff workload in terms of managing
Cohesion policy programmes, given new requirements to ensure that internal audits
are carried out (Mendez and Bachtler 2011). Despite some simplification, the chal-
lenge remains how to improve the coordination, governance and financing of different
Cohesion policy funds, as well as how best Cohesion policy can effectively contribute to
achieving the European Union’s (EU) long-­term goals of smart, sustainable and inclu-
sive growth.

Member States

Across 28 member states, thousands of national ministries, and regional and local public
authorities, and a range of private actors are engaged in spending the Structural and
Cohesion Funds. Moreover, it is these same bodies that engage in national consultation
exercises in the run-­up to a new seven-­year programming period, to determine what issues
should be reflected in the priorities of the newly revised regulations on Cohesion policy.
The regulations themselves set out a framework, indicating priorities for the European
Union (at present for 2014–2020) to be ‘interpreted’ in the operational programmes at
member state level, be this through operational programmes in individual member states,
or through interregional, cross-­border and transnational territorial cooperation pro-
grammes that bring together multiple member states (or parts thereof).
How is Cohesion policy managed in the member states? Regional and National
Operational Programmes (ROPs and NOPs) make up the vast majority of spending.
Key actors are the managing authorities (MAs), whose functions are listed in Art. 125 of
the Common Provisions Regulation (CPR) (European Parliament and Council 2013a),
certifying authorities (Art. 126), audit authorities (Art. 127), and intermediate bodies,
that is, bodies in charge of undertaking delegated tasks for the managing or certifying
authorities.
Managing authorities are generally ministries and departments at national or regional
levels. They are responsible for: the accuracy and legality of payment transactions,
including internal controls and corrective measures (including the certification of service
38  Handbook on Cohesion policy in the EU

provision); information and publicity measures related to the operational programmes;

liaison between the authorities implementing the programme and other interested parties
where necessary; liaising with the European Commission and the implementation of all
accepted recommendations for amending management and monitoring procedures; pro-
gramme evaluation, and others.
Certifying authorities are responsible for drawing up and submitting payment appli-
cations to the Commission. They draw up the accounts, and certify their completeness,
accuracy and veracity as well as that the expenditure complies with applicable EU and
national rules. The audit authorities are instead responsible for carrying out audits on
the proper functioning of the management and control systems of the operational pro-
grammes and for auditing samples of projects during the programme lifetime (second-­
level controls).
Most implementation tasks are in fact not carried out by the MA – itself a political
body with limited staff resources and, arguably, limited expertise – but by intermediate
bodies (IB). Ministries and regional authorities departments can act as IBs, but external
agencies and technical assistance bodies (that is, consultants) often take up this task. The
lower-­level IBs are the ‘first recipients’ of applications and the first level at which compli-
ance with eligibility rules is analysed and improved. Being closer to final beneficiaries,
they know best the main problems to be solved. They deal with practical issues and are
responsible for tasks ranging from selecting, contracting, monitoring and evaluating co-­
financed projects to promoting the external certification of expenditure and six-­monthly
and annual performance reports (Molle 2007: 209).
Monitoring committees (articles 47–49 CPR), which comprise the actors involved in
programme implementation and programme partners, are responsible for reviewing pro-
gramme implementation and performance, identifying those issues that affect them, as
well as making observations to the MAs and monitoring those actions taken about such
observations. A notable change introduced by the CPR for the 2014–2020 period has
been the provision of ‘voting rights’ within the MCs for the representatives of partners,
‘thus potentially strengthening the application of partnership in programme implementa-
tion’ (Baun and Marek 2014: 138).
Specific to European Territorial Cooperation (ETC) programmes, managing author-
ities often appoint Joint Technical Secretariats for the day-­to-­day management of
the seven-­ year programme and for the project development process, working in
­collaboration with a series of national contact points in the member states, who often
work in a regional or national ministry, or else work freelance, having been hired by the
national public authorities who manage Structural Funds and regional and Cohesion
policy. Together they help project applicants to build and promote their project, from
the first registering of a project idea, through to the submission of the application
for funding. In some cross-­border cases new legal structures, notably the European
Groupings for Territorial Cooperation (EGTCs), have been created. EGTCs are legal
entities, whose objective is to facilitate and promote cross-­border, transnational and
interregional cooperation between their members. Made up of member states, regional
authorities, local authorities and/or bodies governed by public law, their competences
are laid down in binding conventions for cooperation (see Gänzle, Chapter 24, this
volume).
 39
The institutions and procedures of Cohesion policy  ­

European Parliament

Besides the Budgets Committee (a powerful committee responsible for the setting of
the EU budget and Multiannual Financial Framework) and the Budgetary Control
Committee (a weaker non-­legislative body), the main legislative committee responsible
for Cohesion policy is the European Parliament’s Committee on Regional Development
(EP REGI), currently chaired by Bulgarian Iskra Mihaylova since 7 July 2014 (Group
of the Alliance of Liberals and Democrats for Europe) (see Hübner, Chapter 9, this
volume). REGI is responsible for Cohesion policy and for assessing the impact of other
Union policies on economic and social cohesion. It coordinates the EU’s structural
instruments. The committee works on a number of dossiers and produces own-­initiative
reports, researching issues relevant to the geography of Cohesion policy (for example,
marginalised communities, the urban dimension, a strategy for the Adriatic, an instru-
ment for pre-­accession assistance), its governance (for example, interoperability solutions
for public administrations, statistics for macroeconomic imbalances, fixing an adjust-
ment rate for direct payments) and its effectiveness (for example, a review of the Europe
2020 strategy, budgetary discharge).
The Parliament’s Directorate-­General for Internal Policies is responsible for organis-
ing the work of the EP committees and comprises six directorates. Policy Department  B:
Structural and Cohesion Policies, supports the work of REGI by producing studies
and research reports. It covers internal policies across five areas: agriculture and rural
development; culture and education; fisheries; regional development; and transport and
tourism.1 The June 2014 Vademecum of the DG for Internal Policies outlines the role of
the EP and REGI. It provides an overview of the history of Cohesion policy since 1988,
and the primary and secondary laws that constitute the legal framework.2

Committee of the Regions

The Committee of the Regions (CoR) was created in 1994 in the wake of the Maastricht
Treaty. It provides a voice for Europe’s regional and local representatives, who are elected
in the 28 member states (see Schönlau, Chapter 10, this volume). It has 353 members who
work within six commissions, of which the Territorial Cohesion Policy and EU Budget
(COTER) deals with issues concerning Cohesion policy. The CoR can intervene through-
out the policy process. At the pre-­legislative phase, before the Commission draws up a
legislative proposal, it consults regional and local authorities and cooperates with the
Commission on impact assessment. The Commission must consult with the CoR before
adopting legislative proposals, working in consultation with partners to ensure subsidi-
arity is respected. It is also co-­organiser, with the European Commission, of the annual
Open Days – European Week of Regions and Cities, which are a showcase for regions
and cities and an opportunity for self-­promotion. The event has grown significantly with
more than 6000 people attending 100 workshops, debates and exhibitions.

European Court of Auditors

Cohesion policy accounts for almost a third of the total EU budget, that is, €351.8 billion
for the period 2014–2020 (32.5 per cent of the EU budget), though this figure rises to
40  Handbook on Cohesion policy in the EU

€453.2 billion if one takes into account all rural development monies.3 The Court audits
the implementation of Cohesion policy, where 80 per cent of policy expenditure involves
shared or decentralised management in and with the member states (Cipriani 2010; Molle
2011). It is essential to ensure independent, external financial control on this expenditure.
The European Court of Auditors checks how European taxpayers’ money has been
spent, carrying out financial audits (regularity: do the sums add up?), compliance audits
(legality: has the money been spent according to the rules?), and performance audits
(value for money: was the money used effectively?). It performs these audits in coop-
eration with the national audit offices (‘supreme audit institutions’). Its annual report
on the implementation of the EU budget contains an error rate for Cohesion policy.
Its performance reports (‘special reports’), several of which have focused on Cohesion
policy, contain recommendations. All reports are delivered to the European Parliament’s
Budgetary Control Committee (as well the Council’s Budgets Committee), which engages
in scrutiny and follow-­up (see Karakatsanis and Weber, Chapter 11, this volume).
Cohesion policy consistently presents the highest error rates across all policy areas in
the European budget, which may be unsurprising given the sheer number of individual
financial transactions involved. Most errors are linked to public procurement and the eli-
gibility of expenditures (European Commission 2011; see annual reports of the European
Court of Auditors; Karakatsanis and Weber, Chapter 11 in this volume). Error does not
necessarily mean fraud, but fraud has been rife, with misuse of the Structural Funds in
many areas. In fact, it was the prospect of own budgetary resources, with the creation of
the EU budget in the 1970s – alongside increasing stories of fraudulent spending in the
Communities, particularly in agriculture – that led to the creation of the Court in 1977.
Today, any suspicion of fraud is passed on to OLAF, the European Anti-­Fraud Office.

European Investment Bank

The European Investment Bank (EIB) plays an active role in delivering jobs and growth,
including by supporting the implementation of Cohesion policy. The EIB is the bank of
the European Union, and is effectively owned by the 28 member states. It is the world’s
largest multilateral lender and borrower, providing finance and expertise for invest-
ment projects. In 2007–2013, EIB financial support for cohesion objectives amounted
to €147 billion (38 per cent of total lending in the EU). The Bank supports Cohesion
policy in four principal ways: (1) lending to projects and programmes in less-­advanced
regions and helping to attract investors; (2) assisting governments to access structural and
investment funds by providing the co-­financing for national and regional contributions;
(3) helping governments to make the most of the EU funds by using them to provide
equity, loans and loan guarantees for sectors including regional, urban renewal and envi-
ronmental projects, as well as supporting small and medium-­sized enterprises (SMEs);
and (4) providing advisory services to countries and regions at the preparation stage of
investment projects in order to improve quality and raise the chances for successful imple-
mentation.4 Loans can be invested in key areas: infrastructure, including trans-­European
networks, sustainable energy, waste management, food security, education and training,
information and communication technologies, and so on. For example, in 2009, a €1.1
billion loan enabled Lithuania to co-­finance all three operational programmes in the
country, while a €2 billion loan to Greece in 2010 enabled it to implement its 2007–2013
 41
The institutions and procedures of Cohesion policy  ­

National Strategic Reference Framework. Lending in the 2014–2020 programming

period is in line with the Europe 2020 strategy and continues to be in close coordination
with the member states (for more detail, see Bubbico et al., Chapter 12, this volume).

Formalised Interest Groups

A wealth of organisations and bodies seek to shape Cohesion policy and take part in pro-
jects financed by it. Many have a geographical, topographical or thematic focus, acting
as federations or umbrella bodies, to champion vested interests with a louder voice in
Brussels. Three important groups are outlined below.
First, the Council of European Municipalities and Regions (CEMR) is the largest,
broadest and oldest organisation of local and regional government in Europe, promoting
citizenship and exchange among elected representatives in 41 countries. It is the Europe
section of the world organisation United Cities and Local Governments (UCLG). It
represents 60 member organisations and 150 000 local governments. Created in 1951, it
promotes ‘the constructions of a united, peaceful and democratic Europe founded on self-­
government, respect for the principle of subsidiarity and the participation of citizens’.5 Its
work is organised around two pillars: influencing European policy and legislation in all
areas having an impact on municipalities and regions; and providing a forum for debate
between local and regional authorities via their national representative associations. As
such, it has intervened in the debates on the reform of Cohesion policy too.
Second is the Conference of Peripheral Maritime Regions (CPMR), which brings
together 150 regions and claims to be ‘not just an interest group but a think-­tank for
Europe’.6 It works to ensure that the EU institutions and national governments take
account of their common interests and cooperate on practical projects to enhance
common assets. It is comprised of six geographical commissions – Atlantic Arc, Balkan
and Black Sea, Islands, Inter-­mediterranean, Baltic Sea, North Sea – as well as 11
working groups on thematic issues, including Cohesion policy. With an eye on the reform
of Cohesion policy for the post-­2020 period, in July 2015 the Conference Secretariat pro-
duced a report on regional disparities trends according to the latest statistics produced
by Eurostat which showed, based on the assumption of an unaltered Cohesion policy
framework, that 32 regions would change status, 31 of them for the worse (CPMR 2015).
Third, Eurocities is a network of major European cities, founded in 1986 by the mayors
of six cities: Barcelona, Birmingham, Frankfurt, Lyon, Milan and Rotterdam. Today
it brings together more than 130 of Europe’s largest cities and 40 partner cities, which
between them govern 130 million citizens in more than 35 countries. Eurocities seeks to
reinforce the important role that local governments should play in a multilevel govern-
ance structure. It aims to ‘shape the opinion of Brussels stakeholders and ultimately shift
the focus of EU legislation in a way which allows city governments to tackle strategic
challenges’.7
Academic and professional associations and networks also play a role in informing the
policy. Cohesion policy is studied by a wide range of scholars and practitioners inter-
nationally. Their work analyses Cohesion policy governance and impact, and also feeds
into policy redesign through close contact with Brussels-­based and member state policy-­
makers. The Regional Studies Association (RSA), celebrating its fiftieth anniversary in
2015, is the most important academic network of scholars working on Cohesion policy
42  Handbook on Cohesion policy in the EU

developments in various disciplines: economics, geography, political science, planning

and sociology. The association has sponsored a research network dedicated specifically to
Cohesion policy. Cohesion policy is also studied under the aegis of the European Spatial
Planning Observatory Network (ESPON), an interregional cooperation network funded
by the European Regional Development Fund which promotes a territorial dimension
to development and cooperation by providing evidence, knowledge transfer and policy
learning to public authorities. Four-­fifths of its almost €50 million budget comes from
the EU.

THE FUNDS

Cohesion policy comprises three main funds: the European Regional Development Fund
(ERDF), European Social Fund (ESF) and the Cohesion Fund, set up in 1992 in the
wake of Spain and Portugal’s accession to the EU (see Brunazzo, Chapter 1, this volume).
Other monies include the European Solidarity Fund (EUSF), the Instrument for Pre-­
accession Assistance (IPA) and the Aid Programme for the Turkish Cypriot Community.
The ERDF aims to strengthen economic and social cohesion in the EU by correct-
ing imbalances between its regions. It focuses investments on key priority areas through
­‘thematic concentration’ in innovation and research, the digital agenda, support for SMEs,
and the low-­carbon economy. The amount of ERDF allocated depends on the category
of the region (see Brunazzo, Chapter 1, this volume): in more developed regions, at least
80 per cent of funds must focus on at least two of these priorities; in transition regions the
focus is 60 per cent of the funds; while less-­developed regions are only required to spend
50 per cent of their allocated funds on such priorities. ERDF resources must be channelled
specifically to low-­carbon economy projects too: in more developed regions 20 per cent,
transition regions 15 per cent, and less-­developed regions 12 per cent.8 The ERDF also
has special territorial characteristics, designed to reduce economic, environmental and
social problems in urban areas, with a special focus on sustainable urban development. At
least 5 per cent of ERDF resources are set aside for ‘integrated actions’ managed by cities
(see Atkinson and Zimmermann, Chapter 26, this volume), while areas that are naturally
disadvantaged from a geographical viewpoint (remote, mountainous or sparsely populated
areas) benefit from special treatment, as do outermost regions.
The Cohesion Fund is aimed at member states whose national income per inhabitant
is less than 90 per cent the EU average. It aims to reduce economic and social disparities
and to promote sustainable development. For the period 2014–2020 the fund concerns
Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia,
Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia. It allocates a total
of €63.4 billion to activities focused on transport and environment: first, trans-­European
networks, notably priority projects of European interest as identified by the EU, and
infrastructure projects under the Connecting Europe Facility; and second, projects that
benefit the environment though energy efficiency in transport and renewable energy,
and which encourage rail transport, intermodality and public transport (European
Parliament and Council 2013b).9
The ESF focuses on improving employment and education opportunities, as well as
improving the situation of those most vulnerable at risk of poverty. Covering all regions,
 43
The institutions and procedures of Cohesion policy  ­

it allocates more than €80 billion for human capital investment in the period 2014
to  2020, with an extra €3.2 billion for a Youth Employment Initiative. The ESF’s four
thematic focuses are: promoting employment and supporting labour mobility; promoting
social inclusion and combating poverty; investing in education, skills and lifelong learn-
ing; enhancing institutional capacity and an efficient public administration.

THE PROCEDURES OF COHESION POLICY: THE

IMPLEMENTATION CYCLE

Drawing Up Programmes

The budget for Cohesion policy and the rules for its use are decided jointly by the
European Council and the European Parliament on the basis of a Commission proposal.
In addition to common rules (regulations) for the European Structural and Investment
Funds which, in addition to the ERDF, ESF and CF also comprise the European
Agricultural Fund for Rural Development (EAFRD) and the European Maritime
and Fisheries Fund (EMFF), there are rules specific to each fund. The principles and
priorities are arrived at through a process of negotiation whereby member states draw
up Partnership Agreements, outlining the country strategy and the list of programmes
through which it will be delivered, and thereafter, the Commission gives its opinion.
Member states and regions draft Operational Programmes (OPs) covering entire
member states, groups of regions or individual regions. The Commission negotiates with
national authorities on the final content of the programmes and the partnership agree-
ment (see Bachtler and Mendez, Chapter 8, this volume). Public authorities tend to draw
up programmes, generally with consultative processes involving other public and private
bodies (for example, representative associations of local authorities, entrepreneurs and
trade unions). In addition, projects themselves can be cross-­sectoral and engage civil
society bodies, private firms and universities/ and research institutes, as well as regional
and local public administrations. Managing authorities in the member states put in place
administrative structures (internally or externally) to select, monitor and evaluate project
applications. This work is organised by managing authorities or designated intermediate
bodies. The Commission pays tranches of the ERDF to the managing authorities so that
they can start to commit funds to projects and their various project partners (financial
beneficiaries).

Drawing Up Projects

In some cases, particularly for some types of (generally larger) projects, projects are
identified directly in the text of the programmes. In others, calls for projects are issued
whereby once a new operational programme gets under way, the managing authorities
and/or intermediate body launches competitions for potential beneficiaries to submit
project applications under the various areas of interventions foreseen by the programme.
Programme secretariats and implementing bodies often have staff to advise prospective
applicants on how to put the project bid together, providing guidelines and assistance on
issues related to project content, aims and objectives, eligible expenditure and the like.
44  Handbook on Cohesion policy in the EU

Project applications typically have to specify the deliverables that the project expects to
realise and successful projects are subsequently required to report on those as well as on
financial progress. MAs may hold regular calls for proposals for as long as there remains
money at programme level to be committed. They monitor the progression of expendi-
ture and the achievement of programme objectives by cumulating the project objectives
reported in activity reports. As implementation proceeds, the MAs may choose to trans-
fer remaining funds from one priority area to another, in order to avoid decommitment,
or to stimulate expressions of interest in thematic areas that have been less popular, so as
to achieve the anticipated programme goals.

Appraising and Approving Projects

Project funding may be automatically allocated once an appraisal has been done to ascer-
tain that the funding application meets basic eligibility criteria, with particular attention
paid to the fit with the programme and, where applicable, other national or regional
strategic frameworks. Procedures for selecting projects vary, even within programmes,
depending on the type of intervention. In some cases, procedures are streamlined and
automatic, to the extent that projects are automatically funded once it has been appraised
that basic criteria are met, or more elaborated, for example through projects scoring and
ranking.
Several selection criteria can be used to determine the quality of the application.
Core eligibility criteria ensure that projects comply with the basic rules of the Structural
Funds, while selection criteria address the merits of the project. Eligibility criteria are
minimum requirements, each of which has to be met for a project to be declared admis-
sible. If a project application is eligible it may be then scored for quality against a number
of selection criteria. A number of core principles at the heart of policy are often broadly
interpreted to inform evaluating criteria, for instance: strategic fit (working to achieve
smart, sustainable, inclusive growth); complementarity (fair and balanced strategies for
economic growth that encourage mutual cooperation over direct competition); economy
(avoiding excessive cost and duplication in project actions and investments); additional-
ity (delivering added value with EU funds in a way that could not be achieved through
national funding alone); experimentation (favouring new approaches to problem-­solving,
and the trialling of alternative solutions); learning (drawing lessons from existing best
practice in a neighbouring region).
In the case of national and regional OPs one might see tensions between sectoral minis-
tries, DGs or local authorities within a region where politicians try to favour the approval
of a project for personal electoral gain. In ETC, where several member states are involved
in a single transnational cooperation area, politics becomes particularly evident halfway
through programming periods, as member states closely monitor where programme
money has been allocated. They might do this by looking at the total ERDF flowing
to their member state (all partners across all projects in that programme), or the ERDF
flowing to lead partners only in their member state, or the ERDF to each region based on
a per capita of the population calculation. Recommendations whether to approve or reject
the project provided to a Programme Monitoring Committee (PMC), comprised of two
to three members of each member state participating in the operational programme. This
committee usually meets twice a year and makes decisions based on the recommendations
 45
The institutions and procedures of Cohesion policy  ­

it receives, though it can deviate and engage in political bargaining. In short, while the
project appraisers are as far as possible objective, it is important to highlight the political
nature of decision-­making based on approval by a committee. PMCs or project selection
advisory boards (where they exist) may deviate if there is political pressure to see a project
given the go-­ahead. It is thus in the interests of the projects themselves to lobby their
member state representatives. Statistics can be used in many ways by political decision-­
makers to advance an argument that a region has received comparatively more or less than
others, and in so doing, apply political pressure to approve favoured projects.

Providing Match Funding

EU monies are usually paid out on the basis of receipts provided by final beneficiaries
that show evidence of money already spent. This means that money is by and large not
paid in advance, but on the basis of past transactions. However, state aid advances can
be paid, up to 40 per cent of eligible expenditure (see Art. 131(d) CPR). The amount
paid to project partners will depend on the grant rate applicable to the eligible expendi-
ture. Co-­financing rates vary depending on regions and programmes, as well as types of
intervention (studies, soft actions, investments). The rates are decided in the programmes
themselves. Depending on the administrative system and on the programme, co-­financing
can either be provided upfront as part of the financial plan of the OP, or inbuilt in match
funding, where the project beneficiaries commit to contribute their share of resources to
the project. For example, for a project with a grant rate of 50 per cent, when a receipt for
€1000 is submitted, €500 will be reimbursed to the project. This assumes that every €1 of
ERDF is matched by €1 of match funding raised by the project. In such cases, project
applications will only be eligible if accompanied by a statement of intent signed by the
lead partner, declaring that it has the political will to commit to the project and will
secure the necessary co-­financing, should the project be approved.
Once funds are allocated to a project, the project must ensure that it spends the money
in respect of the amounts indicated in the various budget lines of the project according to
the timetable set out. Projects have to spend according to the timetable set at the time of
project approval; deviations or revisions to the timetable may have to be communicated
to and approved by the managing authority. Since 2002, following regulation 1260/1999
(Council of the European Union 1999), the Commission has applied a strict ‘N12’ rule
(Art. 31(2)) in the implementation of Cohesion policy that applies to programmes as
a whole; that is, the sum of all expenditure from the different projects determines the
amount of certified expenditure valid for establishing whether the rule has been met. In
an attempt to include as much eligible expenditure as possible, in the wake of the crisis,
in 2010 the Commission pushed to introduce an ‘N13’ rule for the new EU12 (European
Parliament and Council 2010). The current CPR has extended the rule to three years for
all member states (Art. 136 CPR); thus funds that have not been claimed from the EU
budget based on certified expenditure within three years from the year of commitment in
the EU budget are lost to the programme.
Understandably, the member states and regions are keen to avoid any ‘decommitment’
of available European funds. Programme authorities thus place pressure on project
holders to ensure timely implementation. Projects that are not spending according to
their original proposed timetables are sometimes threatened with decommitment at
46  Handbook on Cohesion policy in the EU

project level so that the money can be redirected to other projects that are spending well
and speedily. This creates an obvious tension, in terms of spending money quickly as
opposed to spending money effectively, hence the need to monitor closely the quality of
output. Programmes can tend to adopt strict criteria and uphold high quality thresholds
at the beginning of a new programming period, and then relax their demands in order
to meet the expenditure required to avoid decommitment. So, if initially MAs or imple-
menting bodies may reject project proposals and encourage resubmissions, only approv-
ing the strongest applications at the outset, later in the programming period these bodies
may be less stringent, eager to commit money on the ground.

Assessing Policy and Programme Results and Performance

The CPR introduced new rules on monitoring and evaluation as part of a wider effort
to enhance the results orientation of programmes. First, programme authorities are
now required to set up monitoring systems that allow tracking progression towards
established target values (to be reached in 2023) in relation to output, results and a selec-
tion of common, EU-­wide, indicators (Art. 27 and 96 CPR). Second, programmes are
required also to establish measurable milestones (to be achieved by 2018) and targets (to
be achieved by the end of the programme period, in 2023), linked to the allocation of a
new performance reserve (Art. 18–20 and Annex II CPR). And lastly, managing authori-
ties are required to draft Evaluation Plans (previously not compulsory), which have to
be approved by the PMC within one year from the adoption of the programme (Art.
114.1  and 110.2 CPR). Such plans should comprise both implementation and impact
evaluations. Managing authorities have to ensure that the evaluations foreseen are real-
ised, that their conclusions and recommendations are discussed within the PMC, and
that agreed action points are followed up (Art. 56.3 CPR) (Polverari 2015b).
With regard to both monitoring and evaluation, programme authorities have devel-
oped expertise and experience incrementally, over successive programming periods;
however, data accuracy and capacity limitations – within MAs, implementing bodies,
project holders and the evaluation community at large – continue to be a problem in
some countries, and new challenges are also emerging in relation to the necessity to carry
out evaluations, such as theory-­based and counterfactual evaluation, that require dif-
ferent skills than those employed in 2007–2013. Altogether, these changes are intended
to redress the balance from implementation (expenditure) to impact, enabling a shift
compared to 2007–2013 when financial absorption, partly linked to the economic crisis,
dominated the agenda (Polverari 2015b).

TECHNICAL ASSISTANCE

In order to support effective programme management and delivery, programme authori-

ties can utilise resources for so-­called technical assistance activities. These types of actions
can be undertaken at the initiative of the Commission and at the initiative of member
states, with the latter having to be specified in the programmes (Art. 56 CPR). Technical
assistance activities typically include provision of support in the areas of programme
drafting, management, monitoring, evaluation and communication activities, but also
 47
The institutions and procedures of Cohesion policy  ­

administrative capacity-­building, reduction of administrative burden, networking and

complaint resolution (European Parliament n.d.: 56). Ceilings are established for techni-
cal assistance spending, to ensure that monies are spent principally on project activities
and not used largely to finance the running of existing public sector entities. To facilitate
the creation of streamlined delivery arrangements in a context where member states
implement multiple funds, it is possible for technical assistance activities to be framed to
comprise several categories of regions (Art. 104).
The amount of the Funds allocated to technical assistance is limited to 4 per cent of
the total amount of the Funds allocated to operational programmes in a member state
under each category of region (Art. 119(1)). Each Fund may be used to support technical
assistance operations eligible under any of the other Funds; the allocation cannot exceed
10 per cent of the total allocation of that Fund to operational programmes in a member
state (Art. 119(2)). Technical assistance operations may be implemented outside the
programme area, but within the Union, provided that the operations are for the benefit
of the operational programme, or, in the case of a technical assistance operational pro-
gramme, for the other programmes concerned (Art. 119(3)).
Thus, the legislation prescribes the maximum financial contribution of ERDF funds
to technical assistance. It leaves the organisation of technical assistance structures in the
hands of the member states, which must agree on ways to reinforce the administrative
capacity for implementing the funds.

GOVERNANCE ARRANGEMENTS

It is left to member states to decide upon the appropriate institutional configuration for
policy implementation. The architecture of the system permits a lot of leeway to national
and local actors: ‘this entails the risk of loss of effectiveness use to a distortion of the
policy as the agents responsible for implementation are tempted to use the EU resources
for national or local objectives’ (Molle 2007: 191). Member states must decide on the
capacity they deem appropriate for implementing policy effectively. In some member
states devolution has led to greater accountability of Cohesion policy expenditure
(Polverari 2015a). Successful implementation depends on a range of factors, not least
political will in lower-­level public administrations (Milio 2010).
When implementing Cohesion policy through operational programmes there is a fun-
damental need for appropriate administrative capacity, to be able to coordinate, provide
advice and, essentially, act as intermediary between stakeholders. The organisation of
implementation is ‘firmly rooted’ in existing national and regional administrative structures
(Molle  2007: 209). The managing authority institution is shaped by the power, size and
political culture of each country. As Molle asserts, ‘there is no tailor-­made structure and no
uniform concept regarding the delegation of tasks by MAs has as yet emerged’ (ibid.).

CONCLUSIONS

Given the multiplicity and complexity of organisational arrangements in Cohesion

policy, it seems most tempting to conceive of Cohesion policy’s architecture as one of
48  Handbook on Cohesion policy in the EU

policy networks, with multilevel policy actors participating in operational programmes

with clusters of actors (experts, lobbies, academics, non-­governmental organisations,
and so on) involved in the different thematic priorities. The architecture of implement-
ing Cohesion policy may be considered an embodiment of multilevel governance in
the conventional sense of supranational, national and subnational levels, since we may
see member state actors engaged at each level, but it is arguably more than just that
(see Gualini, Chapter 32, this volume). Cohesion policy is organised according to roles
and tasks at programme level (strategic and operational) and project level (development,
evaluation, management): at project level, one might consider the presence of several
overlapping issue networks; at programme level, there is sometimes decentralisation
and delegation to intermediate bodies. Therefore, we see considerable ‘agencification’.
Structures and organisational linkages depend on the roles that each level’s actors play in
the implementation process. We might therefore consider, from a functional perspective,
that the architecture of Cohesion policy is one of task-­based, actor-­centred institutional-
ism (Scharpf 1997). Alternatively, given the leeway that the member states are given to
organise their own technical assistance arrangements, one might consider that Cohesion
policy is a vital expression of experimentalist governance (Sabel and Zeitlin 2012),
whereby rules, procedures and operating frameworks are established by the Commission
and member states according to their specific geographical and thematic needs, with con-
siderable day-­to-­day autonomy for lower level units. These themes are further explored
in Part III of this Handbook, where various authors consider the theoretical implications
of Cohesion policy.

NOTES

1. Reports can be accessed via the EP’s website at http://www.europarl.europa.eu/committees/en/supporting-­

analyses-­search.html or the EU bookshop at https://bookshop.europa.eu/en/home/, accessed 25 November
2015.
2. http://www.europarl.europa.eu/document/activities/cont/201407/20140728ATT87364/20140728ATT8736
4EN.pdf, accessed 25 November 2015.
3. http://ec.europa.eu/regional_policy/en/funding/available-­budget/, accessed 25 November 2015.
4. http://www.eib.org/attachments/thematic/economic_social_cohesion_en.pdf, accessed 25 November 2015.
5. http://www.ccre.org/, accessed 25 November 2015.
6. http://www.crpm.org/, accessed 25 November 2015.
7. http://www.eurocities.eu/, accessed 25 November 2015.
8. http://ec.europa.eu/regional_policy/en/funding/erdf/, accessed 25 November 2015.
9. http://ec.europa.eu/regional_policy/en/funding/cohesion-­fund/, accessed 25 November 2015.

REFERENCES

Baun, Michael and Dan Marek (2014), Cohesion Policy in the European Union, London: Palgrave.
Cipriani, Gabriele (2010), The EU Budget: Responsibility without Accountability?, Brussels: Centre for
European Policy Studies (CEPS).
Council of the European Union (1999), Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down
general provisions on the Structural Funds, OJEC L 161/1.
CPMR (2015), ‘What do the recent regional GDP statistics tell us about Cohesion? Analysis from the CPMR
Secretariat – July 2015’, available at http://news.crpm.org/wp-­content/uploads/2015/08/Analysis-­from-­the-­
CPMR-­Secretariat-­Regional-­GDP-­statistics-­July-­2015.pdf.
 49
The institutions and procedures of Cohesion policy  ­

European Parliament (n.d.), European Union Cohesion Policy 2014–2020. A Comprehensive Presentation of the
Legislative Package and the Role of the European Parliament, PE532.425v01-­00, accessed 11 October 2015
at http://www.europarl.europa.eu/document/activities/cont/201407/20140728ATT87362/20140728ATT8736
2EN.pdf.
European Parliament and Council (2010), Regulation (EU) No 539/2010 of the European Parliament and the
Council of 16 June 2010 amending Council Regulation (EC) No 1083/2006 laying down general provisions on
the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards sim-
plification of certain requirements and as regards certain provisions relating to financial management, OJEU L
158/1.
European Parliament and Council (2013a), Regulation of the European Parliament and of the Council (EU) No
1303/2013 laying down common provisions on the European Regional Development Fund, the European Social
Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime
and Fisheries Fund, OJEU L 347/320.
European Parliament and Council (2013b), Regulation (EU) No 1300/2013 of the European Parliament and of
the Council of 17 December 2013 on the Cohesion Fund and repealing Council Regulation (EC) No 1084/2006,
OJEU L 347/281.
Mendez, C. and J. Bachtler (2011), ‘Administrative reform and unintended consequences: an assessment of the
EU cohesion policy “audit explosion”’, Journal of European Public Policy, 18 (5), 746–765.
Milio, Simona (2010), From Policy to Implementation in the European Union: The Challenge of a Multi-­Level
Governance System, London: Tauris.
Molle, Willem (2007), European Cohesion Policy, London: Routledge.
Molle, W. (2011), ‘Cohesion policy’, in W. Molle, European Economic Governance, London: Routledge, pp.
219–239.
Polverari, L. (2015a), ‘Does devolution increase accountability? Empirical evidence from the implementation of
European Union cohesion policy’, Regional Studies, 49 (6), 1074–1086.
Polverari, Laura (2015b), ‘The monitoring and evaluation of the 2014–20 Cohesion policy programmes’,
IQ-­Net Thematic Paper 36(2), European Policies Research Centre, University of Strathclyde, Glasgow.
Sabel, Charles F. and Jonathan Zeitlin (2012), Experimentalist Governance in the European Union: Towards a
New Architecture, Oxford: Oxford University Press.
Scharpf, Fritz W. (1997), Games Real Actors Play: Actor-centred Institutionalism in Policy Research, Boulder,
CO: Westview Press.
Schön-Quinlivan, E. (2008), ‘Implementing organisational change: the case of the Kinnock reforms’, Journal of
European Public Policy, 15 (5), 726–742.
Schön-Quinlivan, Emmanuelle (2011), Reforming the European Commission, Houndmills, Basingstoke and
New York: Palgrave Macmillan.
3.  The economic theory of Cohesion policy
Iain Begg

INTRODUCTION

It is too tempting to start this chapter with an assertion: anyone expecting to read about a
coherent economic theory of Cohesion policy is going to be disappointed, because there
isn’t one. The policy has a Treaty base in Article 174 TFEU, the Treaty on the Functioning
of the European Union (European Union 2012) which articulates the underlying objec-
tive of ‘reducing disparities between the levels of development of the various regions
and the backwardness of the least favoured regions or islands’, but it would be hard to
identify it with a single economic approach. Instead, it has gone through many phases
over the years, during which particular theoretical approaches have been evident and the
rationale for having the policy has often drawn on disparate theories rooted in economics,
regional science or economic geography.
‘Cohesion’ is not an easy notion to define and, although there is often a tacit under-
standing of what it means, it is open to a variety of interpretations. As Molle (2015: 4)
observes, it is a ‘concept that was introduced into EU policy without a precise definition’.
It arguably embraces inequalities, whether in income, living standards, employment or
environmental conditions, and also has to be seen in terms of opportunities as well as
outcomes. The ambiguity about the meaning of the term explains, in turn, why the eco-
nomics behind it are hard to identify.
This chapter starts by relating Cohesion policy to theories rooted in regional econom-
ics and economic geography, showing that the policy builds on diverse approaches. It
then looks more specifically at the economic theories which have been most visible over
the years in Cohesion policy. The chapter then examines the economics behind Cohesion
policy today, highlighting some of the approaches that have become most prominent of
late, and concluding comments complete the chapter.

ROOTS OF COHESION POLICY IN REGIONAL ECONOMICS

AND GEOGRAPHY

There is a long tradition in many European countries of regional policy interventions

intended to promote a mix of developmental and equitable objectives. In 1973, when the
United Kingdom (UK) and Ireland (along with Denmark) acceded to what is now the
EU, a key part of the accession negotiations was establishing a new mechanism for sup-
porting weaker regions. The upshot was the creation in 1975 of the European Regional
Development Fund (ERDF), complementing the European Social Fund (ESF) which had
been in place since 1958. The economic case for regional policy relies on a variety of con-
tested arguments (see, e.g., Armstrong and Taylor 2000), while the case for EU regional
policy – certainly in the way in which it is presented by the European Commission – has

50
 The economic theory of Cohesion policy  ­51

evolved over time as the Cohesion policy introduced in 1988 has itself evolved. The
development of the policy is covered elsewhere in this volume (Brunazzo, Chapter 1, this
volume), but in economic terms, it has both reflected and, at times, led the underlying
debates in regional economics.
In many member states, early regional interventions included capital or labour sub-
sidies targeted at companies to persuade them to locate in a designated area, alongside
property development. These policies can be seen as market-­correcting because, without
them, the market would have led to spatially unbalanced outcomes. Subsequent iterations
of regional policy placed much more emphasis on endogenous development of regions
by creating conditions conducive to making a transition towards a more competitive
economy. Investment in training, infrastructure or social cohesion can all be seen as sup-
portive of this aim.
In what follows the main focus is on economic cohesion or, put differently, the
‘regional  problem’. The main purpose of policy intervention is to correct shortcom-
ings on the supply side of the economy that result in a deficient economic performance.
Relevant aims are raising the long-­run level of productivity, boosting public investment
(widely defined to include ‘soft’ as well as ‘hard’ infrastructure), support for entrepre-
neurship and small and medium-­sized enterprises (SMEs), training and other labour
market measures, and the fostering of research and development (R&D), innovation or
other technology-­related initiatives. Since 1988, the remit has been primarily to promote
long-­term improvement in regional economies.

Convergence as a Regional Policy Goal

Convergence and divergence are, as Molle (2015) shows, core concepts in justifying
regional policy interventions, and draw on a range of economic theories. The narra-
tive at EU level has long been that too large a gap in prosperity, usually interpreted in
terms of gross domestic product (GDP) per head or growth rates, would be somehow
unacceptable, reflecting the treaty mandate set out in Article 174 and implying that the
economic rationale for policy intervention is to keep such disparities within politically
acceptable limits. Successive Periodic Reports and Cohesion Reports, of which European
Commission (2014) is the latest, have documented and analysed these disparities; see also
Tondl (2001).
Curbing ex ante disparities, in turn, means acting either to prevent divergence or
to promote convergence by acting on either the demand side or the supply side of the
economy. Under the assumptions of neoclassical economics, convergence would be
expected to occur as a result of flows of labour or capital to where either is in short
supply, unless there is some kind of market failure. Cohesion can be achieved in this
respect by policies that counter the sources of market failure or by action to over-
come a specific blockage in the system, such as attaining a minimum initial level of
development.
Divergence can come about for many reasons, ranging from purely geographical
­phenomena (centrality versus peripherality, or inaccessibility resulting from natural bar-
riers such as seas or mountains), locational advantages (proximity to coal, for example,
was crucial for some regional economies reliant on heavy industries), to the effects of
agglomeration. Some of these effects may evolve over time or as economies develop and
52  Handbook on Cohesion policy in the EU

what were once advantages may become liabilities because of long-­run trends, including
de-­industrialisation or the rise of new specialisations.
A competing thesis, emanating from the work of Myrdal (1957), is that regional econo-
mies are subject to long-­run processes of cumulative causation in which an initial advan-
tage or disadvantage leads to a virtuous or vicious cycle. An already successful region will
attract investment flows, skilled labour, property developers and dynamic entrepreneurs,
further strengthening its position; and vice versa for disadvantaged regions. To prevent
or break these cycles, a Cohesion policy has to offer enough support to disadvantaged
weaker regions to alter the development dynamics in their favour.

New Economic Geography

Although a powerful conclusion from economic analysis, rooted in standard trade

theory, is that removing barriers to market integration is welfare-­enhancing, some of
the work in the New Economic Geography (NEG) tradition is more nuanced. Because
market opening (for example, through the drive to complete the single European market)
encourages increased specialisation, the interplay between agglomeration economies and
congestion costs will affect a region’s potential. Regions able to specialise in industries
subject to increasing returns to scale will benefit relative to those with a specialisation
in less dynamic sectors. Increased congestion in the most-­favoured regions should nev-
ertheless mean that centrifugal forces push economic activity away from these regions.
Shortcomings in the business environment or in infrastructure in less-­favoured regions
could, however, mean that they are unable to capitalise on this effect.
Puga (2002) provides a good survey of NEG’s relevance for EU regional policy, while
Baldwin et al. (2003) address the policy dimension of NEG more generally. Puga’s analy-
sis is representative of a number of NEG contributions in focusing on a puzzle: namely,
why there had been convergence at the member state level after 1988 yet, notwithstand-
ing increased expenditure on regional policy, internal regional disparities widened within
most countries. He notes that unemployment has become more polarised, with more
regions exhibiting high or low unemployment, and fewer intermediate levels. The answer
derived from NEG is that there is a trend towards increased specialisation resulting from
closer economic integration.
The other side of the same coin is that if policy inhibits the agglomeration processes
predicted by NEG, the benefits of integration might also be compromised. Here, the role
of Cohesion policy is disputed. Several contributors to NEG argue against interventions
that disrupt the emergence of appropriate specialisations. NEG principally concerns
interindustry flows of goods and the determinants of specialisation. Its predictions rely
on the match between locations and the attributes of different manufacturing industries,
such as the costs of transport, their utilisation of skilled labour and the scope for achiev-
ing economies of scale. However, the policy issue being confronted in many regions
is, precisely, how to counter geographical isolation or a lack of development. Service
industries and knowledge-­based industries, rather than conventional manufacturing, are
likely to be a sizeable part of the solution. In this respect, at least some of the criticism
of the effectiveness of Cohesion policy from an NEG perspective may be misconceived.
But, as is argued in the Sixth Cohesion Report (European Commission 2014), action
to improve the business environment or to enhance transport and digital networks can
 The economic theory of Cohesion policy  ­53

overcome obstacles to attracting investment, thereby facilitating the realisation of scale

economies. The report adds that Cohesion policy can help to alleviate congestion costs in
fast-­growing lagging regions.
In looking back at 20 years of NEG, Krugman (2011) concedes that the explana-
tory power of the approach in mature economies is open to question to the extent that
the focus on specialisation may be better suited to an era when large industry was the
dominant source of prosperity, with many places defined by what they produced. By
contrast, while there is manifestly still specialisation, similar activities, notably in services,
are found in many regions. An explanation accepted by Krugman (2011: 6) is that what
he calls ‘subtler forms of agglomeration economies’ have become more crucial than the
explanation based on economies of scale, transport costs and congestion in his original
interpretation. He cites ‘information spillovers, entrepreneurial chains of influence and
so on’ (ibid.).

The Economics of Growth

Economic theory provides two broad sets of explanation for growth. Work in the
tradition of Solow (1956) emphasises factor accumulation, with the growth of the
capital stock, especially, as the variable that accounts for differences between countries.
Technology is considered exogenous and is freely available to all economies and economic
agents. An economy that succeeds in increasing its stocks of capital and labour will grow.
A second class of theories starts from the proposition that the technology variable is
not exogenous (Romer 1990), but is instead the result of specific characteristics of the
economy, including policy choices; for an overview, see Aghion and Howitt (2009). The
competitive attributes of any territory can be created through a mix of policy interven-
tions and investment by either the private or the public sector. Investment in R&D or
human capital, institutional quality and appropriate infrastructure are among the factors
considered to bear on the outlook for growth, and there has been a profusion of models
establishing the contribution of one or the other factor.
In practice, both approaches can provide insights for regional development policy. For
some economies, the factor accumulation story will predominate because the technology
it uses is predominantly what can be classed as non-­rivalrous public goods in the form
of freely available knowledge. But in the knowledge-­intensive economy, it can be argued
that the balance shifts such that the capacity to generate and exploit new technologies – in
the process, at least partly excluding rivals – becomes the key to growth. The salient point
is that policy can be influential in fostering (or retarding) growth insofar as it bears on
the endogenous determinants of growth. Romer (1994: 18), one of the leading contribu-
tors to endogenous growth theory, comments that the new approaches to growth will
eventually allow economists to ‘offer policy-­makers something more insightful than the
standard neoclassical prescription: more saving and more schooling’. The word ‘eventu-
ally’, however, has to be noted, as there is not an off-­the-­shelf formula that can readily be
used.
Endogenous growth reasoning points to a range of policy orientations, but there is by
no means a consensus on how to translate this logic into policy practice. Nevertheless, the
influence of the endogenous growth approach is visible in the more recent manifesta tions
of Cohesion policy, for example in the thematic priorities for both the 2007–2013 and
54  Handbook on Cohesion policy in the EU

2014–2020 programme periods, albeit in a somewhat haphazard manner. Themes such

as innovation or social cohesion reflect the determinants of economic development and
growth stressed by the likes of Aghion et al. (2014), but rather selectively. Higher educa-
tion, for instance, is not prominent in Cohesion policy except through the physical invest-
ment in buildings or research facilities.

Innovation

A connection between research, innovation and regional development is assumed to

be crucial and there is almost a presumption that if innovation can be stimulated, the
scope for enhancing regional performance will be greater. The economic reasoning is the
following: R&D generates innovation and new technologies, and innovation and new
technologies then generate economic growth. This will happen because new technolo-
gies increase productivity and therefore have a positive supply-­side effect on the growth
potential of the economy.
Innovation as a foundation for growth and convergence and as an economic rationale
for Cohesion policy is, however, open to different interpretations (Rodriguez-­Pose and
Crescenzi 2007), and they distinguish three channels through which innovation matters.
The first is the role of research and development in various forms in promoting growth,
with a presumption of ‘the more, the better’. Second, there is the ‘systems of innovation’
literature associated with Lundvall (1992) and with roots in evolutionary economics and
the work on technological change of Freeman (1994). What this stresses is that the char-
acteristics of any territory – examples being internal networks, education systems and
more amorphous factors like trust – will determine whether or not it is able to sustain
a more rapid rate of innovation. A third determinant is how readily the region can gain
from information flows from outside: knowledge spillovers.

WHAT IS THE ECONOMIC OBJECTIVE OF COHESION POLICY?

Several strands of economic thinking bear on the appropriate assignment among tiers
of government of policy competences, some of them overlapping, some potentially in
conflict with others. Cohesion in the EU can be advanced by policies implemented both
by the member states and the Community.

Public Finance Economics

Building on the conventional distinction in the theory of public finance between allo-
cation, distribution and stabilisation – explained notably in the work of Musgrave
(1959)  – three very different potential economic justifications for Cohesion policy can be
distinguished. The first is about supporting the long-­term competitiveness of regions by
supporting transformation of the supply side of the economy: their target is allocation.
Second, there are measures which enhance the current standard of living of residents or
attempt to deal with specific social problems, both of which are, thus, essentially redis-
tributive or palliative in their impact. Third, there are policies which help to stabilise
the demand side of the economy. In practice, the divisions between these three types of
 The economic theory of Cohesion policy  ­55

policy are fungible. Supply-­side measures will also have some redistributive effect, though
not necessarily or always from rich to poor regions, just as redistributive measures are
often the means by which stabilisation is achieved. Over time the relative weight given to
these three main aims has shifted in response to evolution in thinking about the function
of the policy as part of economic governance overall.
While what member state policies do has a large and positive impact on aspects of
cohesion, Community policies plainly contribute to promoting convergence, especially
for the least competitive regions and the poorer member states. There is, however, a quali-
tative difference between the main instruments of national policy, which have explicit
redistributive aims, and the much more specific interventions from the Structural and
Investment Funds aimed at economic development. This sort of regional policy is best
organised in a top-­down manner, so as to enable the EU level to mediate in the inevita-
ble competition between regions and, where appropriate, to superimpose objectives and
conditions at the EU level.
What is less clear is whether EU policy is motivated by efficiency or equity objectives
or what weight is accorded to each. As Farole et al. (2011: 1090) observe, ‘much of the
language of European cohesion policy eschews the idea of trade-­offs between efficiency
and equity, suggesting it is possible to maximise overall growth while also achieving con-
vergence in outcomes and productivity across Europe’s regions’.

Distributive Arguments

Distributive policy is relatively easy to analyse, as much of the distributive case hinges
on ‘ability to pay’ as a principle. Very simply, in any well-­conceived distributive system,
the rich pay and the poor receive. Different bases for the net transfer can, however, be
envisaged. Cohesion policy is predominantly about securing a net transfer of budgetary
resources between richer and poorer member states, but also results in some net transfer
between richer and poorer regions, irrespective of the prosperity of the member state.
What it is not intended to do, at least directly, is to transfer resources from richer to
poorer households or citizens, whether at the EU level or within either a member state
or a region.
The effects of interregional transfers on inequality at the individual level can be
complex, as shown by Dupont and Martin (2006). They suggest that Cohesion policy
in the EU is motivated partly by low labour mobility, which exacerbates regional prob-
lems (unlike in the United States, where migration attenuates regional disparities). They
then argue that, under certain assumptions, regional transfers may have perverse effects
on inequality. Moreover, although certain Cohesion policy interventions may lead to
interpersonal transfers, they will be second-­order effects and cannot be regarded as core
objectives. The reason, simply, is that in the assignment of competences within the EU,
income redistribution is a social policy reserved to the national (and possibly subnational)
levels of governance.
A separate distributive argument is that European integration creates its own economic
development dynamic from which some regions gain hugely while others lose ground
(whether relatively or absolutely). There is then an expectation that goes back to routine
welfare economic analysis that the winners should compensate the losers. In this logic
it should not matter that a region which loses is above an eligibility threshold, so long
56  Handbook on Cohesion policy in the EU

as there is a convincing case that integration has contributed to its difficulties. Both the
Padoa-­Schioppa (1987) and the Delors (1989) reports drew on this reasoning in advocat-
ing a reinforced Cohesion policy. However, it is essentially a side-­payment logic which has
been criticised (for example in the Barca Report; Barca 2009) as unconvincing. Moreover,
Barca is surely correct to assert that if the aim is income transfers, there are easier ways
of effecting them (see, also, de la Fuente 2004).

Allocative Arguments

Fiscal federalism provides one approach to assessing the allocative principles behind
Cohesion policy. A key argument for external funding is that if there are spillovers or
other externalities, then it makes sense to match the jurisdiction funding the policy to
the span of its effects, failing which the investing region will tend to underinvest. This is
essentially an empirical matter and, according to analysis by Ecorys et al. (2008), such
spillovers are small, undermining the case for EU funding.
Second-­generation fiscal federalism adds a further argument about the centralisation
versus heterogeneity debate which has to do with public sector incentives. A strong prin-
ciple is that matching funding to the scope of the policy is efficient. In addition, analysis
of incentives and of the interplay between market forces and the public sector is needed
in allocating expenditure functions (see Oates 2005; Weingast 2007). Weingast, citing a
number of other studies, argues that attention should focus, especially, on whether policy
interventions are growth-­enhancing, with correspondingly less attention to equity issues.
There are evident connections in this regard to the notions of territorial capital (OECD
2011) and smart specialisation (McCann 2015) and, more broadly, of innovation as a
focus of policy intervention, as discussed above.
Building on this point, a different perspective on allocation comes from considering
EU-­level public goods other than the economic development of lagging or uncompetitive
regions. Increasingly, cohesion funding has been asked to contribute to other Community
objectives, such as the Lisbon and Europe 2020 strategy goals. It can be argued, too, that
making territorial cohesion operational may well necessitate spending in more prosper-
ous regions to develop the public goods, such as physical or soft networks, that underpin
effective cooperation across borders.

A MACROECONOMIC RATIONALE FOR COHESION POLICY?

There has long been a macroeconomic rationale for regional policy, dating from Kaldor
(1970), that by balancing demand across regions a better aggregate trade-­off between
inflation and unemployment (or, for those who doubt Phillips’s curve reasoning,
between ‘over’-­and ‘under’-­heating) can be achieved. In the Delors Report (1989) that
paved the way for Economic and Monetary Union, there is also an element of this sort
of macroeconomic reasoning (see also, Begg 2003). The report recognises that fiscal
capacity is a critical consideration in justifying external funding in poorer countries
where fiscal resources are much scarcer than in richer ones. In periods of acute pressure
on public finances, the scope for co-­financing in regions where Cohesion policy domi-
nates public investment will be especially affected, unlike those where it is marginal.
 The economic theory of Cohesion policy  ­57

A macroeconomic rationale for Cohesion policy has rarely been explicit, even though
the potential for regional policy to have a role in demand stabilisation could be consid-
erable. Indeed, one of the concerns about how to reform the governance of Economic
and Monetary Union is, precisely, that a lack of an EU-­level stabilisation capacity is
problematic (Juncker et al. 2015). Nevertheless, macroeconomics impinges on Cohesion
policy through the notion of ‘sound economic governance’ – in effect, a euphemism for
macroeconomic conditionality – brought in for the 2014–2020 period. It is argued, first,
that public investment will achieve less if it is not accompanied by discipline in public
finances, because its absence will deter private investors and public co-­financing will be
hard to obtain. Second, if appropriate structural reforms are not undertaken, investments
supported by Cohesion policy will generate a lower effective return.
In addition, the euro crisis has prompted a fresh analysis of the macroeconomics
of Cohesion policy (see, e.g., Bachtler et al. 2014). An obvious point is that regional
prospects will be strongly influenced by how the member state is affected by substantial
macroeconomic shocks and by some of the effects of the crisis such as a widening of
interest rate spreads that, in turn, raise the costs of capital in weaker regions (Camagni
and Capello 2015). There is also, as the evidence assembled by Camagni and Capello
demonstrates, an increased likelihood of a credit crunch in crisis countries, potentially
with more severe effects in the more vulnerable regions. If, as they contend, the outcome
is that convergence is reversed, new challenges for cohesion will arise.
The question then is whether EU Cohesion policy, or indeed any spatially targeted policy,
can do much in response. There were limited attempts to accelerate Cohesion policy spend-
ing as part of the 2008–2009 fiscal stimulus package orchestrated across the EU and an
acceleration of Cohesion policy spending in the countries worst hit by the euro crisis has
been canvassed. The limited scale of Cohesion policy and the fact that operational pro-
grammes are implemented over several years rather than being anticyclical militates against
the sort of automatic stabilisation that occurs in more closely integrated monetary unions.
Nevertheless, by facilitating more balanced economic development, Cohesion policy can
have some macroeconomic impact by spreading demand in a manner that reduces inflation-
ary pressures in overheating regional economies and curbing deflationary trends in others.

A Competition Policy Rationale

A further consideration is that, in the absence of EU regional policy, member states or

regional governments may resort more extensively to state aids as policies to promote
regional development, with potentially perverse consequences. The usual justification for
regulation of state aids is to ensure that the internal market is not at risk, but it can also
be argued that an EU-­level cohesion rationale is that decentralised policies may compete
with one another.
It is not, however, as simple as saying that because region X obtains a competitive
boost from regional policy, region Y will lose. Some regional development policies can
have ‘win–win’ effects, either through demand channels or because supply-­side linkages
are mutually beneficial. Equally, there are consequences of regional policy, such as a deci-
sion by a company to invest in region X (perhaps because the regional government is able
to afford better infrastructure paid for by national regional policy)’, rather than region Y
which are often zero-­sum in nature.
58  Handbook on Cohesion policy in the EU

A further argument that is sometimes made about state aids is that they are subject to
a high degree of deadweight and, possibly, a greater risk of ‘capture’ by local interests,
whereas the much more targeted interventions of the Structural and Investment Funds
can unblock obstacles to economic development. Yet there is a puzzle to be confronted
of whether any apparently better performance of EU-­level interventions in this regard is
a feature of their being from outside, or whether well-­designed national policies could be
equally effective.
There is a large amount of literature on whether, when and how national and regional
governments should aid their companies, industries or regions (for an overview, see
Wishlade 2003). By and large, this literature concludes that, on efficiency grounds, aid
may be justified when it is intended to correct market failure. The typical reasons cited for
market failure are externalities (plus public goods), economies of scale and asymmetric
information. However, in markets with multiple distortions, addressing only one source
of distortion by intervening in the market can create its own distortion, which may have
the apparently paradoxical effect of reducing welfare. For instance, subsidies to attract
companies to certain regions may also worsen pollution, increase congestion or put pres-
sure on weak transport systems. Public policy may also be zero-­sum if job creation in one
area is at the expense of economic activity elsewhere with no net increase in jobs.

THE ECONOMIC PRIORITIES TODAY

Cohesion policy’s original economic rationale was closely linked to the integrating effect
of the single market which, it was feared, would favour stronger regions and penalise the
less competitive. Thus Paul Krugman, in his contribution to the Padoa-­Schioppa Report
(1987), pointed out some of the negative consequences for weaker regions that might
emerge from further market integration, including increases in unemployment, agglom-
eration effects in particular industries and conflict over unjustified support for national
champions. Similar sentiments were expressed in the Delors Report (1989). However,
what was once portrayed as the ‘Krugman versus Commission’ debate on whether the
single market would be dominated by potential divisive patterns of specialisation, rather
than increased intra-­industry trade, has been overtaken by the much greater integration
of production chains across Europe.
Cohesion policy is, nevertheless, seen by many – especially its critics – as no more
than a device for redistribution, sometimes expressed in more pejorative terms as a
­‘side-­payment’ made to certain countries to ‘buy’ their support for other economic
integration initiatives (Leonardi 2005). In this latter view, the creation of the Cohesion
Fund in 1993 could be seen as the price extracted by the (then) four cohesion countries –
Greece, Ireland, Portugal and Spain – for acquiescing in the establishment of Economic
and Monetary Union. In more recent budgetary negotiations, projected receipts from
the Funds have become a pawn in the chess game of net financial contributions to the
EU budget, often with any direct connection to objective criteria for receiving the money
being overridden by a calculus of national positions.
Fundamentally, two policy imperatives compete for the soul of Cohesion policy today.
On the one hand, the links to the Europe 2020 strategy, together with the identification of
the four priority objectives stressed in the 2014–2020 period, signals that the ­‘investment
 The economic theory of Cohesion policy  ­59

instrument’ of the EU is designed to shift the Union towards the knowledge-­based,

innovation-­led economy that it requires to be globally competitive. On the other, the
treaty obligation to reduce disparities and the geographical concentration of spending
on less-­developed regions means that regional development is prominent. Can these two
strands be reconciled?
A compensation aim was foremost up to the late 1980s (Leonardi 2005), while the
allocation aim was given more weight following the 1988 reforms of both the EU budget
and the Structural Funds. In particular, the programming approach adopted from then
onwards gave priority to productivity gains in recipient regions. However, the fact that
Cohesion policy has always been quite strongly biased towards the least-­prosperous
member states has meant that its distributive impact (at least at the country level) has
always been substantial. Many governments among the net contributors to the EU
budget, such as the UK (HM Treasury 2008), have written of Cohesion as a redistributive
policy, echoing the stance of economists such as Tabellini (2003).

Logic of Intervention

The notion of the ‘logic of intervention’ is one that the Commission has manifestly
become keen to promulgate (European Commission 2014), and the message it contains
for regional actors is that they will need a better-­worked-­out conceptual basis for future
programmes. It is worth dwelling upon what this means in practice. First, regions will
have to identify what it is in the region that inhibits development, and thus what needs
to be overcome to make progress. They then have to establish realisable objectives which
address these needs, and to have a focus on results in the design and implementation of
the programme. While this might seem both obvious and desirable, there is an evident
intention to shift away from a mentality of simply spending the money, or of spreading
the spending to satisfy competing local interests. In other words, an intervention logic
should articulate a development strategy and should, moreover, evolve as objectives are
achieved.
The Sixth Cohesion Report proposes a typology comprising three elements affecting
regional prospects:

● ‘First nature’ determinants are those inherent to the member state or region, such
as its geographical attributes, climate or natural endowments.
● ‘Second nature’ characteristics are shaped by human investment. Some of the latter
may change only very slowly, as a result of which the boundary with the first cat-
egory can be blurred, but others can be transformed – potentially quite rapidly – by
appropriate policy interventions.
● The impact of trade and economic integration on development.

The mix of policy interventions for the region will depend on the diagnosis of what is
deficient whether in physical or human capital, innovation, accessibility or institutional
quality. The report also highlights agglomeration economies and clustering, making clear
that urbanisation is one of the sources of competitive advantage that warrants attention.
In this regard, the report appears to favour new economic geography. Policies that are for-
mulated by policy-­makers close to the regional problem would, on the whole, be expected
60  Handbook on Cohesion policy in the EU

to be better attuned to the region’s needs. But there are counter-­arguments, centring espe-
cially on the risks that dominant local interests will ‘capture’ local policy-­makers, leading
to policies that serve these dominant interests rather than the wider regional interest.
In discussing the third element in the typology, the report distinguishes between effi-
cient and inefficient disparities, arguing that trying to remove the former could prove to
be counterproductive. The argument is that in the single market, Cohesion policy can
sustain public investment in ways that support the inflow of private investment from
outside the supported territory. In this way, the policy contributes to improving the busi-
ness environment in lagging regions, but also help to relieve the congestion in favoured
regions predicted by NEG theorists.

BALANCED ECONOMIC GROWTH

The gradual rapprochement between Cohesion policy and the EU’s growth strategies
(first the Lisbon Strategy, then Europe 2020) suggests that investing in some combination
of human capital and the creation of knowledge has become a key economic rationale.
It dovetails with the many ideas from local and regional development economics about
the roles of clusters, science parks, university–industry links, risk capital and so on. Yet
having too many objectives could overload Cohesion policy (Begg 2010). Nevertheless, as
well as being more equitable, spatially balanced growth can be justified because it makes
the economy more resilient and improves fiscal sustainability. Much of the argument
hinges on exploiting untapped growth potential, leading the Organisation for Economic
Co-­operation and Development (OECD) (2012: 15) to bemoan the fact that ‘less devel-
oped regions are often seen as a drag on national performance, rather than as potential
assets’. The key is to adopt growth-­orientated policies, rather than using subsidies and
fiscal transfers to prop up underperforming or underdeveloped regional economies.

Policies to Foster Growth

Innovation has become increasingly central to economic development policy in general,

and certainly to Cohesion policy. However, as Aghion (2012) shows, while noting the
long-­term, underlying connection between innovation and growth, differing sorts of
innovation call for differing policy approaches. He distinguishes, for example, between
the role of advanced tertiary education in supporting what he calls frontier innovations
(new discoveries) and more basic education in supporting innovations that aim at imita-
tion (catch-­up). He also argues that Schumpeterian ‘creative destruction’ can lead to a
tension between past and future innovators, with tricky policy implications. The former
will be keen to protect the gains from investing in innovation, while the latter often
succeed only by driving out the former, for which they require competitive markets. It is
far from clear in all this which economic model of innovation informs Cohesion policy.
Growth typically stems from a range of influences, rather than single determinants, and
it is how they are combined in different contexts that matters. The OECD (2011,  2012)
suggests that the key factors for regional growth vary over time and from region to
region. Human capital is singled out as a robust determinant of regional development,
whereas infrastructure investment is considered to be most helpful for under-­developed
 The economic theory of Cohesion policy  ­61

regions, but often adds little in other settings. Similarly, many regions will gain little from
science and technology centred innovation policies, with the obvious implication that
unsubtle espousal of top-­down policies will disappoint.
The Sixth Cohesion Report, for example, highlights agglomeration economies and
clustering, making clear that urbanisation is one of the sources of competitive advantage
that warrant attention (European Commission 2014). In this regard, the report appears
to favour new economic geography logic, but also hints at a shift away from the Barca
Report and towards the World Bank (2009) precepts of spatial concentration. At the
same time, the report warns against expecting too much from agglomeration effects.
One rationale for the new emphasis placed on urban areas in the 2014–2020 period is
that urban areas are the main source of productivity growth, although as McCann (2015:
28) observes, ‘urban scale appears to be a blessing where the economy is growing well
and something of a curse where the economy is struggling’. The ‘smart specialisation’
approach that has become prominent latterly in Cohesion policy attempts to reconcile
the economic proposition that enhanced innovation is crucial for regional development
with the concern that if too many regions attempt to follow the same policies, the aggre-
gate effect will be disappointing.

Supportive Institutions

There is agreement that the economics of institutions is pertinent for Cohesion policy
(OECD 2012), but as Rodriguez-­Pose (2013: 1043) explains, it is less obvious what the
nature of the link is, and there is a risk of adopting inappropriate policy responses. He
implies that the policy focus should be on correcting ‘institutional arrangements which
represent barriers for the efficiency of other factors influencing economic development’.
His approach provides a connection with the place-­based approach advocated in the
Barca Report (2009).
Weak institutional capacity tends to diminish the effectiveness of any economic devel-
opment policy, whether because of poor project choices, inadequate implementation and
monitoring or shortcomings in complementary policies. This can even lead to the almost
paradoxical finding (as suggested, for example, by Ederveen et al., 2006) that regions with
stronger institutional capacity make the most effective use of the Cohesion policy, even
though it could be argued that they need them least. If, as Farole et al. (2011) speculate is
often the case in less-­developed parts of the EU, there is tendency for institutional weak-
nesses of various sorts to detract from a region’s capacity to develop, then care is needed
in selecting the appropriate logic of intervention.

CONCLUSIONS AND RESEARCH ORIENTATIONS

Cohesion policy today has the dual purpose of acting directly to mitigate imbalances in
relative prosperity, while contributing to the realisation of broader EU objectives. The
latter include the overarching aim of facilitating integration in Europe and raising public
investment, while also playing a part in the successful pursuit of key EU goals, ranging
from underpinning economic and monetary union to advancing sustainable develop-
ment. Because many of these broader aims have been more recent additions to what
62  Handbook on Cohesion policy in the EU

Cohesion policy is asked to achieve (Bachtler et al. 2013; Molle 2015), there cannot be
stability in the economic concepts behind the policy. Linking Cohesion policy to, first,
the Lisbon strategy and subsequently the Europe 2020 strategy, the approach that came
to the fore for the 2007–2013 and 2014–2020 programme periods, added new objectives to
Cohesion policy, but the economics behind the policy reorientation can be hard to grasp.
However, Cohesion policy was, to a considerable extent, the instrument chosen for
the rather negative reason that there was no other option with a credible budget. To turn
the issue round, it is unlikely that a policy-­maker charged with advancing the knowledge
economy in Europe would seize upon Cohesion policy as the solution. Regional policy
has always had to reconcile challenges of aggregate competitiveness of an economy and
the stimulation of target areas. Often this is portrayed as an equity–efficiency trade-­off,
although it is an open question whether the EU’s Cohesion policy is, in fact, redistributive
in practice, even though its overt purpose is to allocate resources for economic development.
There is, in addition, a paradox that it is hard to draw firm conclusions about the
economic effectiveness of a policy area that has been, in many ways, in the vanguard
of evaluation efforts. A number of factors behind this paradox can be identified. First,
with multiple objectives and a mixed economic rationale, diverse national and regional
settings, and heterogeneous institutions and priorities, policy success cannot easily be
ascertained. A second consideration is that the absence of firm evidence of improved
economic performance does not preclude the possibility that the underlying potential of
a region has been improved. Third, there are problems in attributing observed results to
the policy itself, as well as daunting methodological problems in doing so (see Fratesi,
Chapter 28, this volume).
A last issue is whether Cohesion policy delivers economic benefits even though the
evaluation evidence is conflicting. Many econometric studies (Boldrin and Canova 2001
is a good example) are sceptical, though many others are more positive (see the survey
by Bachtler and Gorzelak 2007). More positive verdicts on Cohesion policy come from
qualitative evaluations that consider, inter alia, how the governance of economic develop-
ment has been affected by the policy interventions, leading Mairate (2006) to argue that
Cohesion policy cannot be judged purely on directly measurable outcomes, but needs to
be judged on its contribution to the wider economic development effort. An evaluation of
the long-­term effects of Cohesion policy by Bachtler et al. (2013) revealed the prolifera-
tion of motives and rationales in successive rounds of Cohesion policy.

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Bachtler, John, Carlos Mendez and Fiona Wishlade (2013), EU Cohesion Policy and European Integration: The
Dynamics of EU Budget and Regional Policy Reform, Farnham: Ashgate.
Baldwin, Richard, Rikard Forslid, Philippe Martin, Gianmarco Ottaviano and Frederic Robert-­Nicoud (2003),
Economic Geography and Public Policy, Princeton, NJ: Princeton University Press.
Barca, Fabrizio (2009), An Agenda for a Reformed Cohesion Policy. A Place-­based Approach to meeting
European Union Challenges and Expectations, Brussels: European Commission.
Begg I. (2003), ‘Complementing EMU: rethinking cohesion policy’, Oxford Review of Economic Policy, 19 (1),
161–179.
Begg, I. (2010), ‘Cohesion or confusion: a policy searching for objectives’, Journal of European Integration,
32 (1), 1–16.
Boldrin, M. and F. Canova (2001), ‘Inequality and convergence in Europe’s regions: reconsidering European
regional policies’, Economic Policy, 16 (32), 205–253.
Camagni, R. and R. Capello (2015), ‘Rationale and design of EU cohesion policies in a period of crisis’,
Regional Science Policy and Practice, 7 (1), 25–47.
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test and an application to the case of Spain’, Regional Science and Urban Economics, 34, 489–503.
Delors, J. (1989), ‘Report on economic and monetary union in the European Community’, Brussels: Council of
Minsters, accessed 1 May 2016 at http://aei.pitt.edu/1007/1/monetary_delors.pdf.
Dupont, V. and P. Martin (2006), ‘Subsidies to poor regions and inequalities: some unpleasant arithmetic’,
Journal of Economic Geography, 6 (2), 223–240.
Ecorys, CPB and IFO (2008), ‘A study on EU spending’, for DG Budget, European Commission, accessed
3 December 2015 at http://discutii.mfinante.ro/static/10/Mfp/buget/reformabugetue/5bStudyEUspendingen.
pdf.
Ederveen, S., H.L.F. de Groot and R. Nahuis (2006), ‘Fertile soil for Structural Funds? A panel data analysis
of the conditional effectiveness of European cohesion policy’, Kyklos, 59, 17–42.
European Commission (2014), Investment for Jobs and Growth. Promoting Development and Good Governance in
EU Regions and Cities. Sixth Report on Economic, Social and Territorial Cohesion, Luxembourg: Publications
Office of the European Union.
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OJ C326/47.
Farole T., A. Rodriguez-­Pose and M. Storper (2011), ‘Cohesion policy in the European Union: growth, geogra-
phy, institutions’, Journal of Common Market Studies, 49 (5), 1089–1111.
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Monetary Union’, European Commission, Brussels, 22 June.
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Leonardi, Robert (2005), Cohesion Policy in the European Union: The Building of Europe, New York:
Palgrave.
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Learning, London: Pinter.
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and Smart Specialisation, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing.
Mairate, A. (2006), ‘The “added value” of European Union Cohesion policy’, Regional Studies, 40 (2), 167–177.
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nomic system of the European Community’, Report of a Study Group Appointed by the Commission of the
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1034–1037.
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4. Cohesion policy, multilevel governance and
democracy
Simona Piattoni

INTRODUCTION

This chapter seeks to draw the contours of a new ‘model of democracy’ for inter-
connected political settings such as the European Union (EU) and argues that
Cohesion policy already foreshadows some features of this new model. Multilevel
governance (MLG) is probably the most apt descriptor of the activity of governing
in ­contemporary societies. Whether we look at subnational, national or international
phenomena, it seems unavoidable to find multiple governmental levels and multiple
actors simultaneously activated in making, implementing and assessing political deci-
sions. The distinctive traits of this new way of governing are that public and private
actors and multiple levels of government cooperate in the making of policy decisions
by engaging in relationships and procedures which defy existing distinctions and hier-
archies. Multilevel governance, in other words, calls into question two constitutive
elements of the political order of the modern era: the distinction between the public
and the private, and the hierarchical or nested nature of governments at different ter-
ritorial levels.
The separation between the public and the private sphere, so typical of political science
discourse during the age of state-­and nation-­building, has crumbled under the impact
of phenomena as varied as the taming of international anarchy after World War II –
which derived from the acknowledgment of the existence of an international community
with a legitimate interest in containing interstate anarchy – and the cultural revolution
of the late 1960s which added ‘quality of life’ and ‘right to roots’ motivations to public
mobilisation and spurred the massive involvement of civil society into public life. In dif-
ferent ways, both phenomena called into question the distinctiveness of the public from
the private sphere both domestically and internationally and triggered transnational
mobilisation (Keck and Sikkink 1998). While until World War II central governments
of sovereign national states stood at the crossroads of these empirical, analytical and
normative dimensions and guarded the gates between these boundaries, at the end of the
1960s the Westphalian sovereign, unitary and distinctive state was seriously challenged
(Piattoni 2010).
Points of contact between the public and the private and among multiple levels of gov-
ernment obviously also existed before World War II, but their interactions were rigidly
regulated both procedurally and normatively. While private interests lobbied and placed
requests upon public governments certainly also during the nineteenth century – and
even tried to ensnare them in dependent and suffocating relationships – this proximity
was considered normatively problematic by the prevailing Western public philosophy.1
Similarly, interrelations among levels of government and administration in federal,

65
66  Handbook on Cohesion policy in the EU

regionalised and even unitary states have always existed, but they were regulated by fairly
rigid constitutionally mandated procedures which created a hierarchy of law and power.
The distinction between public and private and the constitutionally regulated inter-
governmental relations belong to a political-­philosophical world in which the separation
between sovereign nation-­states served the purpose of guaranteeing two distinct but
interdependent types of orders: the anarchical order among states and the democratic
order within states. According to some scholars, the possibility of articulating voice
within nation-­states was premised upon the ability of national governments to regulate
exit from their physical, economic, social and political borders and could, therefore,
eventually result in the development of bonds of loyalty among the citizens of each
nation-­state (Bartolini 2005). In other words, the international order based on the fully
sovereign state was instrumental to national democracy: as the former has been called
into question, the latter must also be thought anew.
This political-­philosophical world has been called into question from the 1960s
onward by three simultaneous developments: economic, cultural and political. In the
1960s, ‘planning regions’ had been created to aid the drive towards economic planning
which took hold in several European countries. Later, regional economies, industrial
districts and global cities emerged unscathed and even strengthened from the economic
crisis of the 1970s which undermined large-­firm production for national markets and
gave a new meaning to these partitions. What until that moment had been considered
theoretically impossible – that small firms organised in localised systems of produc-
tion might be competitive in world markets – revealed itself to be the saving grace of
economies in which manufacturing traditions and cooperative attitudes allowed such
formations (Piore and Sabel 1984). New Economic Geography (NEG) eventually caught
up with reality by theorising increasing marginal returns and economies of scope and
by fully factoring in the relevance of space as ‘place’ rather than as mere ‘distance’
(Krugman 1991).
In the 1960s, moreover, regional and local societies also made themselves heard
through the rediscovery of minority languages, cultural traditions and, in some cases,
also political ambitions that were assumed to have been obliterated by the process of
nation-­building, and claimed the right to have these ‘less-­spoken languages’ accepted, the
subnational identities that they supported recognised, and a certain degree of self-­rule
acknowledged. Some of them managed to lend political significance to these subnational
cultures better than others and to be given a certain degree of self-­rule, spanning from co-­
determination of language and cultural policies to administrative and political autonomy
(Keating 1998). The ‘rise of the meso level’ in Europe (Bullmann 1994) took several
forms but swept the entire continent in the late 1960s. At the intersection of these three
­developments – economic, cultural and political – stood the European Union, which
after some hesitation was eventually perceived as more sympathetic to the claims of the
regions than the member states themselves. Cohesion policy appeared to give substance
to this ‘attention’.
In the remainder of this chapter I will, first, review the emergence of the concept of
multilevel governance in relation to Cohesion policy and its relationship with interna-
tional and domestic dynamics. I will then demonstrate its theoretical impact in exposing
the weakening of the nation-­state as the lynchpin of the international–domestic dual
order described above. While it clearly surged to notoriety particularly in relation with
 Cohesion policy, multilevel governance and democracy  ­67

EU Cohesion policy, multilevel governance was also in wide currency earlier in the field
of international relations; consequently it cannot be merely read as the result of an insti-
tutional tug-­of-­war between levels of government which aim at extracting, respectively,
more autonomy or more submission from one another, nor can it simply be understood
as a new technique aimed at offloading some of the responsibilities of governing onto
civil society organisations, perhaps in the hope of silencing their discontent.
Multilevel governance must be rather understood as a ‘(dis)ordering framework’
(Rosamond 2000: 111) which calls into question the empirical, analytical and normative
foundations of the sovereign, unitary and distinctive nation-­state (Piattoni 2010). For
this reason, I will further review the criticisms that have been levied against multilevel
governance as a plausible solution to the conundrum of democratic and participated rule
in modern times and, in the penultimate section, present a new democratic perspective
from which multilevel governance can be seen to provide a solution to the practical chal-
lenges of democratic governing contemporary societies. In the concluding section I will
give examples of how multilevel governance has contributed to a different, and perhaps
better, form of representative democracy.

COHESION POLICY AND THE EXPLOSION OF MULTILEVEL

GOVERNANCE IN EU STUDIES

The notion of multilevel (or multilayered) governance surged to notoriety with

Gary  Marks’s chapter in Alberta Sbragia’s edited volume entitled Europolitics (1992),
although it was used simultaneously also by James Rosenau and Ernst-­Otto Czempiel in
their Governance without Government (1992). Marks then refined the concept in several
successive contributions (Marks 1993, 1996) and showed how it challenged the two
competing views that had until then crystallised the debate in EU studies: intergovern-
mentalism and neofunctionalism. Marks managed to enter an analytical wedge between
both theorisations in which he could insert a greater appreciation for the independent
impact on EU politics of actors whose interests and behaviours were not dictated simply
either by their institutional position as state or governmental representatives or by their
functional or societal interests. Not only European institutional actors but also state
representatives had policy visions and preferences of their own, which they derived from
their past political engagement and future political plans, and were sensitive to the need
to balance their EU-­level commitments with the continuation of a successful domestic
political career. In other words, Marks reinserted politics into the narrative and explana-
tion of the process of European integration (Piattoni 2009).
At the centre of this reflection stood Cohesion policy, which was presented as the most
palpable example of how actors did in fact move beyond the rigid script supposedly dic-
tated by their institutional roles and functional interests to make decisions which created
new policy commitments, new spaces for mobilisation and new political allegiances.2 By
adopting a non-­formalised version of actor-­centred institutionalism (for a formalised
version see, for example, Scharpf 1997), Marks directed everyone’s attention from the
level of constitutional bargaining to that of everyday politics and policy-­making. In so
doing, he was part and parcel of that paradigmatic shift from international relations to
comparative politics in the study of European integration (Hix 1994). Moreover, while
68  Handbook on Cohesion policy in the EU

structure-­centred institutionalists understand political mobilisation and policymaking as

dictated and constrained by institutional architectures, actor-­centred institutionalists see
the latter as the outcome of the mobilisation of actors around policy issues (for a discus-
sion of both, see Steinmo et al. 1992). In actor-­centred institutionalism, the dynamics
which lead to changes in institutional structures are generated by political mobilisation
around concrete policy issues. This change in perspective and the consequent embrace-
ment of ‘policy makes politics’ – an expression originally coined by Theodore Lowi
(1964, 1972) but which is here employed in a much larger sense – has been, as we will see,
one of the least-­appreciated traits of multilevel governance.
The novelty of Cohesion policy lay not only in the member states committing them-
selves to devoting growing financial resources to a common distributive or redistribu-
tive policy which would dictate which regions of their domestic territories would be
primed for developmental support according to community rules (see Leonardi and
Holguin, Chapter 27, this volume), but they were also doing this by relinquishing at least
in part the formal power to decide how many domestic resources would be directed to
these regions (see Bubbico et al., Chapter 12, this volume). Moreover, the multilevel
policy-­making space created by Cohesion policy’s successive rounds of regulations (see
Brunazzo, Chapter 1, this volume) was also inhabited by subnational authorities, social
partners and other representatives of civil society organisations. These were the carriers
of distinctive interests, which could range from extracting additional financial resources
for their developmental plans to recasting the territorial order of Europe, both within
their states and across the continent, which did not fit equally well within all existing
systems of macroeconomic management.
Regional institutional authorities pursued often – but not always, nor exclusively –
polity-­restructuring goals (Bartolini 2005) when engaging in negotiations for Cohesion
policy regulations which set the criteria and procedures for the distribution of resources.
Regionally organised functional interests pursued mostly the maximisation of the
resources distributed to their region and, therefore, had partially compatible but also
partially conflicting interests with the regional authorities. This fact alone shows how
the construction of ‘the regional interest’ was the outcome of the strategies of the actors
mobilised by Cohesion policy and not the premise for their mobilisation. Marks himself,
but many others as well (Marks et al. 2002; Marks et al. 1996; Jeffery 1996), recorded the
many ways in which regional associations and individual regional authorities mobilised
in order to steer Cohesion policy in their direction.
This led to an explosion of contributions charting the advancement of that ‘third’
or ‘meso’ level between the national and the local which had also been spurred by the
economic, cultural and political developments recalled in the introduction (Bullmann
1994; Keating 1998). While this phenomenon could also have been detected by simply
looking at the territorial reforms occurring in a number of European countries, the
heightened role of regional authorities in EU Cohesion policy suggested the impending
emergence of a ‘Europe of the regions’ (J. Anderson 1991; Borrás-­Alomar et al. 1994;
Christiansen  1996; see also Keating 2008). This phrase expressed both a vision and an
incitement for subnational mobilisation in the hope of a soon-­to-­come Union in which
regions, rather than states, would be the constitutive institutional units, thanks to their
greater proximity to citizens and supposedly more genuine resonance with citizens’
­identity (Loughlin 1996).
 Cohesion policy, multilevel governance and democracy  ­69

Unfortunately, the ‘Europe of the regions’ literature distracted many scholars into
thinking that, indeed, the regions could become the new elementary aggregating units of
the Union-­to-­be. Many mistook what was really a rallying cry aimed at drawing atten-
tion to the requests made by only some regions for a serious constitutional project, and
concluded, quite understandably, that it was ill-­conceived and unlikely (Hooghe 1995;
Christiansen 1996; Jeffery 1997, 2000). This debate also had the effect of redirecting the
analysis towards a structure-­centred institutionalist reading of Cohesion policy – thus
losing sight of the most innovative contribution of multilevel governance to European
integration studies, the actor-­centred approach – as if regional actors across Europe
were mobilising in this policy area only to extract greater institutional powers and con-
stitutional privileges from their central governments. Consequently, the appropriateness
of multilevel governance for describing Cohesion policy mobilisation ended up being
judged according to how vocal subnational authorities were in claiming for greater insti-
tutional powers and how successful they were in obtaining such powers, and the empiri-
cal significance of multilevel governance was simply pinned upon an indicator – the
degree of autonomy of the regions from central government (later measured by Marks
et al. 2008) – which supposedly captured and exhausted the capacity of the regions for
actorness.3
This return to a ‘polity makes politics and policy’ type of vision entailed a further
simplification of the debate on the impact of Cohesion policy on regional mobilisation
and suggested naïve analytical shortcuts to the determination of which regions could be
expected to benefit most from Cohesion policy. The conclusion to which many scholars
arrived was that regions which were domestically already inserted in a multilevel politi-
cal context, like the German Länder, would be for that reason at an advantage in their
mobilisation efforts at EU level and would therefore be able to extract further degrees
of autonomy and institutional powers from their federal government (J. Anderson
1996; Börzel 2002; Scharpf 2010). On the contrary, institutionally weak regions, like the
English regional or municipal authorities, would be condemned to awkward marginal-
ity also at the EU level and would not be able to consolidate their power vis-­à-­vis their
central government. As shown by Piattoni (2010: 102–132), this account ignored the very
concrete advantages that some of these apparently ‘weaker’ regions were able to gain
from Cohesion policy. The debate on Cohesion policy thus got intertwined with that on
Europeanisation (see Dąbrowski and Graziano, Chapter 5, this volume) and with the
responses that could be expected of different regions to similar pressures from the EU
(see also Featherstone and Radaelli 2003).
Very few scholars – in line with a genuine actor-­centred institutionalist approach –
entertained the possibility that not all regional authorities might have wanted to play the
‘multilevel governance game’ in order to extract greater institutional powers and auton-
omy, and even fewer considered the possibility that the political classes – and sometimes
the local societies – of many European regions might have wanted to use the opportu-
nities offered by Cohesion policy to simply collect greater financial resources, develop
their regional economies, and perhaps cash at the national level the political credit thus
accumulated (Bukowski et al. 2003; Benz and Eberlein 1999; Benz 2000; Zerbinati 2012,
see also Massetti and Shackel, Chapter 14, this volume). Even fewer finally recognised
that the identification of the interest of a region is the outcome of mobilisation in a
policy field as adjudicated by the authorities which regulate it (Piattoni 2014), and not the
70  Handbook on Cohesion policy in the EU

automatic reflection of the institutional powers of the region, and that Cohesion policy
has been a prime example of a policy which allowed for this new type of mobilisation.

MULTILEVEL GOVERNANCE AND THE QUESTION OF STATE

SOVEREIGNTY

Cohesion policy revealed, more than many other EU policies, that the governmental
representatives of EU member states were ready to relinquish significant amounts of
sovereign power – such as that of deciding autonomously the amount and direction of
the resources that would accrue to their more problematic regions – and were willing
to accept that subnational authorities and representatives of civil society organisations
would be entrusted with significant ideation, implementation and evaluation roles. True,
national governments still retained the upper hand in deciding the overall ‘financial enve-
lope’ of the policy as well as the general criteria according to which the deserving regions
would be identified. And it is equally true that member states’ representatives in the
Council of Ministers tried hard, at each negotiation round, to extract the most favour-
able conditions for their own regions (see Bachtler and Mendez, Chapter 8, this volume).
Moreover, no member state was forced to create an intermediate territorial articulation
that it did not wish to create, but the pressure to indicate a suitable subnational level for
the delivery of the policy and the incentive to obtain greater resources by creating them
where none existed were certainly there (the famous Nomenclature of Territorial Units 2
– NUTS 2 – regions, in Cohesion policy jargon). So, even though member states were still
formally the ‘masters of Cohesion policy’, they were gently shepherded into ­‘lowering
the gates’ against direct mobilisation of their subnational tiers of government in the EU
arena.4
The Commission, moreover, was experimenting at the margins of Cohesion policy
with a number of Community Initiatives aimed at addressing problems which were either
very specific or spanned across the formal borders of member states. Cross-­border coop-
eration among neighbouring or even distant regions was not a novelty in itself, but the
attempt to give some stability and institutional (if not legal) personality to these forms of
cooperation was (see Gänzle, Chapter 24, this volume). The ever more intense contacts
among regional authorities spurred by Cohesion policy, and by the parallel activity of
the Council of Europe in defence of ethnic minorities and minority languages, further
increased regional mobilisation (see Hepburn, Chapter 13, this volume). The upshot of
this heightened mobilisation was the creation of a representative chamber for regional
and local authorities, the Committee of the Regions, which was given consultative powers
over all EU legislation which had a clear territorial component. Born amidst great hopes
but burdened with many divisions, the Committee of the Regions nevertheless managed
to strengthen its role and institutionalise itself as one of the main institutional interlocu-
tors for many EU policies, but particularly in Cohesion policy (see Schönlau, Chapter 10,
this volume).
These developments suggested that the state was being ‘hollowed’ (Milward and
Provan 2000) or was ‘withering away’ (Schmitter 1995), or again that it was ‘unravelling’
(Hooghe and Marks 2003), and this in turn led to questioning the centrality of the state
and its territoriality (see Gualini, Chapter 32, this volume). There is no need to repeat
 Cohesion policy, multilevel governance and democracy  ­71

here arguments that have been already developed in other chapters of this volume.
Rather than withering away altogether, we could perhaps say that the state was losing
its role as lynchpin of the processes of political mobilisation, mediation and adjudica-
tion (Piattoni 2014). Burdened by tasks they could not perform exclusively from the
national capitals and challenged by global developments they could not control, state
­authorities  – or, better said, real-­life actors occupying positions of leadership in national
political systems in this historical moment – coped by enlisting subnational authorities
and civil society organisations in the definition of the problems and the delivery of the
solutions, and by seeking jointly with other national authorities the solution to common
challenges. States’ sovereignty has thus been weakened: states are no longer fully auton-
omous, as they have to share decisions with other states in a growing number of domes-
tic areas; they are no longer unitary, as they must enlist subnational authorities in the
delivery of the policies; and they are no longer distinct, as their agendas are increasingly
set by transnational societal actors which are often also involved in the identification of
the solutions (Piattoni 2010: 17–80). Whether this amounts to hollowing, withering or
unravelling the state, I leave to the reader to decide. What matters is that the state is no
longer sovereign, hence the bases of the world order that existed until World War II are
changing. In the remainder of this chapter I will discuss the normative consequences of
these developments.

MULTILEVEL GOVERNANCE AND REPRESENTATIVE

DEMOCRACY

As we have seen, multilevel governance exposes the transformation of the nation-­state,

which historically acted as the cradle of representative democracy and the guardian of
the international order. Just as direct democracy is historically and logically associated
with small political entities – such as the Greek city-­states or the New England munici-
palities or the Swiss cantons – so is representative democracy associated with the national
communities of the nation-­states. The weakening of the state, therefore, jeopardises rep-
resentative democracy as it is conventionally understood.
According to many, the existence of a nation, or of a demos, is a precondition for
representative democracy (Weiler et al. 1995). After all, it is the existence of a nation – an
imagined community which shares a past history, certain cultural (perhaps even ethnic)
traits, and sees itself projected towards a common destiny (B. Anderson 1983) – which
allows the sovereign people to delegate to elected representatives the making of decisions
which affect their lives. And it is the existence of a nation with strong ties of internal soli-
darity that allows democratic representatives to make difficult political decisions, that is,
redistributive decisions that take from some to give to others (Majone 1999). According
to this view, without a pre-­existing demos in which strong ties of solidarity have already
developed, no redistributive policy would be possible. In reality, the historical record
does not support this thesis and does not show such a clear sequence between the crea-
tion of a nation and the establishment of representative democracy, but rather suggests
that the two may have co-­evolved and that democracy may even have been instrumental
in fostering a sense of national identity (Bartolini 2005). Still, the most common notion
of representative democracy is premised on the existence of a demos which delegates to
72  Handbook on Cohesion policy in the EU

elected representatives the making of policy decisions. In other words, it is premised on a

particular notion of ‘representation as delegation’.
‘Representation as delegation’ implies a principal delegating to an agent the making of
those decisions that best promise to secure the welfare of the principal. As many theo-
rists have remarked, this notion of democracy smacks of elitism: the representatives are
supposedly better able to decide what furthers the welfare of the represented than the
represented themselves (Pitkin 1967: 144–167; Held 2006: 125–157). There is therefore an
inherent danger (moral hazard) in this relationship. How can the represented be sure that
the representatives will not interject their own personal interest in the pursuit of the inter-
est of the represented? How can these be protected from being served with suboptimal
choices that in fact maximise the interests of the representatives? How can the principals
trust that the agents will not shirk and skirt (Pollack 2003)? These are classical principal–
agent theory conundrums which supposedly have their own remedies.
The bond of trust that connects principal and agent can be supported and protected
by a number of safeguards. The first such safeguard is the ‘representation contract’
itself, which is normally sealed at election time. The second main safeguard is to establish
accountability mechanisms that allow the principal to assess whether the agent has indeed
tried to pursue the principal’s welfare, and if it has not, why that occurred and whether
the agent should be punished. Theories of representation discuss the many ways in
which this bond can be created, the contract sealed, and the delivery of full political and
democratic representation secured (Pitkin 1967; Mansbridge 2003, 2009; Rehfeld 2006,
2009; Urbinati 2006; see Piattoni 2013). Moreover, if the agents must further delegate
the implementation of decisions to other agents (say, to non-­elected bureaucrats), the
latter must be accountable to the former so that chains of delegations should always be
matched by chains of accountability running in the opposite direction (Strøm et al. 2003).
This is the theory that inspires the mainstream view of representative democracy, which
implies a rather mechanistic vision of the delegation and accountability relationships that
link the sovereign people, the parliament and the executive (and its bureaucracy).
But what happens when the principals are many (and potentially have contrasting
views of their own welfare), the lines of delegation are blurred and the chains of account-
ability are broken? What happens when important allocative or distributive decisions
are decided by technocratic structures which are not subjected to any representational
contract but which have purposefully been made independent of the electoral circuit,
precisely in order to shield their decisions from the pressures of democratic representa-
tion? Several scholars give a negative, or highly qualified, answer to the first question
(Curtin  2007; Papadopoulos 2007). For them, when the chains of representation (as
delegation) are broken and are not matched by equally unbroken chains of accountabil-
ity, representative democracy is imperilled (Scharpf 2009). Others believe that there are
numerous ex ante and ex post mechanisms that allow elected representatives to control
independent administrative agencies without for this reason meddling too closely with
their technocratic decision-­making procedures, and thus to pursue the greater common
good (e.g., Majone 2002; Pollack 2003).
On the one hand, thanks to the flattening of hierarchies among governments at dif-
ferent territorial levels and to the involvement of civil society representatives at each
level, multilevel governance promises (at least in theory) to arrive at more informed and
more shared decisions which take full advantage of the on-­the-­ground knowledge of
 Cohesion policy, multilevel governance and democracy  ­73

subnational authorities and social partners. Many authors have remarked how multilevel
governance seems to imply by its very nature the delivery of good governance, and how
it tends to discount the raw exercise of power (Kohler-­Koch and Eising 1999; Bache and
Flinders 2004). On the other hand, multilevel governance is accused of weakening both
democratic safeguards. Several authors have remarked that multilevel governance makes
the decision-­making process particularly opaque and confounds responsibilities, and
thus runs the risk of concealing what is in fact technocratic and irresponsible decision-­
making (Benz 2007; Smismans 2015).
Take for example the usual shuttling of accusations between different levels of gov-
ernment when Cohesion funds are not spent in time or are not spent well: whose fault
is it? If a hierarchy of authority could be easily identified, blame could be assigned and
punishments could be meted out. But if policies are implemented with the concourse
of many agents and their impacts are assessed by many principals, then blame cannot
be easily placed and punishment cannot be easily administered. In the literature, this is
known as the problem of ‘many hands’ and ‘many eyes’ (Papadopoulos 2007). Likewise,
if arcane and cumbersome regulations are drafted by bureaucracies which are not under
the control of elected representatives, then no one is really responsible for the dispersal of
resources caused by such complications.
In other words, multilevel governance is often accused of evils or praised for quali-
ties which it does not have (Piattoni 2015). In all cases, it is said to be incompatible with
democracy as traditionally understood, that is as representation (as delegation) cum
accountability. In the following section, I will argue for a notion of representative democ-
racy which is compatible with multilevel governance and which is apt for interconnected
settings such as the EU.

A NEW MODEL OF DEMOCRACY FOR INTERCONNECTED

POLITICAL SETTINGS

Interconnected political settings like the EU challenge the most basic premises of tradi-
tionally understood representative democracy in which representation is equated with
delegation. Without delving into the debate about ‘the nature of the beast’, it is clear
that the European Union is more than an international organisation but less than a
state. If it were the one or the other, it would fit nicely into the nineteenth-­and early
twentieth-­century world order described in the introduction to this chapter: an order
which neatly separates domestic from international politics and places the sovereign
Westphalian state at the intersection acting as a ‘gatekeeper’ between the two. But since
the EU is a hybrid construction, which shares traits of both, it straddles this divide and
this creates problems for democracy. Democratically elected governmental representa-
tives must respond both to their direct principal – the national demos – and to the other
member states’ governmental representatives and, through them, to all other EU demoi.
Responsiveness towards one’s demos must now be balanced with responsibility towards
all other EU demoi, and the two are often in conflict (Bardi et al. 2014).
In an interconnected setting such as the EU, democratic representation as delegation
is neither possible nor desirable. It is not possible because there is no pre-­existing EU
demos, but rather several demoi, and because the chains of delegation and accountability
74  Handbook on Cohesion policy in the EU

get blurred and tangled due to the ‘many hands, many eyes’ problem recalled above. It is
not desirable, because even if they could be restored, democratically elected governmen-
tal representatives would also have to respond to systemic imperatives aimed at avoid-
ing offloading onto other EU constituencies the externalities of the policy choices that
­maximise the welfare of each national constituency; and what is true of national demoi is
also true of subnational communities.5
Once the Pandora’s box of what constitutes a national demos is opened, it is difficult
to put the subnational genie back into the bottle. It becomes in fact unclear why subna-
tional communities – which often compete with one another on world markets as fully
fledged cultural, social and economic systems and have often competed in the past for
the achievement of statehood – should be sidelined in the making of decisions whose
externalities affect them deeply and often differentially. The same kind of questioning of
‘representation as delegation’ which upsets national democracy forces us to look also at
ways in which subnational authorities and civil society representatives must be integrated
in a new model of democracy. Cohesion policy, both for its substance and for the way in
which it is governed, foreshadows this new model of democracy for interconnected politi-
cal settings which we could call ‘multilevel democracy’.
Cohesion policy has been the response to many types of EU needs (see Leonardi
and Holguin, Chapter 27, this volume) and has become the receptacle of many dif-
ferent goals (see Fratesi, Chapter 28, this volume). However, what has never changed
since the beginning is its foundational idea (which the word ‘cohesion’ nicely captures):
that in the process of building a new European political order no EU region should be
systematically penalised and all EU regions should, in fact, be helped to become more
fully (‘harmoniously’) integrated. Cohesion policy, then, encompasses both economic
growth and convergence objectives and social and territorial equalisation goals. Each
locality has the right to balance differently economic growth, social cohesion, territo-
rial integration and environmental preservation, but no locality should be structurally
and systematically shunned from partaking in the gradual growth of the standards of
living and in the possibility to fully participate in EU life. This is why Cohesion policy
does not merely seek to distribute money, but it also tries to favour the formulation of
developmental visions and institutional capacities which can be then be placed at the
service of the above goals.
The governance structure of Cohesion policy reflects this attention to subnational
constituencies and civil society organisations, in addition to national concerns, and to the
systemic composition of different national and regional interests. Consensus is reached
both through informal exchanges and through formal procedures.
The European Council sets the Multiannual Financial Framework which also
determines the amount of money that will be allocated to Cohesion policy during
the following budgetary period. The European Commission proposes the objectives
and guidelines for Cohesion policy for the following programming period after ample
consultation with the stakeholders – regional and local authorities, functional associa-
tions, social partners, associations of regional authorities – and after having consulted
informally with the institutions that will later have to formally advise or decide (see
Tömmel, Chapter 7, this volume). Most of the ideas that later shape Cohesion policy
are generated through informal contacts at events such as conferences, dialogues
between specialised European Parliament and Committee of the Regions ­committee
 Cohesion policy, multilevel governance and democracy  ­75

members and institutional trialogues (see Hübner, Chapter 9, this volume). This
complex web of consultations contributes to shaping the policy details and registering
the needs, demands and expectations of the constituencies variously represented by
these bodies.6
After also having formally acquired the opinions of the Committee of the Regions and
the Economic and Social Committee, the Council of the European Union co-­decides
together with the European Parliament the regulations for the next programming period,
that is, the objectives and procedures that will govern Cohesion policy during the fol-
lowing 5–7 years. National, regional and civil society representatives are then involved in
the implementation of Cohesion policy objectives through their participation in various
managing, accounting and supervisory committees and secretariats (see Stephenson,
Chapter 2, this volume). The Commission monitors progress towards the attainment of
the policy goals and the Court of Auditors checks the soundness of the financial report-
ing (see Fratesi, Chapter 28, this volume).
The different levels of government are involved in the process in ways that do
not constrain, but rather empower all other levels and actors. The system is ‘loosely
coupled’ in the sense that the influence that each level or actor can exert on the others
derives more from sharing information and deliberating over objectives than from
imposing ideas or opposing vetoes (Benz 2015). At the same time, formal representa-
tive bodies, such as the national parliaments and the Committee of the Regions, stand
guard over breaches of the principle of subsidiarity and can block decisions which
should contravene this principle. Subsidiarity must be understood more as a demo-
cratic safeguard than as a justiciable principle: it does not much consist in a technical
assessment of whether a certain policy decision should be better placed (meaning:
decided) at one or the other level of government, but it rather encourages a democratic
assessment of whether the interests of certain territorial constituencies have been duly
taken into account.
This system of multilevel governance is democratic in that it preserves both crucial
components of any democratic system: judgement and will (Urbinati 2006). It allows for
the formation of judgement both as ‘active doing’, as activating institutions on behalf of
given interests, visions and objectives, and as proposing policy ideas in order to protect
those interests and promote those visions; and as ‘passive doing’, as receiving the policy
proposals stemming from the Commission and the European Council, hence mindful of
the systemic compatibilities, and as surveillance over the infringement of the principle
of subsidiarity. The formation of judgement is one of the essential tasks of representa-
tive institutions and, I would argue, the function which makes representative democracy
truly democratic. The expression of will is the second crucial component of democracy,
but it is a function that also non-­democratic institutions can deliver. It is therefore not
participation in the making (or vetoing) of decisions that makes a system of governance
democratic, but participation in the formation of judgement: in the active shaping of
policy and in the passive monitoring of implementation and impact. In this sense, the
many forums, levels and actors that are so problematic for a notion of democracy as
based on ‘representation as delegation’ are precisely what makes multilevel governance
fully democratic when representation is understood as being based on both judgement
and will.
76  Handbook on Cohesion policy in the EU

CONCLUSIONS

Cohesion policy is one of the main embodiments of multilevel governance, a form of gov-
ernance that enlists different levels of government and different types of constituencies at
each level in the shaping and making of public policy. While its current deployment may
not be perfect – given that discussion and deliberation could certainly improve at all levels
– it is certainly not by trying to reconstruct matching chains of delegation and account-
ability that we will secure democracy in an interconnected setting like the European
Union. In interconnected settings, in which not only responsiveness to predefined national
constituencies but also responsiveness to continuously shifting subnational and functional
constituencies and responsibility vis-­ à-­
vis affected constituencies located in different
member states is paramount, the formation of judgement is at least as important (if not
more important for democratic legitimacy) than the sheer expression of will: will without
judgement is blind and arbitrary, while judgement without will is inconclusive. Cohesion
policy gives us a glimpse, however imperfect, of what democracy in interconnected settings
could be.

NOTES

1. In the United States the proximity between business interests and the administration has always been
tighter (‘iron triangles’). However, as Lowi (1969) himself noted, the normative assessment of the proximity
between private interests and public institutions changed in the course of time, thus registering a change in
public philosophy.
2. This explains why many commentators concluded that multilevel governance was, in the end, nothing more
than neofunctionalism in a new guise (Jordan 2001).
3. For an early critique of this overly formalistic approach, see Bukowki et al. (2003).
4. This is an obvious reference to the contentious issue of the gatekeeping capacity of member states (Bache
1998).
5. The perfect example of this predicament is Economic and Monetary Union (EMU) and, particularly, the
euro area: national governments must also take into account the other euro area member states’ constituen-
cies’ expectations when making decisions formally under their control, first and foremost budgetary and
fiscal decisions.
6. On the specific role of the Committee of the Regions in this policy-­shaping activity, see Piattoni and
Schönlau (2015).

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5.  Cohesion policy and Europeanisation
Marcin Dąbrowski and Paolo R. Graziano

INTRODUCTION

Europeanisation has been one the most promising perspectives in European policies over
the past years. After its first analytical introduction in the scholarly debate, the concept
of Europeanisation has increasingly been used and operationalised in order to carry
out research on public policy change in European (and non-­European: see Gawrich
et al.  2010; Catalano and Graziano 2016) countries. Europeanisation, broadly defined
as a process of construction and diffusion of European Union (EU) polities and institu-
tions, seemed particularly useful with respect to Cohesion policy and its multilevel system
of governance. For this reason, since the early 2000s scholars have particularly worked
on the link between Cohesion policy and Europeanisation, and to date Cohesion policy
is one of the most studied policies adopting an Europeanisation framework. A very
gross indicator of the relevance of Europeanisation for Cohesion policy research can
be the number of entries for ‘Europeanisation and Cohesion policy’ in Google Scholar
that reaches 17 500, a strikingly high record compared to 29 000 entries for the term
‘Europeanisation’ alone.
But beyond the quantitative, purely publishing aspects of the relationship between
Europeanisation and Cohesion policy, why is it that the two have gone together so
often? There are at least three reasons for this: first, the objective relevance of the policy
in EU budget terms; second, its multilevel nature; third, its link to EU enlargement­ –
possibly the most relevant process of the past decades in EU politics. More specifically,
due to the great share of the EU budget used for Cohesion policy purposes (currently
about one-­third of the overall 2014–2020 budget), the Structural Funds – which con-
stitute the financial basis of the policy – have immediately attracted the attention of
EU scholars. The multilevel nature of the policy was remarked on soon by several
researchers, the first being Gary Marks in his ground-­breaking contribution of 1993.
The activation of subnational levels of government has been seen as one of the most
important effects of Cohesion policy in the way it has been designed (see, among
others, Polverari 2015) and therefore specific attention on the patterns of policy and
political change triggered by EU Cohesion policy formulation and implementation
have been often analysed through the analytical lenses of Europeanisation (see, e.g.,
Graziano 2012). Cohesion policy has been considered as capable of attracting general
political interest towards the EU and, therefore, to play a role in the Europeanisation
of the countries being candidates for EU accession or the countries from Central and
South-­Eastern Europe that joined the EU in the most recent enlargement wave starting
in 2004 (Scherpereel 2010).
In scholarly contributions, the analysis of Europeanisation and Cohesion policy has
been linked to a number of processes such as administrative reforms aimed at creating
new institutions for the purpose of management of EU Structural Funds at the national

79
80  Handbook on Cohesion policy in the EU

or regional levels (see, e.g., Baudner and Bull 2013; Dąbrowski 2012; Dobre 2010) sub-
national institutional and political change (Graziano 2010; Sturm and Dieringer 2005;
Thielemann 2002), interinstitutional cooperation dynamics (Adshead 2014; Buzogány
and Korkut 2013; Dąbrowski 2014; Zerbinati 2004), national and subnational policy
change (Benz and Eberlein 1999; Ferry and McMaster 2013; Graziano 2012) and inter-
regional cooperation (Stead 2014).
For all these good reasons the Europeanisation ‘toolkit’ has been used in order to
analyse the main features and effects of Cohesion policy in a number of countries, both
within and outside the EU. It provides a useful conceptual framework for exploring and
making sense of the vast array of effects of EU Cohesion policy on domestic polities,
policies and (multilevel) politics, while being helpful in understanding the dynamics of
this peculiar policy, its achievements and flaws. At the same time, because of the above-­
mentioned prominence of the policy among EU policies and the breadth of its domestic
influence, EU Cohesion policy provided scholars with an excellent ground for testing the
validity of the concept of Europeanisation and confronting it with the empirical reality
of the difficulties that the member states encountered in adjusting to EU norms clashing
with domestic institutions and priorities.
The aim of this chapter is threefold. First, it aims at stock-­taking of the different
strands of research analysing EU Cohesion policy through the lens of Europeanisation.
Second, it endeavours to offer a critical overview of what this body of research tells us
about the substance of EU Cohesion policy, its influence and spillover effects on the
domestic regional policies, administrative systems and governance patterns. Third, the
aim of the chapter is to point to the remaining gaps in our knowledge on Europeanisation
in the field of regional policy and suggest avenues for future research.
After this concise introduction, the chapter will provide an in-­ depth literature
review of the various analytical dimensions, which have been followed in the study of
Europeanisation and Cohesion policy. First, it will briefly look into the origins of the
concept of Europeanisation, and explain how it has been operationalised and applied
to study the domestic effects of EU Cohesion policy. Second, it will review the applica-
tion of the concept across different cases. The chapter focuses on the countries for which
Cohesion policy is the most relevant, that is: its former core beneficiaries, notably the
‘cohesion countries’ (Spain, Portugal, Greece and Ireland) and (Southern) Italy; the
EU member states in Central and South-­Eastern Europe, the current main recipient
of Structural Funds; and, lastly, candidate countries for accession to the EU. The vast
majority of the Europeanisation literature that deals with Cohesion policy is focused on
these three clusters of countries, because this is where the intensity of regional aid has
been the greatest and hence one can expect the biggest exposure to the norms promoted
by the EU through this policy. By contrast, more developed EU member states have been
much less exposed to the influence of Cohesion policy, hence they are largely omitted in
the chapter.

EUROPEANISATION AND EU COHESION POLICY

This is not an appropriate place to focus on broad theoretical considerations on

Europeanisation (more in Graziano and Vink 2012). Nevertheless, before we move on
 81
Cohesion policy and Europeanisation  ­

to the illustration of the findings of Europeanisation research in terms of Cohesion

policy we need to analyse where the research agenda comes from and how it is linked to
other contemporary political science approaches. In broad terms, to a certain extent the
Europeanisation research agenda is a good example of the institutionalist turn in the
political science of the 1980s (Börzel and Risse 2003). Europeanisation fits into the insti-
tutionalist turn in European studies (Aspinwall and Schneider 2000) since it focuses on
the creation and implementation of institutional arrangements at the EU level, creating
policies which are more or less binding (depending on the source of the EU rule) at the
national level. In other terms, it takes ‘institutions’ very seriously, since Europeanisation
processes have to be significantly connected – directly or indirectly – to European institu-
tions or policies. More specifically, with reference to Cohesion policy, the legislative rules,
since the 1988 reform, have been stipulated in binding EU-­wide Regulations. Cohesion
policy can be implemented in a differentiated manner in each member state (Ferry and
McMaster 2013: 1505; Bachtler et al. 2013: 3) but still, if compared to other less binding
policies (social policy, for example), the room for manoeuvre in implementation is rather
limited since the EU-­wide Regulations provide policy objectives, principles and proce-
dures which cannot be easily changed at the domestic level.
But what is the direct link between Europeanisation and the various institutional
approaches? Whereas the above-­mentioned definition of Europeanisation does not relate
immediately with varieties of institutionalism, when we move to the empirical ground the
link is much clearer and different propositions or hypotheses have been developed and
tested. The relevance of the different institutional approaches may be considered when
specific research hypotheses are formulated (such as, for example, the notion of ‘misfit’;
see Börzel and Risse 2003) or the motivations that guide the behaviour of actors (institu-
tional, political, social) are examined. More specifically, actors may be guided by rational
considerations, which follow individual or collective cost–benefit analysis and order
their fixed preferences before starting any kind of negotiation with other actors (rational
choice institutionalism); or preferences and interests may be the product of interaction
among actors who do not have predefined and fixed preferences (sociological institution-
alism). The status of the historical institutionalist approach is less clear in the literature
since either it is ignored (as in the case of Börzel and Risse 2003) or it is somehow taken
for granted, that is, considered inbuilt in the ‘misfit’ hypothesis of the Europeanisation
literature since ‘[t]he central claim made is that existing institutional paths are “sticky”
and resistant to change’ (Mastenbroek and Kaeding 2006: 4).
That being said, a very limited set of studies has taken seriously (albeit implicitly) the
historical institutionalist premises since the goodness-­of-­fit route has been followed only
by a handful of Cohesion policy scholars (Mendez et al. 2008; Graziano 2012). In this
type of contribution, the fit/misfit is not taken for granted but rather constitutes the
first object of analysis since the fit/misfit relation is historically reconstructed: the basic
assumption is that in cases of misfit the ‘stickiness’ of the institutional paths can be chal-
lenged only when the adaptational pressures of the EU are particularly strong, that is,
the EU policies adopted are particularly binding. In the Cohesion policy literature, much
more frequent has been the adoption of an explicit (or implicit) rational choice or socio-
logical institutionalist approach, as the following sections will testify.
Concerning the way in which the Europeanisation concept has been operationalised to
account for the domestic impact of EU Cohesion policy, it broadly followed the trends in
82  Handbook on Cohesion policy in the EU

the wider Europeanisation literature, reproducing two key dichotomies. The first reflects
the above-­mentioned strands of institutionalism. Thus, in the rational choice model the
EU norms result in a change in the structures of opportunities for the domestic actors
that respond to it strategically. By contrast, in the sociological model, the EU norms are
considered as an element that affects the domestic actors’ identities and shared under-
standings. In both perspectives, the outcomes of Europeanisation depend on a set of
mediating domestic factors, such as adaptation costs, presence of supporting domestic
institutions and actors, societal mobilisation or administrative capacity in the rational-
ist perspective; and identification with the EU, the positive normative resonance with
domestic rules and the presence of transnational epistemic networks in the sociological
perspective (Sedelmeier 2011).
The second distinction contrasts top-­down Europeanisation research designs, character­
ising the earlier wave of Europeanisation literature and focused on the ways in which the
domestic actors respond to EU adaptation pressures (e.g. Börzel 1999; Ladrech  1994),
with the more recent bottom-­up research approach, which explores the ways in which the
domestic actors interpret and use the EU pressures (Radaelli 2003). In the literature on
Europeanisation related to EU Cohesion policy the leading proponents of the top-­down
approach are Ian Bache and his collaborators (e.g. Bache and Tomšic 2010; Bache et al.
2011; Bache 2008). Their research focused on whether and how EU Cohesion policy and
pre-­accession aid affected governance systems in EU member and candidate countries,
pointing to more or less profound changes in the direction of more compound polities,
depending on the interplay of the domestic mediating factors. The bulk of the literature
on this topic, however, follows the bottom-­up approach, being concerned with the interac-
tive and open-­ended nature of Europeanisation and focused on the strategies (e.g. Brusis
2005, 2014) and interpretations (e.g. Dąbrowski 2013; Méndez et al. 2006; Wishlade et al.
2003) of domestic actors.

THE DIFFERENT ‘WORLDS’ OF EUROPEANISATION AND EU

COHESION POLICY

If we turn to the changes, which have occurred in various European countries, and we
start from the ‘old’ member states, we need to focus on the peripheral member states
such as Ireland, Portugal, Spain, Italy and Greece. Before we turn to the account of the
various changes linked to Europeanisation, we need to start with two caveats. First, within
the limited scope of this chapter, it is not an easy task to discuss extensively the issue
of Europeanisation and domestic change; nevertheless, one of the first aspects which
emerges from the literature is that ‘change’ (political, institutional, policy-­based, and so
on) has been conceptualised in a very differentiated manner and therefore quite often the
research results are not truly comparable. Second, although the theoretical literature on
Europeanisation has emphasised the relevance of considering both the bottom-­up and
top-­down dimensions of Europeanisation, in fact so far only a limited number of contri-
butions has done so. This is due possibly to the quite significant research effort that such
an approach would require. Therefore, in this section the contributions we will analyse are
primarily aimed at understanding Europeanisation in a top-­down manner, that is, focusing
on the impact of European institutions and policies on national and regional institutions
 83
Cohesion policy and Europeanisation  ­

and policies. That said, what does the existing literature tell us about changes (or continu-
ity) in European states due to the formulation and implementation of EU Cohesion policy?
In principle, we may witness three possible outcomes of the interaction between the EU
and member states with regards to Cohesion policy: (1) radical change (transformation);
(2) incremental change (adjustment); and (3) no change (continuity). Furthermore, we can
differentiate between policy, institutional and broader political changes.

Europeanisation in the European Periphery

In terms of policy changes some of the peripheral member states have experienced a
significant degree of change (transformation): Italy (Graziano 2012; Baudner and Bull
2013), Ireland (Adshead 2014), Portugal (Medeiros 2014) and Greece (Andreou 2006);
whereas only some incremental changes (adjustment) occurred in the remaining periph-
eral country, Spain. The picture at the regional level is diversified as well and there are
virtually no clear domestic patterns since change depends significantly on numerous
intervening factors such as administrative capacities, trust and institutional autonomy
(Börzel 1999; Pasquier 2005; Milio 2014; Medeiros 2014; Graziano and Terracciano
2015).
Considering institutions, especially in terms of centre–periphery relationships, pos-
sibly the most relevant change regards the (formal) empowerment of the regions in all
peripheral countries, although the pattern is once again quite diversified in function of
a number of intervening variables, such as institutional actors’ resources, administrative
structures and pre-­existing social relationships (Börzel, 1999; Smyrl, 1997; Jordana et al.
2012). In other words, there is some evidence of adjustment, not much of transformation.
Finally, looking at political change, that is, focusing on the changing pattern of
representation of parties and interest groups, we do not have much specific evidence
linked to Cohesion policy as such. Of course, there are several contributions linking
Europeanisation to political parties and to interest groups and social movements, such as
those provided by Eising (2007), but there is a very limited specific literature on the links
with Cohesion policy (for a few exceptions, see Borrás et al. 2006; Graziano 2012).
In sum, Europeanisation has triggered several policy changes in the various periph-
eral EU member states, whereas the overall picture regarding institutional and political
changes is more nuanced, also due to the limited systematic comparative research, which
has been conducted in this field with reference to the peripheral countries.

Europeanisation in the Context of EU Enlargement

A new strand of Europeanisation research emerged in the run-­ up to the biggest

enlargement wave in 2004 and 2007, in which ten of the formerly communist states
of Central and Eastern Europe became EU member states. After the collapse of the
communist regimes in 1989, these countries reoriented their geopolitical, ideological
and economic strategies towards the West. Part of this was the discourse on ‘return to
Europe’, artificially divided by the Iron Curtain until 1989, and aspirations for closer
collaboration and, ultimately, integration with the EU. This resulted in a string of
applications for membership in the EU in the mid-­1990s submitted by post-­communist
countries.
84  Handbook on Cohesion policy in the EU

However, what made Europeanisation of Central and Eastern European countries

(CEECs) and, subsequently, those of the South-­East European and Western Balkan
states in particular, was the strong pre-­accession conditionality, entailing close monitor-
ing of the candidate states’ progress in compliance with the membership criteria and
adoption of the acquis communautaire. The prospect of membership was used as an
incentive for wide-­ranging domestic reforms (Grabbe 2001, 2006; Hughes and Sasse
2004; Schimmelfennig and Sedelmeier 2004; Sedelmeier 2011).
In this context, one could expect some degree of convergence across the candidate
countries due to the exposure to similar (though ambiguous) adaptation pressures.
Nevertheless, studies adopting a bottom-­up approach and focusing on the domestic
actors’ strategies painted a more nuanced picture. In fact, Europeanisation, in Poland
for instance, involved ‘a complex process of interaction between EU and domestic pres-
sures, with some areas of convergence alongside areas of conflict or tension’ (Ferry 2003:
1111). Likewise, the Czech case showed that the technocratic nature and the fast pace
of the accession process resulted in ‘reinforcing the centralist preferences of national
governmental authorities and undermining the Commission’s nominal support for decen-
tralisation and partnership’ (Marek and Baun 2002: 913–914). In sum, the European
Commission’s guidelines for administrative reforms to accommodate EU Cohesion
policy implementation system remained approximate and conditionality was applied
in an ‘inconsistent and ad hoc’ manner (Hughes et al. 2004: 543). Hence EU pressures
played only a limited role in the regionalisation processes in the candidate countries and,
ultimately, resulted in differentiated outcomes across those countries.
Therefore, EU requirements were just one among many factors behind the admin-
istrative and territorial reforms in the candidate countries. Brusis (2005), for instance,
argued that EU conditionality was used strategically by Czech and Slovak leaders to
catalyse and legitimise long-­planned but stalled reforms. In a similar way, while EU
pressures opened a window of opportunity to complete the long-­gestating territorial
administration reform in Poland in 1999, this process remained unfinished (Ferry 2003)
or ‘shallow’ (Czernielewska et al. 2004) due to insufficient consideration for the historical
boundaries of regions when designating new regional units, unclear division of com-
petencies between decentralised and deconcentrated institutions, insufficient financial
resources offered to the newly created regional authorities, and a deficit of traditions
of cross-­level coordination and cooperative culture. In Hungary, after regionalisation
experiments in the second half of the 1990s, establishment of institutions to manage the
Structural Funds and introduction of some channels for participation of non-­state actors
in regional policy, a recentralisation trend was observed (Buzogány and Korkut  2013).
This exemplified superficial Europeanisation in which the domestic ‘actors may change
strategies as a response to changes occurring in the policy environment, but they still
pursue the same previously held preferences’ (Kovács et al. 2004: 457). The outcome of
Europeanisation processes in these three countries depended on whether the territorial
reforms prior to accession involved putting in place elected subnational authorities with
significant bargaining power towards the central government and resulted in emergence
of regional networks pushing for devolution and inclusion in the making of regional
policy (Bruszt 2008).
Similar trends were also apparent in the later enlargements in 2007 (Romania and
Bulgaria’s accession) and 2013 (Croatia). While Europeanisation may have initially
 85
Cohesion policy and Europeanisation  ­

promoted regionalisation and more horizontal and cross-­level interactions in policy-­

making, ‘at times the Commission’s role has been to strengthen centralisation rather
than multi-­level governance, where the situation has been seen to demand it’ (Bache
et  al. 2011: 139). For instance, in Croatia, the Instrument for Pre-­Accession Assistance
(IPA) spurred the proliferation of development agencies engaging in cooperation with
various local actors, but the management of the IPA remained centralised (Bache
et   al. 2011; Bache and Tomšić 2010) and focused on capacity-­building at the central
level (Antonopoulos and Bachtler 2014). In Bulgaria, a state with strong centralisation
traditions, the adjustment to EU Cohesion policy entailed only superficial changes to
the territorial system such as the establishment of statistical regions and task-­specific
operational committees (Yanakiev 2010). Likewise, in Romania, despite the emergence
of regional development agencies and introduction of elements of multilevel govern-
ance, the central government remained firmly in control of the EU funds management
(Dobre 2010).
In the wake of those various accounts highlighting the difficulties in implementing
pre-­accession funding, the ‘regionalisation without regions’, the superficiality of the
institutional changes driven by EU conditionality and the low administrative capacity of
the newly created subnational institutions, some commentators noted a lack of readiness
of the candidate countries for managing the Structural Funds, speaking about ‘shallow’
or ‘formal’ Europeanisation of the subnational actors (Czernielewska et al.   2004;
Paraskevopoulos and Leonardi 2004) or forecasting pressures for reversal of the decen-
tralisation reforms and calling for post-­accession assistance and monitoring (Bailey and
De Propris 2004). To what extent were these sceptical views verified by the developments
after the actual accession to the EU?

Post-­Accession Europeanisation: Learning or Reversal?

Bachtler and McMaster (2008) tested the claim that EU Cohesion policy led to ‘stronger
regions’ by investigating the extent to which the regions’ involvement in the implementa-
tion of EU Cohesion policy reinforced their institutional capacity and their role in the
development and delivery of regional policies. They found that such developments took
place only in those countries that put in place elected regional authorities prior to EU
accession and actually delegated competences in managing the Structural Funds to the
regional authorities. This caused a process of divergence of outcomes of Europeanisation
that continued after accession. This issue was further explored by Brusis (2014), who
explained how Hungary became locked into a centralisation trajectory, initiated prior
to accession to the EU, while in Poland and the Czech Republic the regional authorities
managed to resist centralisation pressures and gain additional powers in management of
the Structural Funds and in other domains.
Moreover, even though the instruments and objectives of domestic regional policies
in the candidate countries converged under the strong influence of EU Cohesion policy,
to become largely subsumed into it, over time and with growing experience of Structural
Funds management, the domestic actors tended to interpret these EU-­imported features
according to their own priorities (Ferry and McMaster 2013). Thus, in some cases (for
example, Poland, the Czech Republic), the domestic regional policies incorporated spe-
cific domestic preferences (for example, for basic infrastructural investment) or targeted
86  Handbook on Cohesion policy in the EU

action to solve particular territorial challenges. This, in turn, led to a degree of differen-
tiation across the ‘new’ member states.
Other studies attempted to verify the claims about the post-­ accession pressures
for reversal of the reforms associated with conditionality-­ driven Europeanisation
(e.g.  Sedelmeier 2006) or the risk of creating institutions without substance (Bugarič
2006; Czernielewska et al. 2004; Grabbe 2006). An example of such ‘de-­Europeanisation’
is the gradual reversal of EU-­induced policy changes in Estonia (Raagmaa et al. 2013).
Following a process of top-­down adjustment to the EU Cohesion policy framework in
the period preceding the accession, after 2004 the Structural Funds were to some extent
‘hijacked’ by the national and subnational elites to finance mainly social and cultural
projects, rather than to support economic restructuring in regions, thus departing from
the objectives of EU Cohesion policy.
That said, while ‘shallow’ and strategic interest-­driven adaptation to EU Cohesion
policy rules, such as the partnership principle, may be commonplace, this does not neces-
sarily preclude processes of learning (Dąbrowski 2012, 2014). The internalisation of this
rule by the subnational actors depends not only on the degree of decentralisation and
the competences delegated to the regional authorities, but also on factors such as the size
and the financial and administrative capacity of municipalities (one of the main users of
Structural Funds), or even the attitudes of their leaders. Importantly, the time factor is
key, as the ‘depth’ of the adjustment to EU Cohesion policy rules tends to change over
time (Dąbrowski, 2014). Thus, the trajectories and outcomes of Europeanisation after
accession can also vary among the particular regional and local authorities within a
particular state. These uneven effects of EU Cohesion policy make it difficult to use the
customary clear-­cut typologies of Europeanisation outcomes, such as that distinguishing
between accommodation, absorption and transformation (Börzel and Risse 2003).
Finally, comparative studies further elucidated the question of post-­ accession
reversal of Europeanisation-­driven changes. Scherpereel (2010) challenged the con-
sensus on the weak role of the EU pressures in regionalisation processes and the
predominance of the domestic factors driving them, arguing that Europeanisation has
actually intensified since accession in countries such as Poland, the Czech Republic
and Slovakia. He observed the gradual embedding of the norms transmitted via EU
Cohesion policy in the practices of regional authorities and stressed how the latter
used Structural Funds to reinforce their power vis-­à-­vis the central governments and
counteract the centralisation agendas of some national leaders. From a different
perspective, Bachtler et al. (2013) stressed the role of administrative capacity in the
‘new’ EU member states as a factor explaining the differentiated Europeanisation
trajectories of change in territorial administration systems. Thus, in the initial period
after accession, Central and Eastern European member states ‘were under pressure to
overcome a certain expectation of administrative failure’ and ‘were no longer subject
to the conditionality of accession, but there was an implicit conditionality associated
with the negotiations underway on the post-­2006 financial perspective’ (Bachtler et al.
2013: 18). This entailed close monitoring of the implementation of programmes and a
strong incentive for the domestic actors to perform well in absorbing the funds in order
to justify claims for a significant allocation in the subsequent, 2007–2013, program-
ming period. All this led to surprisingly optimistic conclusions: the development of
administrative capacity in the ‘new’ member states exceeded expectations and spurred
 87
Cohesion policy and Europeanisation  ­

s­ ocialisation mechanisms. This supports the view that there is no particular ‘Eastern
problem’ with post-­accession compliance with EU norms (Sedelmeier 2011), and chal-
lenges the classification of these countries as a ‘world of dead letters’ in which EU
rules might be transposed but were not enforced (Falkner 2010). However, first of all
these developments could be due to the specificity of the conditionality and socialisa-
tion mechanisms characterising EU Cohesion policy and, hence, limited to this policy
area. Second, there is still ample scope for improvement of administrative capacity in
the ‘new’ EU member states, as perhaps best illustrated by the difficulties in absorb-
ing Structural Funds in Romania (see, e.g., Zaman and Georgescu 2009). Third, the
regional allocations (see, e.g., Bloom and Petrova 2013; Bouvet and Dall’Erba 2010)
and the use of EU funds on the ground to support investment projects can be subject
to political and electoral pressures (e.g. Dąbrowski 2012), which may reverse some of
the positive developments observed.

CONCLUSIONS

The concept of Europeanisation has been widely used as an analytical lens for study-
ing and comparing the role of Cohesion policy in the processes of decentralisation and
regionalisation, the balance of power between the central and subnational authorities,
and the objectives and instruments of domestic regional development policies of EU
member states. The existing literature on this topic paints a nuanced picture of divergent
trajectories of reforms influenced or catalysed by EU Cohesion policy, resulting from the
great variety of domestic institutional, policy and cultural contexts, as noted especially
by scholars investigating the cases of the ‘old’ EU member states. In the case of the
countries of Central and South-­Eastern Europe, one could expect greater convergence of
Europeanisation pathways, due to pre-­accession conditionality and the arguably stronger
pressures for adaptation to EU rules. While indeed all of these countries have reacted to
those pressures and introduced changes to accommodate EU Cohesion policy and its
multilevel mode of governance, there is considerable variation in the outcomes of these
processes.
This variation is due to at least two factors. First is the insufficient ‘bite’ of condition-
ality, with the European Commission initially promoting regionalisation, later insisting
on centralised management of the Structural Funds immediately after accession, and
ultimately allowing for a differentiated approach across the member states. This erratic
behaviour left scope for different domestic interpretations of EU pressures. While some
countries stuck to their centralisation traditions in managing the Structural Funds (for
example, Bulgaria, Romania) or even reversed the pre-­accession reforms in that direc-
tion (for example, Hungary), others (for example, Poland, the Czech Republic) delegated
competences in this field to the regions, which increased the power and capacity of
regional authorities to steer their own development policies. Second, the choice of these
particular responses is best explained by investigating the domestic politics vis-­à-­vis this
policy. This entails, for instance, strategic usage of EU Cohesion policy by central govern-
ments to legitimise decentralisation reforms or by the regional authorities to wrestle more
power from the centre.
Another key issue is that of the sustainability or ‘depth’ of the impact of EU Cohesion
88  Handbook on Cohesion policy in the EU

policy on domestic systems. Was adjustment a superficial window-­dressing exercise,

entailing a reversal of reforms once conditionality after accession weakened, or are we
witnessing continuing learning and internalisation of EU Cohesion policy rules over
time? The answer, again, is nuanced. Pressures for compliance with EU norms persist
even in the absence of accession conditionality. Europeanisation continues in some
cases, with the EU Cohesion policy empowering subnational actors, stimulating learn-
ing and capacity-­building. There is also evidence of the increasing role of socialisation
and lesson-­drawing as mechanisms of rule transfer, promising a gradual internalisation
of these norms among the domestic actors, at least in countries with elected regional
authorities able to seize the opportunities created by the Structural Funds. However,
the process of Europeanisation remains multifaceted and uneven across the different
governmental institutions involved and even across regions and municipalities within
a particular member state, depending on their interest in the policy and capacity to
take part in it. Thus, one observes ‘islands’ of Europeanised elites and territories, while
others have little exposure to EU rules. In addition, in some of the new EU member
states one observes situations of ‘lock in’ in centralisation trends or politically driven
recentralisation of the implementation of EU Cohesion policy. One also notes cases
of ‘hijacking’ of Structural Funds to support domestic priorities, defying the original
EU-­defined objectives. While the European Commission can in theory withdraw EU
funding for a particular project if such developments are observed, in practice it seldom
applies that sanction.
These trends indicate that one no longer needs a distinctive approach to study the
impact of EU Cohesion policy in the ‘old’ and ‘new’ EU Cohesion policy recipient
countries. Europeanisation in the latter group of countries also entails accommodation
and adjustment, rather than an in-­depth transformation of administrative and policy set-
tings driven by EU Cohesion policy. This, in turn, calls for more comparative East–West
Europeanisation research.
This future research should opt for a bottom-­up and longer-­term temporal perspective,
allowing for a finer-­grained analysis that takes into account the fundamentally important
(and shifting) interests, strategies and perceptions of the domestic actors. Given the
evidence on the patchy and differentiated outcomes of Europeanisation, future research
should avoid simplistic views of Europeanisation as a top-­down process and eschew easy
categorisations. Instead, the focus should be on the role of the actors’ strategies and their
interpretations and uses of EU norms, as well as on the drivers and mechanisms of the
learning processes triggered by EU Cohesion policy.
There are also several themes that remain under-­researched and offer exciting avenues
for further research. First, we still know little about the spillover effects of EU Cohesion
policy’s practices and instruments, such as evaluation or partnership, to domestic
regional and other sectoral policies. Second, there is a shortage of research comparing
the Europeanisation experiences of the ‘old’ and ‘new’ EU member states with the pro-
cesses taking place the states currently in the ‘waiting room’ for EU membership. There
are indeed important lessons to be drawn here. Last but not least, there is the question
of diffusion of EU norms to third countries (see Börzel and Risse 2011) in the European
neighbourhood and farther afield, which in the realm of regional policy remains hardly
explored by scholars.
 89
Cohesion policy and Europeanisation  ­

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6. Quality of government, regional autonomy and
Cohesion policy allocations to EU regions
Nicholas Charron

INTRODUCTION

Fostering economic cohesion among the regions of the European Union (EU) is a
primary policy goal of the European Commission. Since 1975, one of the main policy
tools used to achieve this goal has been the use of Structural Funds (SFs) in promot-
ing economic convergence among regions. As they normally constitute one of the
largest items on the EU’s annual budget and help to finance thousands of public-­works
projects in many areas such as infrastructure, transportation, health, environment,
agriculture, energy and telecommunications, these funds have drawn much scholarly
attention. For example, many economists and political scientists have examined the
effectiveness of the funds in producing the economic cohesions promised, with mixed
empirical results (Rodríguez-­Pose and Fratesi 2004; Beugelsdijk and Eijffinger 2005;
Dall’Erba and Gallo 2008). Scholars of multilevel governance have also produced
much research on the intergovernmental aspects of regional policy formation (Hooghe
and Marks 2001; Piattoni 2010; Bukowski et al. 2003; Benz and Eberlein 1999;
Pollack 1995). Recently, a relatively small subfield of scholars have focused atten-
tion on regional political factors and characteristics in determining the allocation of
Structural Fund grants to EU regions (Kemmerling and Bodenstein 2006; Bodenstein
and Kemmerling 2008, 2011; Dellmuth 2011; Bouvet and Dall’Erba 2010). Such schol-
ars have noted an empirical puzzle: that regional transfers from Structural Funds vary
significantly throughout the EU despite relatively clear eligibility criteria for funding.
The main research question in this chapter draws upon this literature: aside from the
stated EU criteria, what regional factors can explain variation in Structural Fund allo-
cation to EU regions?
The several studies that have addressed this question have highlighted numerous vari-
ables outside of the stated criteria (for example, levels of economic development) that
also systematically explain patterns in regional grants. The factors that have been put
forth have in large part included political determinants – such as regional party systems,
elections, the extent to which a region’s population is ‘Eurosceptic’, and the constitutional
strength of a region – and several have been found to a have systematic links with the
distribution of regional grants from SFs.
This chapter contributes a new factor in this ongoing debate – the concept of ‘state
capacity’ or ‘quality of government’ (QoG) (Rothstein and Teorell 2008) – as an explana-
tion of why certain regions are allocated higher levels of Structural Funds grants than
others on average. The main argument in a nutshell is that when there is room for regions,
member states and the Commission to negotiate for funds, regions with greater levels
of QoG will acquire more on average, accounting for levels of economic development,

92
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Quality of government, regional autonomy and EU regions  ­

­ nemployment rates and other political and institutional factors. The rationale behind
u
this is twofold. The Commission has strong incentives to allocate resources to states and
regions where the funds will be absorbed (Dellmuth 2011; Tosun 2014). Regions with
greater levels of QoG – for example, lower corruption, better-­quality bureaucracies – are
more attractive candidates to the Commission in allocating funds. Second, regions with
higher levels of capacity are hypothesised to be on average better at lobbying for their
interests both their own central government as well as the Commission, and better pre-
pared to effectively implement the rules and criteria associated with grant expenditures
from the Structural Funds. In addition, the chapter also tests whether QoG is conditioned
upon the constitutional strength of a region; meaning whether the effect of QoG on SFs
allocation to regions is greater in regions with higher levels of political and fiscal auton-
omy. Using SF grant data for regions for the period of 2000–2006, and a novel subnational
measure of QoG from Charron et al. (2014, 2015), the hypotheses are empirically tested
and corroborated, even when accounting for other economic and political factors.
The chapter proceeds as follows. First, the allocation of Structural Funds and the
dynamics of the bargaining process are briefly explained. Second, the relevant literature
to which this chapter contributes is highlighted. Next, the theory and hypotheses are
put forth. In the next section, the sample, data and research design of the chapter are
explained. The empirical tests and results are then presented and discussed. The chapter
concludes with a discussion of the findings, the main contributions, caveats of the analy-
sis as well as future research ideas.

STRUCTURAL FUNDS ALLOCATION

As a cornerstone of the EU Cohesion policy, Structural Funds serve as a primary

redistributional and development instrument for projects in regions throughout the
EU. Although there have been adjustments over the years, SFs currently comprise the
European Regional Developmental Fund (ERDF), the European Social Fund (ESF),
and the Cohesion Fund (CF). In the current, 2014–2020 programming period, the
Structural Funds also includes the rural and fisheries funds (European Agricultural Fund
for Rural Development, EAFRD; European Maritime and Fisheries Fund, EMFF).
Together, the ERDF, ESF and Cohesion Fund make up the European Structural and
Investment Funds (ESIFs). The ESIFs are managed within a shared framework. These
funds are a substantial portion of the overall EU budget – normally the second-­largest
bloc of total expenditures – constituting between roughly 30.5 per cent and 36.0 per cent
of the total expenditures, depending on the period in question.1
For each seven-­year programming period for which the funds are allocated, the EU
Commission fixes a set amount to be appointed to each member state (MS), based on
relative wealth, population and other criteria such as unemployment. Once the funds
are attributed to each MS, central governments and regions within each state propose
investment plans for the resources to be spent. When such negotiations for regional
investments are completed, the Commission determines a fixed set of expenditures for
the regions, which have the seven-­year programming period plus two additional years to
use the funds.
There is, however, a distinction with respect to negotiating the allocation of funds to
94  Handbook on Cohesion policy in the EU

certain regions within the agreed framework. First, less-­developed regions – those under
75 per cent of the EU average with respect to gross domestic product (GDP) per capita,
also known as former Objective 1 or ‘Convergence’ regions – receive a more or less
pre-­set amount of funds, whereby regions and national governments have little wiggle
room in appropriating funds for investment. On the other hand, regional and national
governments are freer in allocating funds to more-­developed regions (formerly known as
Objective 2 or ‘Regional Competitiveness and Employment’ regions), which are generally
more industrial regions with unemployment rates above the EU average and declining
manufacturing sectors (Bodenstein and Kemmerling 2008). For the allocation of funds
to these regions, national and regional actors have considerably more discretion, in par-
ticular from 2007 onward, whereas during the previous periods certain areas within each
region could be preselected for assistance. Thus, on the one hand, there are clear and
transparent principles that determine the allocation of regional funds based on need and
level of economic development. On the other hand, the negotiation process is a complex,
multilevel one in some cases among the Commission, member states and regional actors.
The dynamic of the allocation of regional grants has been described therefore as
a two-­level (or even three-­level) game (Bodenstein and Kemmerling 2011). While the
Commission has the final say on the amount allocated to these more-­developed regions
within the Union, the MS governments propose a budget for each of these regions,
often as a result of bargaining between the national and regional level (Kemmerling and
Bodenstein 2006; Hooghe and Marks 2001). There is thus ample room for regions them-
selves to lobby for more grants for their local projects during this process.
Thanks to this room for discretion, regions vary along many dimensions other than the
level of development and unemployment – such as political relevance (some have demo-
cratically elected parliaments, while others are simply statistical regions), political institu-
tions, constitutional strength, institutional capacity, and so on – so much so that several
studies have argued that when central and regional governments have more negotiating
power, some non-­economic and/or political factors could be skewing appropriations of
Structural Funds. It is this possibility that this study intends to investigate.

RELEVANT LITERATURE
As noted, relative underdevelopment has been indicated as a primary factor in allocat-
ing Structural Funds. Yet several studies have put forth alternative factors explaining the
appropriation of such resources other than those which concern economic development.
For example, as Bodenstein and Kemmerling (2011: 3) note, ‘the official criteria are not
sufficient predictors of Structural Funds allocation . . . [in that] some European regions
receive significantly more funds per capita than others even if they face comparable
socio-­economic conditions’.
Several studies have highlighted that partisan politics at the regional level influence
appropriations of Structural Funds to regions within states (see Massetti and Schakel,
Chapter 14, this volume). For example, Kemmerling and Bodenstein (2006) argue and
show empirically that left-­of-­centre regional parties that govern are more apt to procure
higher funding on average from their national governments, and subsequently from
the EU Commission when negotiating for funds. Such leftist governments supposedly
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Quality of government, regional autonomy and EU regions  ­

respond to local demand for greater public expenditures. Subsequent empirical studies
have found mixed support for this claim, with some providing further support for the
partisan claim (Bodenstein and Kemmerling 2008; Bouvet and Dall’Erba 2010), while
Dellmuth (2011) finds largely insignificant effects. Moreover, the dispersion of the
regional party system also contributes to this process (Bodenstein and Kemmerling 2008),
in that the more centralised the power is in the regional party system (for example, fewer
parties), the more focused a region can be in overcoming problems of collective action in
negotiations with the central authorities and EU Commission. In addition, electoral com-
petition between fewer parties increases the stakes for national actors to funnel resources
to winning actor to gain favour with regional constituents (Bodenstein and Kemmerling
2011). As Dellmuth (2011) points out, central governments also have incentives to allocate
to fewer regional actors to limit ‘credit-­sharing’ in cases of successful implementation.
This factor is also related to political institutions such as district magnitude, which allows
for greater access to smaller parties, and thus greater fractionalisation of the party system
(Cox 1997). Finally, along these lines, some scholars have postulated that regions with con-
stituents who are on average more ‘Eurosceptic’ will receive more funds, in order to sway
their support of EU policies (Carrubba 1997; Bouvet and Dall’Erba 2010).
An alternative explanation to these political explanations lies in the constitutional
strength of the regions themselves relative to the central governments. For example,
Dellmuth (2011) makes the following argument. The Commission prefers that Structural
Funds be appropriated and spent efficiently (or, in EU parlance, ‘absorbed’). It wants
to avoid its reputation to be tainted by misjudging or overallocating funds to regions
without the capacity to absorb them, thus in a sense ‘wasting’ funds, that could have gone
elsewhere. Regions with greater autonomy have greater lobbying power at the EU level
(Marks et al. 2002) and are better equipped to manage funds and provide documentation
of expenditures than constitutionally weaker regions. Thus the Commission has incen-
tives to provide more funds to constitutionally strong regions: those with more autonomy
and more capable to administer and transparently document Structural Funds alloca-
tion. Dellmuth (2011) measures this concept as regions within a strong federal system.
Bodenstein and Kemmerling (2011) also highlight this factor, arguing that regions in
federal states have greater lobbying capacity at both the national and EU levels during the
negotiation phases. The evidence provided is that regional constitutional strength works
in tandem with past reputation: regions that are constitutionally weak are allocated more
funds only with successful past records of absorption, while constitutionally strong
regions are less dependent on past success in obtaining present funds (Dellmuth 2011:
1028–1029). Building on these studies, this analysis puts forth a new and complimentary
factor to the dynamics of the appropriations of Structural Funds to regions – institu-
tional capacity – which is developed in the subsequent section.

THEORY AND EMPIRICAL HYPOTHESES

Complementing existing ideas about why certain regions acquire more than their ‘fair
share’ of Structural Funds in relation to their relative level of development, the main
crux of the theoretical contribution of this study builds on the ‘state capacity’ or ‘quality
of government’ (QoG) literature. The underlying factors that comprise QoG in a general
96  Handbook on Cohesion policy in the EU

sense are an uncorrupted public sector, a strong and impartial rule of law or protection of
property rights, and government bureaucratic effectiveness in impartially administrating
public goods and services. Kaufmann et al. (2009) show that although these individual
measures are theoretically distinct, they tend to be highly correlated, regardless of the
data and methodology employed to build the data. Rothstein and Teorell (2008) offer a
possible explanation for this strong correlation when discussing the various subcompo-
nents of QoG, in that they argue that the central theoretical underpinning is impartiality:
all citizens are treated equally by the state regardless of gender, age, ethnicity or religion.
QoG as a concept has gained traction both theoretically and empirically in recent years
in several social science literatures as well as in leading international institutions such as
the World Bank. It is understood more in a de jure rather than a legal (de facto) sense in
the context of the quality (not the quantity) of the public services allocated and admin-
istered by the public sector. As with many latent concepts in the social sciences, such as
‘quality of life’ or ‘freedom’, QoG and its subcomponents cannot be measured directly.
The act of corruption is clandestine, and impartiality is difficult to parse out simply by
looking at a country’s legal code. The vast majority of scholars building QoG data at
the national level have relied on subjective measures, which are more or less perceptions
based on surveys of firms, risk assessment groups and non-­governmental organisations
(NGOs), and citizens.
The idea is built on several assumptions previously posited by scholars in this literature
regarding the actors in the negotiation process. First, for reasons of both reputation and
policy goals it is assumed that the Commission wants to maximise absorption for as many
states and regions as possible and avoid having post-­hoc complaints of having misjudged
a region’s absorption capacity (Dellmuth 2011). Second, member states also have a strong
incentive to show that they can effectively implement the Commission’s rules and absorb
Structural Funds; again, both for reputation as well as to maximise procurement of addi-
tional funds in future rounds of negotiations. As several studies have shown, past absorp-
tion success is correlated with increased funds in future rounds (Dellmuth 2011; Tosun
2014). Third, regions have a strong incentive to procure as much as possible for their own
development projects, to enhance their own reputation and to appease local constituents
with enhanced infrastructure and development without the burden of increasing local
revenues.
Moreover, building on a wide literature that has shown the importance of admin-
istrative capacity in implementing and complying with EU laws and regulations (see,
e.g., Dimitrova 2002; Milio 2007; Dimitrova and Toshkov 2009), Tosun (2014) shows
empirically that ‘state capacity’ is strongly related with higher rates of absorption among
member states. One can thus make a similar assumption for the negotiation process of
Structural Funds among the regional, national and EU actors. QoG in the sense that it is
used here implies a higher level of quality in the bureaucracy, a more impartial allocation
of resources among citizens and less corruption in the public sector. Regions with higher
levels of QoG are thus on average more attractive candidates for funding as they have
a more competent bureaucracy to implement rules and administer funds transparently
and are less apt to have resources siphoned off by local corrupt actors. As projects are
more likely to be proposed and allocated within such regions according to need (rather
than procured by local clientelistic pressures and inside contacts), funds will be more
likely spent impartially across a wider scope of constituent base, thus increasing positive
 97
Quality of government, regional autonomy and EU regions  ­

exposure for the EU in general. In addition, regions with higher QoG have been found
to have stronger transparency of public expenditures and whistleblowing laws (Rothstein
et al. 2013), thus making them safer bets for funding. On the regional side, in similar vein
as to the ‘constitutional strength’ at the regional level, those regions with greater levels
of capacity are expected to be better on average at organising, lobbying and pressuring
for greater amounts of Structural Funds during each round of the negotiation process.
In sum, the following hypothesis is tested:

H1: The greater the level of regional QoG, the more Structural Fund transfers a region is
likely to receive on average.

In addition, the study will test a complementary hypothesis, building on the literature
that highlights the constitutional strength of subnational actors and decentralisation.
Several studies have investigated how decentralisation affects economic performance
(Castles 1999; Ezcurra and Rodriguez-­Pose 2013) and found rather complex relation-
ships, for example that decentralisation can improve performance where transparency
and ‘regional learning’ are present, but can impair it when corruption and local capture
by interest groups occur. Of primary interest here is the interaction between QoG and
subnational authority at the regional level. Building on Dellmuth’s (2011) hypothesis
that constitutional strength of a region is associated with procurement of regional grants
from the Commission, it is predicted that QoG will be a particular salient factor in
regions that are more decentralised: when regions are constitutionally strong and have
high QoG, incentives for MS and the EU will also be higher, while when regions have
weaker state capacity they will be weaker candidates for funding. A second hypothesis is
thus tested here:

H2: The effect of a region’s QoG on Structural Funds allocation increases as a function of
its level of regional autonomy.

SAMPLE, RESEARCH DESIGN, DATA AND MEASUREMENT

This study is based on an observational design, taking into account subnational insti-
tutional quality and Structural Funds financial transfers allocated to regions. The unit
of analysis is thus EU regions, at the NUTS 1 and NUTS 2 level,2 depending on the
country in the sample. The empirical tests are based on spatial variation within and across
countries.3
The dependent variable is collected from data from Commission decisions from
2000, provided by Dellmuth (2011). They are the most recently available data on the
level of Structural Funds allocated to states by the Commission to then be allocated to
regions. They are taken from official European Commission decisions from the period
of 2000– 2006. The data include 160 regions (NUTS 1 and NUTS 2) from 13 countries,
all in the EU15 (excluding Denmark and Luxembourg and the new member states which
accessed the EU post-­2000). The relatively limited sample is an advantage in this case
because the theory pertains mostly to countries and regions that have some negotiating
space for funds, whereas most or all regions in the new member states are Convergence
98  Handbook on Cohesion policy in the EU

Table 6.1  Summary statistics of variables

Variable Obs Mean Std Dev. Min Max

Structural Funds (2000–2006, p.c.) 148 439.3 578.3 0 3514.9
Structural Funds (2000–2006, p.c., log) 145 5.29 1.39 1.28 8.16
EQI 143 61.57 16.37 8.54 95.61
PPP per capita 146 9.88 0.33 9.21 10.84
Unemployment 141 8.98 5.08 2 25.7
party fractionalisation 96 0.34 0.13 0.11 0.63
election_1999 96 0.41 0.49 0 1
self-­rule 135 9.45 3.77 1 14
shared rule 135 2.62 3.16 0 9
objective 1 148 0.32 0.47 0 1

(formerly Objective 1) regions and hence have room for manoeuvre. The regions in the
sample are of varying sizes (Åland’s population in Finland is roughly 25 000, while
Lombardy in Italy is more than 9 million inhabitants), the funding data is thus measured
in per capita terms (from Eurostat). In addition, the logarithm of this relative ratio is
tested as an alternative measure due to several outlying regions and to test whether the
logged form better fits with the ordinary least squares (OLS) assumptions of normality
of the residuals and linearity (see Table 6.1).
The central explanatory concept of interest is the level of QoG by region. Data have
largely been collected to compare QoG across countries, yet we take advantage of
relatively newly collected data by Charron et al. (2014; 2015). The European Quality of
Government Index (EQI) constitutes the most comprehensive data on QoG at the NUTS
1 and 2 levels for 206 EU regions. The EQI is built on the largest survey to date focusing
on governance at the regional level; more than 85 000 citizens were surveyed. The instru-
ment proposed here builds on both perceptions and experiences of citizens in public
service areas such as health care, education and law enforcement. The data were collected
in two rounds – 2010 and 20134 – and, like the World Governance Indicators (WGI; see
Kaufmann et al. 2009), are standardised such that the sample mean is 0 and the standard
deviation is 1. The authors also provide a normalised range between 0 and 100 (higher
scores equal better QoG), which we take here.5
In addition to the main variables of interest, several other factors are controlled for in
the analysis. Two economic factors are controlled for. One is the design of the Structural
Funds according to which less-­developed regions will be allocated more resources on
average. The regional GDP per capita (in thousands of euros at purchasing power parity)
is thus taken to account for this. The data, taken from Eurostat, are an average of the
years 1998–2000 and are expected to be negatively correlated with the dependent variable
on average. An additional economic factor found to be significant in previous empirical
studies is the unemployment rate prior to the allocation phase (Dellmuth 2011), which
was found to be positively correlated with higher allocations of funds. The measure is also
taken from Eurostat and averaged for 1998–2000.
Several political institutional factors are also taken into account. The first is the idea,
put forth by Dellmuth (2011), that regions with a greater degree of constitutional strength
 99
Quality of government, regional autonomy and EU regions  ­

will on average receive more funds, which is also used to test H2. As already recalled, such
regions are expected to be able to better lobby for their interests and to reduce error in
the implementation of the funds, and moreover, the Commission has an incentive to
allocate more funds to such regions to reduce implementation errors (Bodenstein and
Kemmerling 2008). Because constitutional strength can vary both across and within
countries, the best available measure to date tracking this for the sample at hand is the
Regional Authority Index (RAI) (Hooghe et al. 2010). The data capture ten aspects of
regional authority for the regions in all countries in the sample.6 Moreover, they allow
researchers to distinguish between self-­rule of a region, and its shared rule with the
central government. Most of interest here is in the self-­rule of a region, which indicates
its constitutional strength, thus this measure is highlighted; yet shared rule is also checked
in the analyses. A key advantage of this data is that the measure tracks asymmetric
self-­rule within countries where it exists, thus it is not a country fixed effect for many
of the c­ ountries in the sample. For example, the region of Bolzano-­Bozen in Italy has
higher self-­rule than ‘ordinary’ regions, and similar asymmetries are found in the United
Kingdom, Portugal, Finland, Spain and Belgium. The self-­rule variable is also used to
test the interaction effect between QoG and regional autonomy in H2.
In addition, Dellmuth (2011) finds a negative correlation between the ‘effective number
of parties’ governing a region at the time of Structural Funds allocation. On the regional
side, it is argued that fewer governing parties have an easier time overcoming problems of
collective action in lobbying, while central governments prefer to share credit with as few
other actors as possible. As a proxy for the effective number of parties in a region (where
applicable), I calculate a Herfindahl index of party-­seat fractionalisation for the closest
mandate period prior to 2000 for each ‘politically relevant region’ in the sample. I also
control for whether a region had an election during the year of allocation 1999–2000, as
local attention to Structural Funds during the election period could have elicited more
attention and possibly have drawn more resources. Finally, as the theoretical part per-
tains largely to the regions where negotiation for more or less funds is most applicable, a
dummy variable for Objective 1 region during the 2000–2006 period is included. A list of
summary statistics of the variables in the analysis is found in Table 6.1.

ANALYSIS

Table 6.2 presents the findings of the empirical tests, beginning with a baseline model
in model 1. H1 is analysed in models 1–4 and H2 in model 5. Post-­regression tests for
homoscedasticity of the residuals (Braush Pagen, and Cameron and Trivedi’s IM test)
showed clear signs of heteroscedasticity, thus country-­clustered, robust standard errors
are used in all models.
Model 1 includes only a control for Objective 1 regions, and we find that the effect of
QoG is significant at the 90 per cent level of confidence. In model 2, when past PPP per
capita and unemployment are accounted for, we observe a strong, non-­random effect of
the EQI variable on the allocation of Structural Funds in EU regions: as QoG increases
by one unit, funds increase by €5.55 per capita on average. Both the level of economic
development (PPP per capita, log) and unemployment are in the predicted direction, yet
only unemployment is significant below the 0.10 level of confidence. In model 3, only
100  Handbook on Cohesion policy in the EU

Table 6.2  Test of H1 and H2: OLS estimates

Hypothesis 1 Hypothesis 2

1 2 3 4 5
EQI 4.95* 5.55*** 6.17** 6.15*** 6.07***
(2.80) (1.45) (2.16) (1.23) (1.20)
PPP per capita (log) −132.7 347.8* −115.8 −94.7
(105.8) (191.5) (92.2) (98.6)
Unemployment 16.6* 59.5*** 15.3* 17.3*
(9.10) (17.4) (8.25) (8.90)
party fractionalisation −428.4
(288.8)
election_1999 84.3
(129.3)
self-­rule 5.79 11.1
(5.78) (8.40)
shared-­rule −6.90 −10.3
(4.83) (6.02)
EQI*self-­rule 0.43
(0.37)
Objective 1 reg. 982.7*** 765.3*** 839.1*** 817.5***
(134.8) (86.4) (89.6) (88.3)
constant 138.7** 1350.9 3345.3 1136.3 978.8
(16.9) (1074.5) (2023.8) (922.9) (989.7)
mean VIF 1.84 1.50 1.91 2.27
observations 143 134 94 125 125
countries 12 11 7 11 11
R2 0.53 0.63 0.60 0.65 0.65
pr.F 0.0000 0.0000 0.0000 0.0000 0.0000

Notes: 
Dependent variable: Structural Funds allocated to regions per capita for the 2000–2006 period.
Figures are unstandardised coefficients with country-­clustered standard errors in parentheses.
Models have varying number of observations based on missing data for certain variables.
Model 3 tests only ‘politically relevant regions’ with elected regional parliaments, thus the number of
observations drops 94.
*** p ,0.01, ** p ,0.05, * p ,0.10.

‘politically relevant’ regions are included so as to test the effects of fractionalisation in

regional party systems and the occurrence of a regional election in the year prior to allo-
cation of Structural Funds (1999),7 hence the sample size reduction. The impact of QoG
increases slightly to 6.17 per capita, and the effect of the economic factors – PPP per
capita and unemployment – becomes more pronounced, as this model does not control
for the Objective 1 regions due to a lack of degrees of freedom. We find here that when
accounting the EQI, the political factors that have been found to be significant in previ-
ous studies become negligible. In model 4, both self-­rule and shared rule are added. While
the results from the previous models for the economic variables and the EQI remain
virtually unchanged, neither of the measures of regional constitutional strength plays an
independent role in explaining the level of regional Structural Funds allocation. Overall,
 101
Quality of government, regional autonomy and EU regions  ­

1000
Predicted level of structural funds per capita

500

Min EQI Mean EQI

Max EQI
–500
min 25%ile mean 75%ile max
Level of Self-Rule

Note:  This figure is produced using the ‘margins’ command in STATA post-­regression from model 5 in
Table 6.2.

Figure 6.1  The effect of QoG on Structural Funds at various levels of self-­rule

robust support is found for a non-­random effect of QoG on the allocation of Structural
Funds to regions, lending empirical support to H1. In practical terms, holding all other
variables constant from model 4, moving from the 25th percentile of the EQI in the
sample to the 75th percentile (from 55 to 75.1) results in a predicted change in per capita
Structural Funds from €354.9 to €478.0, or €123.1 per capita.
In model 5, H2 is tested using an interaction term between self-­rule and the EQI. To
reject the null hypothesis for H2, we would need to observe a significant and positive
interaction term. The coefficient, while in the expected direction, is not significant. Yet,
this shows only the significance of average marginal effect on whole. In Figure 6.1, the
marginal effect of three levels of the EQI (min, mean and max) are shown over five levels
of self-­rule: the min, the 25th percentile, the mean, the 75 percentile and the max values
in the sample. The figure shows predicted levels of regional Structural Funds per capita at
each specified level of the two explanatory variables with 95 per cent confidence intervals
around each estimate. Interestingly, when looking further than simply the interaction
coefficient in model 5, some very interesting effects are observed. While the impact of
QoG on Structural Funds is negligible at low levels of self-­rule, differences in Structural
Funds allocations become more pronounced by the effects of QoG as regions increase
in self-­rule. For example, when holding economic factors constant, by mean values of
self-­rule (9.45) we begin to observe significant effects of the EQI on Structural Funds
when going from both min to mean levels, as well as mean to max levels. These effects of
the EQI on Structural Funds allocations become more pronounced as self-­rule increases,
lending support to H2. In further checking for robustness of the results, I found that the
102  Handbook on Cohesion policy in the EU

logged dependent variable yielded very similar results with respect to H1 and slightly
weaker (yet similar) results to H2.

CONCLUSION

The purpose of this chapter has been to elucidate a new explanation for the allocation
of Structural Funds to EU regions. Building on a relatively new literature, the novel
aspect brought forth here is the aspect of ‘quality of government’ (QoG) at the regional
level, and how this factor plays into the strategic negotiations for Structural Funds
between member states, regions and the Commission. The argument put forth is that
the Commission and member states alike have incentives to appropriate higher levels
of funds on average to regions with greater levels of QoG, as such regions have greater
capacity to absorb such funds and do so in a transparent and non-­corrupt manner. In
addition, the chapter tests a second hypothesis: that the constitutional strength of regions
relative to the central government plays a role in this dynamic and that QoG is likely to
have a greater effect on Structural Funds allocation to regions, the greater the self-­rule
that a region has.
In both cases, empirical support for the hypotheses was demonstrated. First, control-
ling for the factors most pronounced by Commission rules when allocating funds – level
of development and unemployment – and controlling for whether a region was an
Objective 1 region during the 2000–2006 period, it was found that the measure of QoG
used in the analysis still explained significant variance in Structural Funds across (non-­
Objective 1) regions. The findings were robust when considering even political factors put
forth in the literature, such as the concentration of the regional party system and election
timing. Second, when testing the effects of the interaction between QoG and self-­rule of
a region, it was found that the effects of QoG become more pronounced on the allocation
of Structural Funds, the greater a region’s self-­rule is on average.
These effects shown here demonstrate that strategic considerations are at play at one or
both main points during the negotiation phase for Structural Funds: whether at the stage
when member states and regions vie for projects and each state proposes to allocate its
budget among its regions, or at the approval stage by the Commission of the final appro-
priations. Given constant levels of economic development and unemployment, regions
with greater levels of state capacity receive more Structural Funds on average.
This research should be regarded as taking a modest step forward in our understand-
ing of the complex bargaining process between regions, states and the Commission. As
shown in previous empirical studies with respect to member state absorption rates of
funds (Tosun 2014), state capacity matters, and does so as well in the consideration for
regional funding. However, several caveats should be highlighted and the results should
be treated with a degree of caution. First, this analysis pertains only to the period of
2000–2006, and might not be generalisable. Moreover, only a limited number of states
and regions were included in the analysis, making the results most meaningful in older
member states. Second, the measure of QoG used here (EQI) is taken a few years after
the measurement of the dependent variable, thus assuming a ‘stickiness’ over time that
cannot be directly tested. Third, there might be omitted variables, such as past absorption
rates of regions (which might cancel out the effect of QoG in allocation of funds), or any
 103
Quality of government, regional autonomy and EU regions  ­

number of political factors that were not included in this otherwise parsimonious analy-
sis. Fourth and finally, one would need to follow up further with interviews and/or case
studies with national governments and Commission members to obtain a better sense of
the dynamics between regional QoG and Structural Funds allocation.
To conclude, it would be fruitful for future research to gather more data on regional
Structural Funds appropriations for the next two periods of EU expenditure, 2007–2013
and 2014–2020, to test the economic and political factors highlighted in the literature and
in this chapter further.

NOTES

1. http://ec.europa.eu/budget/figures/fin_fwk0713/fwk0713_en.cfm.
2. NUTS (Nomenclature of Territorial Units) are statistical units within the EU. A full list of each
country’s NUTS 1, 2 and 3 levels can be found at http://epp.eurostat.ec.europa.eu/portal/page/portal/
nuts_nomenclature/correspondence_tables/national_structures_eu.
3. The countries included are: Austria (NUTS 2), Belgium (NUTS 2), Finland (NUTS 2), France (NUTS  2),
Germany (NUTS 1), Greece (NUTS 2), Ireland (NUTS 2), Italy (NUTS 2), Netherlands (NUTS 1),
Portugal (NUTS 2), Spain (NUTS 2), Sweden (NUTS 2) and the United Kingdom (NUTS 1).
4. An obvious weakness with the data collected for the dependent and key explanatory variable is that the
Structural Fund data predate the collection of the first round of the EQI by four years. This of course
might invite critiques of endogeneity. Yet a closer scrutiny of the data on QoG in general dampens such
worries. To begin with, data on institutional quality is remarkably ‘sticky’ over time, at least during the
15-­year period or so that institutions such as the World Bank and Transparency International have been
tracking such concepts (Andersson and Heywood 2009). In addition, the two years of the EQI data
correlate at 0.94, indicating a strong time trend in the data. We thus assume that the variation of QoG
among regions in the 2010–2013 period was very similar to that of the period of 2000–2006. However,
this cannot be tested empirically with existing data, hence the results should be taken with a degree of
caution.
5. For more information on the EQI data in 2010, see Charron et al. (2014); for the 2013 round, see Charron
et al. (2015).
6. The ten measured dimensions in the RAI are: institutional depth, policy scope, fiscal autonomy, borrowing
autonomy, representation, lawmaking, executive control, fiscal control, borrowing control and constitu-
tional reform. For more detail, see Hooghe et al. (2010).
7. Politically relevant regions in this sample include any region with a popularly elected parliament at the
NUTS level here. They are regions from Austria, Belgium, Germany, Italy, Spain, France, and also include
Åland from Finland; Northern Ireland, Scotland and Wales from the United Kingdom; and Açores and
Madeira from Portugal.

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 PART II

THE POLITICS AND

INSTITUTIONS OF COHESION
POLICY
7.  The Commission and Cohesion policy
Ingeborg Tömmel

INTRODUCTION

The European Commission has always played a pivotal role in advocating, establishing,
expanding, and reforming Cohesion policy. Based on its right of initiative, it formulated
the basic objectives of this policy, designed its governance modes and implementation
strategies, established institutions for structuring the policy process, and insisted on eval-
uation procedures for bringing possible achievements and failures to the fore. In short:
the Commission stays at the heart of Cohesion policy.
Of course, the Commission could not act on its own; it was and is always dependent
on the member states for decision-­making and policy implementation. At European level,
it had to convince the Council and the European Council of the benefits of Cohesion
policy; in its relationships with individual member states, it had to exert pressure for
sound programming, effective policy-­making and due implementation. Acting in both
horizontal and vertical directions, the Commission met fierce resistance from national
governments and other actors against its policy concepts and implementation strategies.
Thus Cohesion policy was not simply shaped by unilateral actions of the Commission, but
by the Commission’s responses to all sorts of deadlocks, resulting from such resistance.
The most prominent issue of contestation between the Commission and the member
states was and is the degree of acceptable interference ‘from above’ or, conversely,
autonomy ‘from below’. While member states saw Cohesion policy as a welcome increase
of their national budgets, they rejected any pressure on their policies. The Commission,
by contrast, from the outset aimed at establishing an effective European policy and
at inducing change and modernisation of member states’ regional policies. Since the
Commission is by no means entitled to prescribe any measures, and in face of open or
subtle opposition against such attempts, it increasingly recurred to indirect mechanisms
of exercising influence on national policies and governance approaches. Thus over the
years and through a series of fundamental reforms, European Union (EU) Cohesion
policy evolved to a governance model that respects and further consolidates the multi-
level, non-­hierarchical structure of the European polity, while at the same time giving
direction to the policy-­making and governance of the member states.
This chapter focuses on these processes and on the role of the Commission therein.
It starts with an overview of the Commission’s struggle to establish, expand and reform
Cohesion policy in the context of varying integration tides and subtle or open opposition
from national governments in the Council. It continues by analysing the Commission’s
role in designing, reforming and refining the substance of Cohesion policy, showing
that the Commission, in response to deadlocks in the policy process and member states’
concerns about their autonomy, used rather indirect avenues to reach its objectives.
Furthermore, the chapter elaborates on how the Commission succeeded in designing gov-
ernance modes for Cohesion policy and in structuring the vertical relationships between

107
108  Handbook on Cohesion policy in the EU

the European, the national and the regional government levels. It highlights that the cor-
responding procedural and institutional arrangements allow for negotiation and coop-
eration among these levels and thus compensate for the lack of hierarchical relationships
between them. The chapter concludes that the Commission was and is the most impor-
tant institutional actor in shaping the policy and governance model of Cohesion policy, a
model based on a sophisticated mix of mainly non-­hierarchical governance modes which
nevertheless gives direction to policy-­making and governance in the member states. The
overall conclusion is that, through Cohesion policy, the Commission succeeded in struc-
turing the EU as a multilevel system.

BUILDING, EXPANDING AND MAINTAINING COHESION

POLICY

National governments never accepted a Cohesion policy per se at European level, even
though Italy lobbied for such a policy during the founding phase of the European
Communities (EC) in the 1950s. It was the Commission which pressured the member
states first to set up, later to expand, and finally to maintain Cohesion policy. However,
the Commission met consent from national governments for its proposals only when it
presented the policy as an indispensable means either to achieve much desired integration
steps or to offset negative impacts of such steps. In sum, the Commission used Cohesion
policy as a ‘joker’ in order to facilitate processes of enlarging the EC/EU, or deepening
integration (for an overview of the evolution of Cohesion policy see Hooghe and Marks
2001: 33–50; Manzella and Mendez 2009; Allen 2010; Begg 2010; Bachtler et al. 2013:
29–58, Tömmel 2014: 221–224).
In 1965, the Commission launched for the first time a Communication on a regional
policy in the EC, arguing that European integration had aggravated regional disparities.
Yet at this stage, the Council saw no need for such a policy and simply rejected any steps
into this direction. It was only in the early 1970s that the Commission could use a window
of opportunity for re-­launching its proposal. Both the projected first enlargement, bring-
ing into the EC new members with serious regional problems, and the plan for creating a
monetary union, threatened to cause further economic disparities among and within the
member states. In face of this situation, the Council acknowledged the need for a regional
policy at European level. Even though the project of a monetary union was soon aban-
doned due to upcoming economic turbulences, enlargement took place in 1973 and was
sufficient reason for establishing a regional fund (in 1975). However, the initially small
financial endowment of the fund made it a rather toothless policy instrument, so that the
Commission sought ways to expand its scope and leverage.
A first opportunity for expanding the EC’s regional policy occurred when Greece
joined the Community in 1981 and the accession of Spain and Portugal was approach-
ing. This Southern enlargement implied a serious aggravation of regional disparities in
the EC. Accordingly, the Commission in 19841 successfully advocated an increase of the
Regional Fund’s financial means as well as a reform of its policy instruments, resulting
in a significant expansion of the range of eligible policy measures. However, the big leap
forward came only in the late 1980s with the project of completing the single market. The
Mediterranean member states argued that their economies and particularly those of their
 The Commission and Cohesion policy  ­109

less developed regions were not fit for unleashed competition. The Commission under
the leadership of President Delors proposed to improve the competitiveness of these
states and regions by significantly expanding and improving the EC’s regional policy. In
1988, the Delors Commission pushed through a fundamental reform of regional policy,
henceforth labelled Cohesion policy. The reform dramatically expanded the scope of the
policy by subsuming the three existing Structural Funds – besides the European Regional
Development Fund also the European Social Fund and the Guidance section of the
Agricultural Fund2 – under objectives of regional development assistance. In addition,
it significantly increased the leverage of the funds by doubling their financial resources.
Thus in the wake of the single market project, Cohesion policy became the most sig-
nificant instrument of the EC to remedy economic inequalities among and within the
member states.
After these dramatic changes, the road towards further expanding Cohesion policy was
well paved. Unsurprisingly therefore, the Commission used the same arguments when
launching the next major integration step, the adoption of the Maastricht Treaty with
its project of building a monetary union. With the support of the economically weaker
member states, which declared that they could accept monetary union only when getting
more assistance, the Commission proposed the creation of an additional Structural
Fund – the Cohesion Fund – and another doubling of the funds’ financial resources.
The Council in its decision of 1993 accepted the establishment of the Cohesion Fund,
yet it succeeded in slightly reducing the financial claims of the Commission. These deci-
sions marked the climax of the expansion of Cohesion policy; during the following
years, national governments took an increasingly reluctant stance against any further
Commission activism. Henceforth, whatsoever project of enlarging the Union or deepen-
ing integration dominated the agenda, the Commission at best succeeded in maintaining
Cohesion policy.
In the wake of the reform of 1993, criticism of Cohesion policy was raised from differ-
ent angles. Scientific reports doubted the effectiveness of the policy, and net payers to the
EU budget questioned its benefits (Hooghe and Marks 2001: 105–118). The dismantling
of the policy in the near future appeared a probable option. Yet the tide changed once
more when, by the end of the century, eastern enlargement proved to become an inevi-
table, though highly demanding integration step. Since the beginning of the 1990s, the
governance and policy approach of Cohesion policy had provided the template for
setting up an accession strategy, providing assistance to the neighbouring states in tran-
sition. When these states more vigorously demanded membership of the Union, the
Commission was eager to submit a proposal for several reforms aimed at accommodating
the accession of eight Central and Eastern European countries (CEECs), Agenda 2000
(European Commission 1997). An essential part of Agenda 2000 was the proposal for a
fundamental reform of Cohesion policy that would channel more assistance to the acces-
sion states, without however significantly expanding the overall financial endowment of
the Structural Funds. The Council in 1999 adopted these proposals, and the reformed
Cohesion policy became the EU’s major tool for continually providing assistance to the
economic and political transformation of the accession states.
In 2006, when the next regular reform of Cohesion policy was pending, eastern enlarge-
ment could no longer serve as a strong argument for maintaining, let alone expanding
the policy. Hence the Commission changed strategy by presenting Cohesion policy as an
110  Handbook on Cohesion policy in the EU

indispensable instrument for improving the overall competitiveness of the EU (Bachtler

et al. 2013: 154–156). The issue of the EU’s lack of competitiveness had earlier prompted
the launch of the so-­called Lisbon Strategy, adopted by the European Council in 2000.
The Strategy’s objective was to transform the EU, by 2010, into the most competitive
region in the world (Borrás and Radaelli 2011). The road to achieve this ambitious objec-
tive was projected as a series of fundamental reforms, triggered at the European level but
implemented by the member states. Yet in contrast to these high ambitions, the mid-­term
evaluation of the Lisbon Strategy in 2005 brought to the fore a number of shortcomings
in its implementation. In this situation, the Commission proposed to use Cohesion policy
with its financial incentives as a device to boost economic reform and innovation in the
member states. Once more, it could persuade the Council and the European Council to
maintain the policy, in spite of the enormous expenses linked to it and persistent criticism
regarding its benefits (see, for example, the Sapir Report; Sapir 2003).
In the run-­up to the next reform of Cohesion policy in 2013, the Commission
again launched the policy as an appropriate tool for improving the competitiveness
of the member states as well as their less-­developed regions. The Lisbon Strategy had
expired in 2010 with little success; yet it was replaced by the Europe 2020 strategy,
which essentially pursues the same objectives, defined as promoting ‘smart, sustainable
and inclusive growth’ (European Commission 2010). In view of these objectives, the
Structural Funds were henceforth named European Structural and Investment Funds
(ESIFs) and were assumed to play a significant role in triggering growth and invest-
ment in the economically less-­developed states and regions (European Parliament and
Council 2013). In addition, since the financial and sovereign debt crisis had particu-
larly affected those member states which are beneficiaries of Cohesion policy, chan-
nelling assistance to these states through the ESIFs appeared a reasonable solution.
After difficult negotiations on the Multiannual Financial Framework (MFF) for the
period 2014–2020, which also determined the allocations for the Structural Funds, the
Council finally adopted the Commission’s reform proposals. However, for the first
time in the history of Cohesion policy, the Commission had to accept a reduction of
the Structural Funds’ financial resources as compared to the previous period, in both
nominal and real terms.
In summary, we can conclude that during the whole process of building a European
Cohesion policy from its modest beginnings in the 1970s to its present state, the
Commission was the most relevant actor in establishing, expanding and consolidating
this policy. However, the Council and the European Council through their decisions
seriously constrained the Commission’s push forward. The Commission could achieve
consent of these bodies for its proposals only to the extent that much-­desired or inevita-
ble integration steps were at stake. Hence the Commission framed Cohesion policy as an
indispensable instrument either to facilitate certain integration steps or to compensate
for possible drawbacks emanating from these steps. More in general, it framed this policy
as a device for enlarging the Union and deepening integration. In concrete terms, the
Commission presented Cohesion policy as a means to remedy the most fundamental
structural problems of the EU: the enormous economic and regional disparities within
and between the member states, as well as the EU’s overall lack of competitiveness at a
world scale. This in turn implies that the Commission used Cohesion policy as a political
instrument to soothe the ever-­present conflicts among the member states.
 The Commission and Cohesion policy  ­111

DETERMINING THE SUBSTANCE OF COHESION POLICY

The Commission’s activism was not limited to promoting Cohesion policy as an indispen-
sable means for achieving progress in European integration. It also pursued substantive
objectives with this policy and aimed at steering member states’ policies into the desired
direction (Tömmel 1998; Wozniak Boyle 2006; Bachtler and Mendez 2007; Manzella and
Mendez 2009; Bachtler et al. 2013). Thus, through a series of reforms of Cohesion policy,
the Commission launched proposals for innovative policy projects and programmes, as
well as appropriate procedures for defining and implementing them, whereas the Council
and the European Council often curtailed or only reluctantly adopted these proposals.
Even though the Commission during the 1970s had proposed a broader and more dif-
ferentiated approach for the EC’s regional policy, national governments chose to simply
conceive the European assistance as a reinforcement of their domestic policies, or merely
a refunding of their respective expenses. Accordingly, the regional fund in its first phase
(1975–1979) provided only subsidies for industrial and infrastructural investments in
less-­favoured regions, which were disbursed in addition to national subsidy schemes.
Furthermore, the fund’s resources were a priori allocated to the member states in the
form of fixed quotas, based on defined criteria (gross domestic product and unemploy-
ment rates). Already at that stage, the Commission sought to reform this system so as to
induce innovative policies in the member states and to assign the European level a more
decisive role in policy-­making. In order to achieve these objectives, the Commission
used three avenues, pursued from the outset of Cohesion policy to the present with dif-
ferent emphasis and in varying combinations. First, it sought ways to define the policy
measures eligible for funding or to induce the member states to define them according to
European objectives; second, it aimed at involving more actors in policy-­making and thus
to expand and diversify the range and scope of regional interventions; third, it attempted
to establish competitive relationships among the various national, regional and, later,
non-­state actors in policy-­making, so as to induce a continuous upgrading of their policy
proposals and implementation strategies.
With regard to defining policy objectives and measures, the Commission during
the  first decade of Cohesion policy could exercise hardly any influence on the corre-
sponding policies of the member states. Of course, it had the right to adopt (or reject)
their proposals, but in light of the predefined quotas and the sluggishness of national
authorities in filing eligible projects, the Commission in fact had to accept everything
submitted to it. The way out of this impasse consisted in reducing the quotas and in
finding alternative ways to define the policy objectives and measures.
With the first reform of the Regional Fund, enacted in 1979,3 the Commission pro-
posed a quota-­free sector, which the Council however reduced to only 5 per cent of
the overall budget. Yet this percentage was earmarked for ‘specific community regional
development measures’ (Council of the European Communities 1979), for which the
Commission defined the basic parameters and policy objectives (Manzella and Mendez
2009: 11). The next reform, enacted in 1985, expanded these specific actions, now called
Community programmes (Council of the European Communities 1984: Art. 5). In addi-
tion, it obliged the member states to present a significant part of their envisaged measures
in the framework of multiannual programmes, the ‘national programmes of Community
interest’ (Council of the European Communities 1984: Art. 5). The l­andmark reform
112  Handbook on Cohesion policy in the EU

of 1989 then made the programme-­based approach obligatory, while it maintained in

principle the two types of programmes: those defined by the Commission, now labelled
Community Initiatives (CIs), and those defined by the member states, called Operational
Programmes (Council of the European Communities 1988b: Art. 11 and   12). The
programmes of the member states had to respect European objectives as laid down in
the regulations for Cohesion policy. In addition, through the negotiations on these pro-
grammes, the Commission could further upgrade their quality (Bachtler and Mendez
2007). The Community Initiatives, 12 in total, encompassed highly innovative policy
programmes proposed by the Commission. These programmes referred, for example, to
telecommunications, research and development, urban or rural development, and cross-­
border cooperation (Tömmel 1998).
The following reforms of Cohesion policy did not fundamentally alter the double-­track
programme approach; they only changed the names of the programmes and sometimes
their primary objectives. Thus the Commission with the reform of 1994 expanded the
Community Initiatives to 14. In the longer run, the Initiatives were reduced in number
(with the reform of 2000), so as to concentrate on the most successful ones. In 2007 their
objectives and measures were integrated into the mainstream policy, as for example the
LEADER programme (for rural development) or the URBAN programme (for large cities
in decline) (Manzella and Mendez 2009: 19). The most successful initiative, INTERREG,
aimed at fostering cross-­border cooperation, was upgraded in 2007 to a specific pro-
gramme with its own Regulation, called European Territorial Cooperation (ETC).
Overall, the Commission succeeded in dramatically broadening the spectrum of pos-
sible measures within the realm of Cohesion policy. In fact, after the introduction of the
programme approach and under the condition of using all Structural Funds for regional
development purposes, Cohesion policy could intervene in all sectors from agriculture to
industry and services. It allowed for fostering economic restructuring and innovation in
these sectors, for providing professional training to the workforce, and for modernising
public utilities. In sum, Cohesion policy became an encompassing strategy not only for
counteracting regional underdevelopment or decline, but also for improving the overall
competitiveness of the member states and the Union as a whole. In addition, because of
its broad set-­up, the Commission could use Cohesion policy also for triggering new initia-
tives in policy areas, where national governments did not transfer major competences to
the European level. The European Employment Strategy (EES), the energy policy and
the concept of lifelong learning are examples in case. Since only Cohesion policy provides
subsidies for a broad range of initiatives, the Commission used it for boosting pilot pro-
jects in these areas, for example specific training programmes in the EES, Community
Initiatives for investment in renewable energies, or innovative learning programmes.
Another avenue to exercise influence on member states’ policies consisted in ­expanding
the range of actors involved into the design and implementation of Cohesion policy.
Initially, national governments were the exclusive interlocutors of the Commission in the
framework of Cohesion policy, and they were not very inventive in proposing innovative
projects and later programmes to the Commission. The Commission, therefore, as early
as in 1977, advocated the inclusion of regional governments and authorities as relevant
actors in regional policy (Tömmel 2014: 237–238). Yet national governments used all
means, including formal prohibitions, to prevent such a development. It was only after
certain experimental programmes in the face of southern enlargement, the so-­called
 The Commission and Cohesion policy  ­113

Integrated Mediterranean Programmes (IMPs), and the ensuing landmark reform of

1989 that the regions were formally involved in Cohesion policy. Including the regions
into Cohesion policy meant altering and diversifying its substance. Particularly the
Commission’s preferred objective of improving the indigenous potential of regions could
henceforth be pursued with much more rigour.
Once it had undermined the monopoly of national governments in EU Cohesion
policy, the Commission persistently pursued its strategy to further expand the spectrum
of possible actors (Piattoni 2006; Bache 2010). With the reform of 1994, it pushed
through the inclusion of the economic and social partners – that is, employers and
workers and their interest organisations – as relevant actors in Cohesion policy. With
the reform of 2000, it expanded the spectrum of actors by including certain groups of
civil society into the policy. Finally, the reform of 2007, and similarly also that of 2014,
defined as partners ‘any other appropriate body representing civil society, environmental
partners, non-­governmental organisations, and bodies responsible for promoting equality
between men and women’ (Council of the European Union 2006: Art. 11(1c)). Although
national governments, with every reform, strongly opposed or even obstructed the
expansion of the realm of actors in the EU’s policy, they finally had to accept it. Besides
defining the partners in the formal regulations, the Commission made many efforts to
mobilise them as actors in policy-­making, and also to connect them among each other by
organising policy and issue networks or establishing favourable framework conditions,
for example the Cohesion Forums and Open Days, so that they could organise themselves
at a European scale (for details, see Schönlau, Chapter 10, this volume). The rationale
underlying the Commission’s strategy is obvious: regional governments and authorities
as well as non-­state actors are in general more susceptive to the Commission’s policy
approaches than national governments, not least because EU subsidies constitute a much
more powerful incentive for them. For the Commission, these institutions and actors
are particularly supportive as they are more inclined to alter and diversify the substance
of the policy. They may develop new project ideas within the objectives defined by the
Commission, they are nearer to the ground so as to implement more diversified and fine-­
tuned projects or programmes, in sum, they are often much more inventive than national
governments. Furthermore, they sometimes even act as allies of the Commission, for
example in the negotiations on maintaining or expanding Cohesion policy.
In the framework of successive reforms, the Commission could also pursue the third
avenue towards influencing member states’ policies: the establishment of competitive
relationships among national and regional governments or authorities, as well as non-­
state actors. However, in this realm, the Commission was somewhat less successful, due
to strong resistance ‘from below’. Its first objective was to establish more competition
among the member states, mainly by abolishing the predefined quotas. It succeeded in
making the quotas more flexible, and preserving some margin of allocating subsidies to
the best performer through the so-­called ‘performance reserve’, introduced for the first
time with the reform of 2000. Yet the predefined quotas remained in place and the per-
formance reserve since the reform of 2014 covers only 5 per cent of the financial means
of the Structural Funds (European Parliament and Council 2013: Art. 18), that is, exactly
the same percentage as that of the quota-­free sector introduced in 1979. Interestingly,
the performance reserve was not included as a general rule into the 2007 reform, but the
member states could voluntarily establish such a reserve, covering only 3 per cent of the
114  Handbook on Cohesion policy in the EU

budget (Council of the European Union 2006: Art. 23 and 50). The Commission also
attempted to establish competitive relationships among its ‘partners’ in Cohesion policy.
Particularly with the reform of 2007, it introduced the Open Method of Coordination
(OMC) in Cohesion policy which makes use, among others, of voluntary procedures to
compare each other’s policy practices and to peer review them (see below). Overall, the
Commission through competition hoped to foster sophisticated and innovative policy
projects; in practice, however, it had to accept the inertia of actors and institutions
responsible for policy implementation, and also a range of procedural mechanisms in
policy-­making which counteracted this strategy, in particular the predefined quotas for
assigning subsidies to individual states.
In conclusion, we can state that the Commission was highly successful in expanding
and intensifying its influence on the substance of member states’ policies. It managed to
reverse the initial situation with, respectively, national governments holding the active role
and the Commission the reactive role, into a relationship which allows the Commission,
through various and mostly indirect means, to define the substance of the policy or to
induce member states’ authorities to subject their policies to the objectives and priorities
defined by the Commission. Furthermore, together with dramatically broadening the
spectrum of possible interventions, it also succeeded in expanding the realm of actors
involved into the policy, which minimised resistance against its proposals and contributed
to further differentiate the spectrum of projects and programmes and make them more
sophisticated. Finally, it attempted to establish competitive relationships between all
actors involved; yet this strategy was less successful, due to many open and subtle forms of
resistance, mainly from national governments and authorities, but also from other actors.

DESIGNING GOVERNANCE MODES AND BUILDING A

MULTILEVEL SYSTEM

Since exercising influence on the substance of member states’ policies turned out to meet
many obstacles and deliberate opposition, the Commission sought to build appropriate
governance mechanisms which would steer the member states in the desired direction.
Such governance mechanisms, however, were not easy to design. On the one hand, they
had to allow for a more influential role of the European level; on the other hand, they
had to respect the autonomy of national governments. Thus the governance of Cohesion
policy evolved through a process of trial and error, with the Commission striving to
expand its influence mainly through indirect means, and the member states responding
with all sorts of silent or explicit opposition. The overall process is marked by several
shifts in the governance modes, by mixing ‘hard’ and ‘soft’ governance modes, and by
increasingly focusing on shaping the governance approaches in the member states instead
of the substance of their policies (Tömmel 2016).
During the initial years of the Regional Fund, the Commission could exercise influence
on national policies only by persuading the respective authorities to submit appropriate
projects. That is, it used the procedure of adopting projects for elucidating its policy
objectives as well as its preferences and selection criteria, yet in a rather informal and ad
hoc manner. With the increase of available funds and the introduction of the programme
approach, the Commission could make its selection criteria more explicit by partly
 The Commission and Cohesion policy  ­115

incorporating them into the Regulations of Cohesion policy, and partly formulating
them in the framework of the Community Programmes. In addition, since member states’
policy proposals often did not match these criteria, it negotiated with national and later
regional governments and authorities on the upgrading of their programme proposals
and on the terms of implementation. The reform of 1989 formalised such negotiations
by introducing the system of partnership (Bache 2010). The Regulation defined partner-
ship as ‘close consultations between the Commission, the Member State concerned and
the competent authorities designated by the latter at national, regional, local or other
level, with each party acting as a partner in pursuit of a common goal’ (Council of the
European Communities 1988a: Art. 4(1)). In fact, partnership implied establishing a for-
malised procedure for negotiating on the elaboration and adoption of programmes and
also on the terms of their implementation, that is, on the governance approaches of the
member states (Hooghe and Marks 2001: 96–102; Bachtler and Mendez 2007; Tömmel
2016). Thus the Commission through the system of partnership created a vertical nexus
between the three government levels that helped to compensate for the lack of hierarchi-
cal relationships in the multilevel system of the EU. However, the partnership system
never fulfilled the expectations of the Commission. Member states’ authorities found
many ways to evade or circumvent the pressure exercised by the Commission through
negotiations on the substance of their policies and their governance approaches (Bache
2010). Therefore, the most recent reform of Cohesion policy enacted in 2014 introduced
so-­called Partnership Agreements which bind national and regional authorities more
clearly to what they have promised in their programmes (European Parliament and
Council 2013: Art. 5).
Once invented, the system of partnership was soon expanded so as to include non-­state
actors as well. Through successive reforms (see above), these actors became involved into
all steps of policy-­making from the elaboration of programmes to their implementation
and, finally, evaluation. Since non-­state actors were allowed to manage projects and even
programmes within Cohesion policy themselves, for example by administering a Global
Grant4 or, most recently, by implementing a Community-­led local development strategy
(European Parliament and Council 2013: Art. 32–35), their involvement also resulted in
changes in the governance approach. Instead of acting themselves as operators, public
authorities increasingly took over a coordinative and supervisory role. Altogether, the
expansion of partnership to include non-­state actors meant that the Commission, besides
establishing a vertical nexus between government levels, also fostered the establishment
of a horizontal nexus between public and non-­state actors at every level. Yet also in
this case reality did not match the Commission’s expectations, since member states’
authorities at all levels only reluctantly included non-­state actors into their activities
(Piattoni 2006; Polverari and Michie 2009; Graziano 2010). Thus with the reform of the
Structural Funds in 2014, the Commission also introduced, in addition to the Partnership
Agreements which among others have to define the participants, a Code of Conduct for
partnership in order to make the inclusion of non-­state actors into policy-­making more
binding (European Parliament and Council 2013: Art. 5(3b), 15 and 16).
The Commission also increased its influence on member states’ policies by establish-
ing various indirect control mechanisms, which however were presented as means to
simply improve the quality and effectiveness of Cohesion policy. For example, it obliged
national and regional authorities to elaborate carefully designed and well-­grounded
116  Handbook on Cohesion policy in the EU

programmes, to regularly submit reports on progress in policy implementation, to

conduct mid-­term and final evaluations, as well as to cooperate with the Commission in
the framework of monitoring committees. All these obligations facilitated the supervi-
sion of policy implementation and provided many opportunities for the Commission
to express its policy preferences and to pressurise national and regional authorities to
comply with them.
However, through negotiations and certain obligations alone the Commission could
not command sufficient authority so as to give direction to the member states in the
process of policy implementation. It therefore introduced, with the reform of 2007, the
Open Method of Coordination (OMC) as an appropriate procedure to put more pres-
sure on national and regional policies and governance modes (Mendez 2011; Tömmel and
Verdun (2013). The OMC in Cohesion policy is organised along the same lines as in other
policy areas, for example the European Employment Strategy (EES). The Council and
the European Council first adopt guidelines that set the framework for national policy-­
making; member states’ authorities then draw up their national reform programmes
which define policy initiatives and the means and ways for achieving them; national gov-
ernments at regular intervals report on their achievements; finally, the Commission draws
up a synthesis report which forms the basis for the Council and the European Council
to reformulate the guidelines and to give recommendations to individual member states.
The procedure is furthermore accompanied by voluntary procedures of ­benchmarking –
that is, comparing member states’ policy approaches and practices and exchanging
­experiences – and by peer reviews of these approaches and practices.
In general, OMC procedures are perceived as rather ‘soft’ governance modes, used in
those policy areas where the European level lacks significant competences. Against this
background, one might wonder why the Commission introduced such a procedure into
Cohesion policy, since this policy area is already governed by ‘harder’ governance modes.
One reason for introducing the procedure into Cohesion policy lies in its linkage with
the Lisbon Strategy, which in turn is linked to the EU’s surveillance of member states’
economic policies in the framework of the Stability and Growth Pact (SGP) and the EES.
Subsuming Cohesion policy under these procedures made compliance with European
objectives more probable. In addition, policy guidelines, adopted by the Council and the
European Council, even though initially proposed by the Commission, are more likely to
be accepted by national governments than simply Commission preferences.
However, the reform of 2014 once more modified the Union’s governance approach
by introducing more prescriptive instruments (Mendez 2013: 649–650). The adoption
of guidelines for policy-­making in the member states was now replaced by defining a
Common Strategic Framework for Cohesion policy (European Parliament and Council
2013: Art. 10 and 11). In addition, a range of priorities or objectives for Cohesion policy
were incorporated into the regulation governing the policy (European Parliament and
Council 2013: Art. 9). Other mechanisms of ‘hardening’ the governance modes through
‘soft’ means consisted in the already-­mentioned Partnership Agreements and the Code
of Conduct for Partnership. Furthermore, the Commission introduced new instru-
ments for tightening its control on member states’ authorities: the ex ante conditionality,
which requires that national governments have strategies in place to meet the thematic
objectives of the Structural Funds; and the ex post conditionality, which implies an
evaluation by the Commission whether the targets of the Union strategy have been met
 The Commission and Cohesion policy  ­117

(European Parliament and Council 2013: Art. 19 and 57). Whether these instruments will
work in practice and satisfy the Commission’s aspirations remains to be seen.
In summarising the whole process of designing and establishing governance modes
in Cohesion policy, we can conclude that the Commission with every reform of the
Structural Funds introduced alternative governance modes and corresponding proce-
dural arrangements. Thus initially, when deciding on the allocation of funds to project
proposals, it had only hierarchy at its disposal, but could not make use of it due to the
set-­up of the policy at that time. Consequently, it turned to negotiation as a governance
mode, first in an informal manner, then in an organised form in the framework of the
system of partnership. Besides that, it attempted to establish certain competitive mecha-
nisms, which however could never evolve to a significant governance mode in Cohesion
policy. When negotiation, even though widely used, also did not result in the expected
successes, the Commission turned to OMC procedures, that is, the governance mode
of cooperation. Finally, it tightened its governance modes again by setting more clearly
the policy’s objectives and making compliance more binding through various tools, for
example conditionality. These successive modifications of the governance modes rarely
led to replacing the existing ones, but mostly resulted in complementing them. Thus hier-
archy in the form of binding rules laid down in the regulations forms the substratum of
Cohesion policy, but it alone does not suffice to commit member states to due implemen-
tation. Therefore, negotiation constitutes the dominant governance mode, applied mainly
through the system of partnership. It is complemented by (voluntary) cooperation in
various forms and, to a minor extent, by competition. Therefore, we find at present an
innovative mix of various governance modes, and it is only through the combination of
these governance modes that the Commission can, to a certain extent, achieve the desired
impacts.
Yet even this sophisticated mix of various governance modes does not guarantee the
Commission a decisive influence on Cohesion policy in the member states. Therefore,
early on it embarked on an additional strategy that designs governance modes which
eventually result in restructuring the governance approaches of the member states.
Examples are manifold, for instance the various obligations of how to draw up pro-
gramme proposals, to establish procedures for implementation and to effectuate evalu-
ations; the extension of the system of partnership to non-­state actors and particularly
their involvement as programme managers, which consequently transformed the role
of public authorities into a supervisory instead of an operative one; and, not least, the
various forms of transnational cooperation, initially triggered by the Interreg Initiative
and, later, continued by the Territorial Cooperation programme. However, the most far-­
reaching governance change that the Commission induced in the member states lies in
the devolution of policy-­making from the national to the regional government level, and
partly even to local authorities.
In spite of these achievements, we have to note that all these activities of the
Commission to direct the policies and the governance modes of the member states
remain attempts. Member states have found many avenues to counteract them, by react-
ing with inertia, evasion and sometimes fierce opposition to the Commission’s innovative
stance. Therefore, in the absence of clear hierarchical relationships between the European
and the national government levels, we can conclude that the Commission’s attempts in
designing governance modes for shaping the policies and the governance approaches
118  Handbook on Cohesion policy in the EU

of the member states and the resistance of the latter to these attempts constitute a
­permanent balancing act for sounding out the optimal ratio between influence ‘from
above’ and self-­determination ‘from below’.

CONCLUSIONS

This chapter has highlighted the role of the Commission in Cohesion policy. In conclu-
sion, we can first state that the Commission, throughout the process of European inte-
gration from its inception to the present, has played a pivotal role in this policy. At an
early stage, it advocated the need for such a policy; later on, it framed Cohesion policy
as an indispensable means to achieve certain integration steps or to compensate for the
negative impacts of such steps. With every reform of the policy, the Commission was
highly creative in presenting new arguments which underlined the policy’s benefits not
only to the recipient states, but also to the Union as a whole. The Commission thus acted
as the main player in establishing, expanding and finally maintaining Cohesion policy at
European level, against all odds, including reluctance emanating from member states, but
also the changing external circumstances, such as the end of the Cold War, the challenges
of globalisation and, most recently, the financial and sovereign debt crisis.
Once established, the Commission sought ways to shape the policy’s objectives and sub-
stance so as to transform it into a genuinely European policy, aimed at solving problems
that affect the Union as a whole. This was not an easy task in view of the member states’
reluctance against any interference ‘from above’, and meant that the Commission had to
design a policy approach which allowed for both pursuing European objectives and prefer-
ences, and respecting the autonomy of the member states in designing and implementing
their policies on the ground. This resulted in the introduction of the programme approach
as the guiding principle for elaborating detailed concepts for regional assistance, in diver-
sifying the spectrum of actors responsible for policy formulation and implementation in
the member states, and in establishing to a certain extent competitive mechanisms among
them, so as to induce a continuous upgrading of their programme proposals.
Since these strategies did not suffice to give direction to member states’ policies, the
Commission increasingly engaged in establishing appropriate governance modes, first
for structuring the Union’s policy and, later, for shaping the governance approaches of
the member states. In the face of the lack of clear hierarchical relationships between the
Commission and the member states, establishing appropriate governance modes meant
recurring to procedural mechanisms that helped to orient national authorities on the
objectives and preferences formulated by the Commission. Where these procedures did
not lead to the expected impacts, the Commission sought to design governance modes
which induce the transformation of the governance approaches in the member states.
Throughout this chapter, we have noted that the Commission, in its attempts to
exercise influence on member states’ policies and governance approaches, is always
confronted with strong resistance from national governments in the Council and the
European Council or individual governments and public authorities of the member
states. Thus it might seem that in pursuing its objectives, the Commission achieved only
limited success. Such a conclusion, however, would be wrong. The reluctance of the
member states against any interference ‘from above’ has induced the Commission to con-
 The Commission and Cohesion policy  ­119

tinuously search for policy and governance approaches that respect the autonomy of the
individual states, yet are increasingly effective in regard to the pursuit of European objec-
tives. Thus, in spite of many failures regarding its declared goals and sometimes also its
hidden agenda, the Commission through its strategies has achieved far-­reaching results.
These results do not primarily lie in reducing disparities between and among the member
states; on the contrary, the disparities in many cases are increasing further. These devel-
opments, however, are often a consequence of many and highly complex causes, such as
economic turbulence or even downturns, whose solution would by far transcend what
Cohesion policy could ever achieve, even if it were highly effective. Instead, the achieve-
ments of the Commission’s strategies in Cohesion policy consist in orienting member
states on alternative policy and governance approaches, and on inducing the transforma-
tion of their internal distribution of responsibilities, first among public authorities and
particularly the national and regional government levels, and in the longer run between
public authorities and non-­state actors.
In sum, the Commission through Cohesion policy has transformed the EU into a
multilevel system (Hooghe and Marks 2001; Piattoni 2010), that is, a system that allows
for achieving coordination and to a certain extent also convergence across Europe as well
as far-­reaching impacts in the member states, without primarily relying on hierarchical
means of steering. The significance of these achievements by far outreaches the impacts
of Cohesion policy in the recipient states and regions.

NOTES

1. Throughout this section, the dates of reforms refer to the year of the Council decision on the reform. The
debate usually starts two years before this date; the enactment of the reform usually starts in January of the
year following the adoption of the Council decision on the reform.
2. The full names of the Funds are the following: European Regional Development Fund (ERDF),
European Social Fund (ESF), European Agricultural Guarantee and Guidance Fund – Guidance
(EAGGF-­Guidance). The latter was later renamed European Agricultural Fund for Rural Development
(EAFRD).
3. Throughout this section, the dates of reforms refer to the year of their enactment.
4. The so-­called Global Grant was introduced with the reform of 1989. It can be assigned to an intermediary
organisation, such as a Chamber of Commerce or an association of small and medium-­sized enterprises,
with the purpose that these organisations assign subsidies to interested parties. The organisation has to set
up a programme for this purpose and is supervised by public authorities of the member states.

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Paper written in the context of the report ‘An Agenda for a reformed Cohesion Policy’, accessed 22 August
2015 at http://ec.europa.eu/regional_policy/archive/policy/future/pdf/8_manzella_final-­formatted.pdf.
Mendez, C. (2011), ‘The Lisbonization of EU Cohesion Policy: a successful case of experimentalist
­governance?’, European Planning Studies, 19 (3), 519–537.
Mendez, C. (2013), ‘The post-­2013 reform of EU cohesion policy and the place-­based narrative’, Journal of
European Public Policy, 20 (5), 639–659.
Piattoni, S. (2006), ‘Informal governance in structural policy’, Perspectives on European Politics and Society,
7 (1), 56–74.
Piattoni, Simona (2010), The Theory of Multi-­ level Governance: Conceptual, Empirical and Normative
Challenges, Oxford: Oxford University Press.
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IQ-­Net Thematic Paper, 25(2), Glasgow: European Policy Research Centre.
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European Commission.
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“Europe of the Regions”’, Regional and Federal Studies, 8 (2), 52–80.
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system’, Journal of Contemporary European Research, 12 (1), 406–423.
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Policy, Lanham, MD: Lexington Books/Roman & Littlefield.
8. Cohesion policy reform and the evolving role of
the Council
John Bachtler and Carlos Mendez

INTRODUCTION

The reform of Cohesion policy is a complex process within the complex polity of
the European Union (EU). Understanding how it takes place requires insight into
the interplay between different institutions at EU, national and subnational levels as
well as formal and informal alliances and networks of countries, regions and interest
groups (Bachtler et al. 2013). It is also widely recognised that a distinction needs to
be drawn between the financing and policy substance of Cohesion policy because of
the different institutional dynamics and interests at play across these distinct elements
(Marks 1992, 1993), although a key argument of this chapter is that the two dimen-
sions are intrinsically linked and that financing decisions are increasingly impacting on
the institutional design process as well as the core goals and governance of Cohesion
policy.
EU policy reform conducted as part of the negotiations on the Multiannual Financial
Framework (MFF) is commonly seen as slow and incremental, with inertia due to the
requirement for unanimity among all member states in the Council on budgetary matters
(Mayhew 2004; Schild 2008; Tarschys 2011; Bachtler et al. 2013). The MFF 2014–2020,
agreed in 2013, is distinctive for marking a change in the trend of EU spending with
the first reduction (over the MFF period) in over 30 years. As part of the agreement,
Cohesion policy was subject to arguably the biggest reform since 1988, with significant
changes to the objectives, spatial coverage, thematic focus, conditionality and governance
of the policy – some of which have established precedents that will carry over into future
reforms for the post-­2020 period.
The path towards the 2013 reforms began in 2007. In part, it followed the same route
as in previous rounds of debate and negotiation, but there were also some new twists and
turns. Some of these were occasioned by external forces (notably the effects of the finan-
cial and economic crises) while others were due to different institutional r­elationships,
and different personalities in key roles. As the chapter will show, several institutions play
a role in determining the financial allocations and regulations of Cohesion policy, but
there has been a recalibration of interinstitutional relationships in the latest reform with
important implications for the design of Cohesion policy.
The European Commission remains a powerful institution by virtue of its agenda-­
setting and legislative initiative powers, its technical capacities to propose compromise
solutions, and its ability to play off different interests against each other and respond to
new European challenges. The European Parliament is in many respects an ally of the
Commission and has acquired greater formal co-­legislative power to negotiate regula-
tions and shape policy outcomes, but it remains the junior partner on financial matters.

121
122  Handbook on Cohesion policy in the EU

Moreover, the negotiations surrounding the financial framework and wider EU ­objectives
are increasingly determining the policy content and implementation of Cohesion policy,
and the role of the European Council has acquired greater significance in this respect.
Aside from increasing the politicisation of Cohesion policy reform negotiations, an unin-
tended consequence is that the management of Cohesion policy is becoming even more
complex, presenting challenges for effective implementation and its legitimacy amongst
stakeholders.
To make these arguments, the chapter proceeds as follows. It begins by briefly describ-
ing the key actors in the reform process, their roles and relationships. To illustrate the
institutional dynamics in practice, the chapter then examines the chronology of the
reform of Cohesion policy for 2014–2020, and it concludes by reflecting on the distinctive
institutional features of the reform and its implications for the future.

ACTORS, ROLES AND INSTITUTIONAL DYNAMICS

As is well known, the European Commission legally is solely responsible for drawing
up proposals for new legislation as well as implementing decisions of the European
Parliament and Council of the European Union in the area of cohesion (see Tömmel,
Chapter 7, this volume). In the cycle of budgetary negotiations and reform of Cohesion
policy, the Commission begins the process by setting out proposals for reform as part of
the negotiations on the MFF for the period ahead. There are usually three different ele-
ments: (1) the proposals for the overall MFF covering all budgetary headings, of which
Cohesion policy is one; (2) the principles of the policy reforms – usually contained in the
periodic Cohesion Report published by the Directorate-­General for Regional and Urban
Policy (DG REGIO); and (3) the specific legislative proposals for the implementation of
Cohesion policy instruments, in the form of draft regulations.
As the name suggests, the MFF is a framework for financial planning setting the
maximum annual amounts which the EU can spend in different political fields over
the period of the framework. It is also a statement of EU political and policy priori-
ties in terms of the objectives set out for policy headings and the proportion of funding
allocated to them. Since 2000, the MFF has run for seven years at a time (2000–2006,
2007–2013, 2014–2020) but previously ran for shorter periods. For some policy areas,
such as Cohesion policy, the MFF also determines the funding allocated to individual
member states. MFF negotiation and agreement also include decisions on the income of
the EU (own resources) and on legislation on the specific policy instruments needed to
implement the budget (such as the regulatory package for Cohesion policy).
The Commission generally makes its formal proposals some three years in advance of
the start of an MFF period, following extensive work within the different Commission
services (for example on Cohesion policy by DG REGIO and the Directorate-­
General for Employment, Social Affairs and Inclusion, DG EMPL) coordinated by
the Secretary-­General and DG Budget (DG BUDG). For the negotiations on the
2007–2013 period, the Commission published its MFF proposals in February 2004, fol-
lowed immediately by the proposed reforms to Cohesion policy in the Third Cohesion
Report and by the formal legislative proposals in July 2004. For the negotiations on the
2014–2020 MFF, the Commission published its MFF proposals in June 2011, followed
 Cohesion policy reform and the Council  ­123

by the proposed legislative package for Cohesion policy in October 2011 but with the
key principles for reform already having been articulated in the Fifth Cohesion Report
in November 2010.
Once the Commission has published its proposals, the focus shifts to the other two
main EU institutions – the Council and Parliament. The Council of the European Union
(CEU) comprises government ministers from each member state with responsibility to
discuss, amend and adopt laws, and coordinate policies. Each member state takes turns
in holding the presidency of the Council for six months on a rotating basis. Rotating
presidencies have played a crucial role in the negotiation of the MFF and the reform
of Cohesion policy, partly during the debate stages – when they can put issues onto the
agenda, and seek conclusions – and in the negotiation stages when progress depends (for
both budgetary and legislative aspects) on the ability to craft compromises.
Much of the legislative work on Cohesion policy reform proposals is undertaken in the
Council and different configurations of committees and other bodies. The most impor-
tant is the General Affairs Council (GAC) of member state ministers which is responsible
for a number of cross-­cutting policy areas, including adoption of the MFF and Cohesion
policy regulations. The preparatory work is done by the Committee of Permanent
Representatives (of Brussels-­based missions of the member states, COREPER) and in
Council working groups such as the Friends of the Presidency for financing issues and,
for Cohesion policy regulations, the Structural Affairs Working Group (SAWG) and the
Committee on the Coordination of the Funds.1 There are also informal groupings of
member states which meet to work out common positions. On budgetary issues, the most
notable in the negotiations for 2014–2020 were the so-­called ‘Friends of Better Spending’
(bringing together net payer countries) and ‘Friends of Cohesion’ (comprising many of
the net beneficiaries).
The European Council – which comprises heads of government of the member states
plus presidents of the European Commission and European Parliament – defines the
EU’s overall political direction and priorities, traditionally by adopting ‘conclusions’
during European Council meetings which identify issues of concern and actions to take.
The European Council plays a crucial role in the final stages of MFF negotiation when it
is invariably left to heads of state and government to find agreement on the most intrac-
table issues: the size of the budget and its allocation to budget headings; the acceptable
net balances for individual member states; and, for Cohesion policy, the allocations to
individual countries. Decisions require unanimity.
Originating in the informal summits of EU leaders in the 1960s, the role of the
European Council has become progressively formalised in EU treaties. The Treaty of
Lisbon in 2009 confirmed its status as an EU institution and made the position of
President of the European Council a permanent and full-­time role (held initially by
Herman Van Rompuy in 2009–2014 and subsequently by Donald Tusk). The negotia-
tions for the 2014–2020 MFF were the first in which the President of European Council
was involved, and – as discussed in more detail below – were notable for Van Rompuy
eclipsing the role of the Cyprus EU Presidency in late 2012 and playing an important role
in facilitating a final agreement. A further distinctive feature of the 2013 reform is that
the European Council had a stronger impact on the design of the regulatory framework
than previously, by issuing conclusions on the MFF that impinged directly on key aspects
of the Cohesion policy regulation negotiations and competences of the co-­legislators.
124  Handbook on Cohesion policy in the EU

The European Parliament is the only directly elected EU body and has a mix of legis-
lative, supervisory and budgetary responsibilities (see Hübner, Chapter 9, this volume).
Its role in the MFF legislative process is governed by the ‘consent procedure’, under
which the Council requires the consent of the European Parliament to adopt legislative
proposals; however, the Parliament only has the power to accept or reject the proposal
and cannot amend it. In practice, negotiations on the Council’s MFF agreement are
held between the Parliament, Council and Commission allowing an Interinstitutional
Agreement on the budget to be adopted, which contains the table of the MFF and the
rules to implement it. With respect to Cohesion policy regulations, the Parliament is a
fully fledged co-­legislator with the Council under the so-­called ‘ordinary legislative pro-
cedure’ since the entry into force of the Lisbon Treaty in 2009, which allows it to request
amendments to all of the Cohesion policy regulations. This contrasts with earlier reforms,
when the Parliament had co-­decision powers over only fund-­specific regulations but not
the general framework regulation. Where agreement is not reached, a conciliation com-
mittee is formed to conduct trialogue meetings with the Council Presidency, the relevant
Commissioner and a delegation of MEPs in order to reach a compromise agreement.
Lastly, there are two other bodies with consultative roles in the process. The
Committee of the Regions (CoR) is an advisory body representing the EU’s regional
and local authorities consulted by the main EU institutions on legislative proposals for
Cohesion policy. The European Economic and Social Committee (EESC) is an advisory
body representing employee and employer organisations and other interest groups.
While the CoR and EESC lack formal decision-­making powers, both can issue opinions.
These help to highlight particular issues and (in the case of the CoR) have been able to
mobilise subnational actors on matters such as regional eligibility thresholds and crite-
ria, transitional provisions and partnership arrangements as part of the Cohesion policy
reform process.
The interaction of the institutions is complex and can be best illustrated by reviewing
the process and outcomes of a reform cycle. The following section reviews the reform
debate and negotiations for the 2014–2020 period and then reflects on commonalities and
contrasts with previous reform phases.

TAKING STOCK OF POLICY PRIORITIES: THE 2007–2008

BUDGET REVIEW

The nature of EU budgetary and policy planning is such that, for the major areas of
expenditure, the process of reform is almost continuous. Thus, within a year of the
2000–2006 MFF and legislative package for Cohesion policy being agreed in 1999, parts
of the Commission were already considering the options for post-­2006 policy reform.
Likewise, before the ink was properly dry on the MFF and regulations for 2007–2013,
thoughts were turning to 2014–2020. The first stage in the policy development process
for 2014–2020 was led by the European Commission, reflecting its monopoly right of
legislative initiative. This started in 2007 as part of a review of the EU budget. Early
thinking about the long-­term evolution of budgetary and policy priorities was driven
by the Inter-­Institutional Agreement on the 2007–2013 MFF agreed by the Parliament,
Council and Commission in April 2006. Originating in the protracted Council debate
 Cohesion policy reform and the Council  ­125

in December 2006, the Agreement required the Commission to undertake ‘a full, wide-­

ranging review covering all aspects of EU spending’.2
Initially, the European Commission had high ambitions for this exercise. Commission
President José Manuel Barroso described the budget review launched in September 2007
as ‘unique, a once in a generation opportunity to make a reform of the budget and in the
way we work’ (CEC 2007a). The Commission’s consultation posed fundamental ques-
tions relating to the challenges facing Europe, the issues and principles for EU spending,
and the system for generating own resources, and it triggered large numbers of responses.
However, the original purpose of the review – a mid-­term reassessment of spending –
was quietly dropped during 2007–2008, as it became clear that member states had no
appetite for reopening the contentious issue of budget allocations so soon after the bruis-
ing experience of the 2005 reform which had required two intense European Council
meetings to reach agreement. The focus therefore shifted to planning for the 2014–2020
period, although member states were wary about stating or implying national positions
at such an early stage (Bachtler et al. 2008).
Nevertheless, the launch of the debate did allow new ideas to be explored and policies
to be reassessed, and there was significant discussion on the future political and policy
directions of the EU. The primary conclusion to emerge was the ‘need for change’, with
a general recognition that the structure of the budget did not reflect the EU’s political
objectives and policy priorities. Among national contributions, the fundamental differ-
ences between member states on the size of the EU budget, which were so evident in the
2005 negotiations, continued to feature strongly.
In broad terms, the consultation indicated a demand for increased spending on the
environment, energy and competitiveness, research and knowledge – as well as greater
cross-­policy coherence in meeting EU goals in these areas – and a reduction or reorienta-
tion of Common Agricultural Policy (CAP) spending towards rural development. A key
theme of the debate, shared across all member states, was the European added value and
European public-­good character of expenditure, as a criterion for including spending
priorities in the EU budget (Breuss 2008; Copenhagen Economics 2009; Zuleeg 2009).
There were similar divisions among member states on the future of Cohesion policy
(Bachtler et al. 2008). The most radical position was taken by the UK: that Cohesion
policy should be limited to the poorer member states and phased out in richer countries.
Denmark, Ireland, the Netherlands and Sweden also favoured Structural and Cohesion
Funds being directed to the least-­prosperous regions or the least-­prosperous countries,
supplemented by cross-­border and/or transnational cooperation programmes. Several of
the national submissions underlined the importance of richer countries being responsible
for their own regional development challenges. These views were shared by some of the
EU12: Estonia argued that the financing of poorer regions in richer states should be
reconsidered, while both the Czech Republic and Romania favoured increasing the focus
of the policy on the least-­developed member states.
Other richer member states were less radical (Bachtler et al. 2008). Germany advocated
focusing resources on ‘structurally weak regions’ but saw a continued case for other
regions being given ‘targeted assistance in developing their competences’. Finland and
France took a similar view, supporting measures for growth, competitiveness and jobs
being implemented across the EU. Austria was also cautious, supporting the concept of
a ‘comprehensive and integrated structural and regional policy’ but (like Finland and
126  Handbook on Cohesion policy in the EU

Germany) believed that spending should be focused on ‘higher added value’ measures,
especially in richer parts of the EU. Several of the more prosperous countries – Austria,
Denmark, Sweden – were concerned to ensure that allocations under Cohesion policy
were made on the basis of relative wealth so that countries with comparable levels of
gross domestic product (GDP) would benefit equally from returns from the EU budget.
The maintenance of an EU-­wide Cohesion policy was supported strongly by other
EU15 countries, such as Greece, Italy, Portugal and Spain. Greece was especially con-
cerned to avoid ‘discrimination between old and new Member States’. For the newer
member states, Cohesion policy played a central role in national thinking about the
EU budget. In their budget submissions, many of the EU12 highlighted the wide dis-
parities in development levels and the barriers to the achievement of existing European
objectives (such as the internal market) as well as new policy priorities (Cyprus, Czech
Republic, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia). There was clearly some
concern among the EU12 at the implications of new policy priorities for spending on
Cohesion policies. Most of the EU12 highlighted ‘solidarity’ as one of the main prin-
ciples of EU budget spending and the need for ‘adequate resources’, meaning (in the
Czech and Romanian view) a greater concentration of Cohesion policy funding on the
less-­developed member states.
The budget consultation ended in November 2008 with a report from the Commission
(CEC 2008). The main lesson drawn was that radical reform was necessary, with a refo-
cusing of spending on future challenges and shifting the centre of gravity of the budget
towards the priorities of competitiveness, environment and energy. A fair and trans-
parent mechanism of member state contributions to the EU budget was also seen as
important. Flexibility was advocated, so that the budget would have improved capacity
to respond to evolving challenges. The results were used by the reappointed Commission
President Barroso in the presentation of his political guidelines for his new mandate
period (2009–2014) to argue for a ‘transformational agenda’, with the budget used to
focus on ‘new priorities’ determined by added value and flexibility (CEC 2009).

AGENDA-­SETTING FOR COHESION POLICY REFORM

In parallel with the review of overall budget and policy priorities conducted by the
European Commission, in particular through DG BUDG, the Commission was also
rethinking the policy approach to Cohesion policy through DG REGIO. The process
began with the publication of the Fourth Cohesion Report (CEC 2007b) in 2007 which
set out a number of questions on the lessons drawn from programming, the scope for
a more integrated and flexible policy, and the management of the policy. Over the sub-
sequent year, at the Fourth Cohesion Forum (Hübner 2007a), in key speeches and in a
‘reflections paper’ (Hübner 2009), Commissioner Danuta Hübner articulated several
key themes which later became the principles upon which reform was based: the role of
Cohesion policy had to be seen within the context of global challenges; it had to focus
more on maximising its impact on EU competitiveness and growth and jobs; the govern-
ance of the policy needed to place more emphasis on performance; a stronger role for
local actors in programming and implementation was required; and the coordination of
the Funds needed to be rethought (Hübner 2007b, 2008a, 2008b, 2008c).3
 Cohesion policy reform and the Council  ­127

The analytical foundations for these arguments came from three sources. First, an
independent assessment of the policy was commissioned by Commissioner Hübner from
a senior Italian policy-­maker (and later, minister), Fabrizio Barca. What became known
as the Barca Report (Barca 2009) was based on an extensive programme of research and
hearings with member state officials and academic experts, and it presented a series of
recommendations as ‘ten pillars for reforming Cohesion policy governance’. The core
proposals were for the concentration of resources on core priorities, a new strategic
framework, a new contractual relationship between the Commission and member states,
and the use of ex ante conditionalities. Although the report had a mixed reception at the
time, both within the Commission and from member states (Bachtler et al. 2013), many
of the ‘pillars’ were subsequently part of the reform.
Second, the Commission implemented the most extensive programme of evaluation
and analysis of Cohesion policy ever undertaken by DG REGIO. This provided a more
robust evidence base for policy thinking, albeit still with many gaps because of the poor
quality of data. Key findings were: the need for Cohesion policy objectives to take more
account of EU strategies; greater clarity of the relative importance for policy priorities;
and increased concentration of expenditure to ensure a critical mass of interventions and
tangible impacts. Better indicators for measuring policy progress were needed and these
needed to be directly related to programme objectives at the planning stage (Ward and
Wolleb 2010).
Third, a new requirement for member states in this period was the obligation (institu-
tionalised at Council level) for strategic reporting whereby member states had to submit
reports in 2009 and 2012 on their progress with programme performance. These were
synthesised by the Commission and sent to the Council and other EU institutions for
examination and debate. The Commission’s assessment of the 2009 member state reports
provided, for the first time, a comprehensive cross-­national picture of the variation in
programme implementation, the systemic constraints and domestic management issues
such as lack of administrative capacity (CEC 2010a). It also showed the weaknesses in the
reporting of outputs and results, particularly with respect to data quality.
A further novel feature of this phase was the inclusion of member states in delibera-
tions on the development of the Commission’s proposal. DG REGIO and DG EMPL
both set up ad hoc High-­Level Groups of national policy-­makers to reflect on the future
of Cohesion policy over the 2009–2010 period (Bachtler et al. 2010). Mirroring exist-
ing practices in other EU policy fields, the rationale for establishing informal advisory
groups, composed of policy experts from the Commission and the member states, was to
support the Commission in developing the main building blocks of its legislative propos-
als on the future Cohesion policy. The groups filled an institutional void in providing a
forum for discussing strategic reform issues, although as an advisory group the discus-
sions and outputs were not binding, and the group did not replace other formal struc-
tures such as the Structural Affairs Working Group4 and Committee on the Coordination
of the Funds.5
The various inputs to the reform debate came together in mid-­2010 when the General
Affairs Council (of the Council of Ministers) adopted conclusions on the Commission
2010 strategic report in mid-­June 2010 under the Spanish Presidency (CEU 2010). It
endorsed the Commission’s report and conclusions, as well as putting forward some
general ideas on the future direction of policy:
128  Handbook on Cohesion policy in the EU

● the need for the policy to have an important role within the ‘Europe 2020’ strategy,
as had already been emphasised in the March European Council conclusions;
● the need to concentrate on a limited number of priorities, but leaving sufficient
flexibility for member states and regions to determine the most appropriate policy
mix;
● the need for one strategic approach and common implementation rules for the
three funds: the European Regional Development Fund (ERDF), Cohesion Fund
(CF) and European Social Fund (ESF);
● the need for further streamlining of administrative procedures; and
● the need to better address problems faced by transition regions by considering a
similar solution to that adopted in the 2007–2013 period.

PROPOSALS FOR REFORM IN A DYNAMIC AND UNCERTAIN

CONTEXT

As the preparations for the MFF and Cohesion policy package intensified, three impor-
tant contextual variables – economic, political and institutional – played an important
part in shaping the reform proposals and their negotiation.
First, the depth and severity of the financial and economic crises were dominating
the political and policy concerns of member states and the EU institutions. At EU level,
the challenge was to manage the stability of the eurozone (primarily in Greece, Spain,
Ireland, Portugal and Cyprus) with extensive and rapid reforms of economic govern-
ance across several areas of economic policy-­making: the conduct of monetary policy;
financial surveillance and support mechanisms; rules on financial regulation; and EU
institutional responsibilities (Begg et al. 2014).
The crises changed the tenor of debate on the MFF and reform of Cohesion policy.
Fiscal pressure placed great pressure on public finances and the approach of net payers
to the size of the EU budget. Supported by Germany and France, the Commission
proposed macroeconomic conditionalities on all Cohesion policy funds to ensure
member state compliance with European economic governance recommendations. Yet,
for some countries in Central, Eastern and Southern Europe, EU budgetary transfers
were becoming the only source of public investment, giving increased importance to the
role of Cohesion policy (see Polverari, Chapter 15, and Pálné Kovács, Chapter 19, this
volume).
A second important change to the political context was the entry into force of the
Lisbon Treaty on 1 December 2009 after eight years of intense negotiation. Important
changes were made to EU institutions and decision-­making processes, most prominently
an extension of qualified majority voting (QMV) in the Council, increased power for
the European Parliament in the legislative process through extended co-­decision with
the Council, and the creation of a President of the European Council and a High
Representative of the Union for Foreign Affairs and Security Policy. For Cohesion policy,
the Lisbon Treaty introduced a new title relating to ‘territorial cohesion’, and more spe-
cific reference to the regions deserving particular attention. Also, the new powers for the
Parliament gave it stronger influence as co-­legislator across the entire legislative package
of Cohesion policy regulations (Bachtler et al. 2010).
 Cohesion policy reform and the Council  ­129

Lastly, with respect to policy priorities, the strategic context for the reform was set
out by Europe 2020. Succeeding the Lisbon Strategy for growth and jobs, Europe 2020
aimed to provide an overarching, long-­term economic strategy for the European Union,
which would ‘turn the EU into a smart, sustainable and inclusive economy delivering
high levels of employment, productivity and social cohesion’ (CEC 2010b). Three mutu-
ally reinforcing priorities of smart, sustainable and inclusive growth were complemented
by five ‘headline targets’ for member states and seven ‘flagship initiatives’ on innova-
tion, youth, the digital agenda, resource efficiency, industrial policy, skills and jobs, and
the fight against poverty. Proposed by the Commission and endorsed by the Council in
March 2010 and approved by the Parliament three months later, Europe 2020 gave the
Commission a mandate to draft economic policy and employment guidelines to steer the
next round of National Reform Programmes (CEC 2010c, 2010d). The Commission also
acquired a new ability to issue country-­specific recommendations and policy ­warnings,
and the system of member state reporting on the achievement of 2020 targets was coordi-
nated more with the Stability and Growth Pact reporting system, the latter now including
a legal obligation to report on macroeconomic and public finance reform. DG REGIO
supplemented these developments with two Communications on ‘smart growth’ and ‘sus-
tainable growth’, highlighting the contribution of Cohesion policy to Europe 2020 objec-
tives and flagship initiatives as well as setting out a series of recommendations to increase
their alignment further during the remainder of the 2007–2013 period and beyond (CEC
2010e, 2010f, 2011a, 2011b).
Against this backdrop, the Commission presented its proposals on the Multiannual
Financial Framework 2014–2020 at the end of June 2011 (CEC 2011c). A total budget of
€1025 billion in commitment appropriations was proposed, representing a 3.2 per cent
increase compared to 2007–2013, or 5 per cent with the inclusion of so-­called ‘outside
MFF’ items. The main budget headings were repackaged to emphasise Europe 2020
objectives, with Cohesion policy and a new infrastructure fund (the Connecting Europe
Facility) being grouped into a sub-­ceiling of the ‘smart and inclusive growth’ heading.
The CAP and Cohesion policy would see their total allocations fall, although both
would still remain the largest items of EU budgetary expenditure, with the Cohesion
policy share overtaking that of agriculture for the first time. Cohesion policy funding
would fall by some 5 per cent, from €354.8 billion to €336 billion. This equated to a
36.7 per cent share of the 2014–2020 MFF, slightly higher than the 35 per cent share in
2007–2013.
On the income side of the budget, the Commission proposed two new own resources,
a Financial Transaction Tax and an EU Value Added Tax component, in order to render
the financing of the EU more transparent and fair. It also proposed to simplify the system
of corrections and rebates by replacing these by a system of fixed annual lump sums.
For Cohesion policy, the Budget 2020 implied a significant change in financial alloca-
tions to countries and regions (Mendez et al. 2011). This was partly due to regional eco-
nomic growth and the use of EU27 averages which considerably reduced the projected
coverage of the Convergence regions. In particular, regional growth would result in several
German and Spanish regions losing Convergence status, along with the capital regions
of Poland and Romania. The introduction of a new definition of ‘transitional region’
(see Brunazzo, Chapter 1, this volume) also altered the pattern of planned intervention.
This new category of regions comprised former Convergence regions that had ‘outgrown’
130  Handbook on Cohesion policy in the EU

that status – continuing previous transitional arrangements – but it also included regions
with GDP in the range 75–90 per cent of the EU27 average, which was a break with past
practice and created a new category of assisted area covering more than 11 per cent of the
EU15 population. Overall, the proposals suggested a modest decrease in the Cohesion
policy budget. This was largely a result of a reduction in Convergence spending, a major
rise in spending on Regional Competitiveness and Employment, and an increase in tran-
sition region spending. As in the 2005 reform, the so-­called absorption cap – substantially
lower than in 2007–2013 – would be critical in determining financial allocations for the
least-­prosperous member states.
Four months after the MFF proposals, the Commission’s proposals for the Cohesion
policy regulatory package were tabled on 6 October 2011, although the key directions of
reform had already been well known since the publication of the Fifth Cohesion Report
in November 2010. These included: closer alignment with and thematic concentration on
the Europe 2020 strategy; greater strategic coherence across shared management funds; a
more binding contractual relationship with the member states; a new performance frame-
work; more use of new financial instruments; and greater proportionality and simplifica-
tion in administrative rules.

NEGOTIATING THE BUDGET AND LEGISLATIVE PACKAGE

Budget Negotiations

Once the Commission’s proposals for the MFF and Cohesion policy package had been
tabled, the focus shifted to the Council and its various committees and working groups.
The process involved finding agreement not only on the MFF but also on 50 pieces of
associated sectoral legislation. The preparatory work was finalised under the Polish
Presidency (second half of 2011) and the Danish Presidency (first half of 2012), leaving
the negotiations on figures to the Cypriot Presidency during the latter half of 2012 and
the Irish Presidency in the first part of 2013.
During what the Council referred to as a ‘clarification phase’, the role of the
Polish  Presidency was largely of a preparatory nature, focused on clarifying technical
issues of the Commission’s MFF proposals and achieving a better understanding of
member state positions. A progress report published towards the end of the Presidency
provided a first synthesis of member state positions (CEU 2011). Views were clearly
divided on the overall size of the budget, with several net-­payer member states calling
for major cuts, and an opposing camp of net beneficiaries offering support for the
Commission. There were also mixed views on the budget’s structure (especially, concerns
that the level of Cohesion expenditure would not be guaranteed throughout the period)
and divisions on a wide range of proposals relating to allocation levels, the criteria and
modalities for allocating funding, eligibility issues and the financial priority given to
particular themes. Lastly, there were divergent views on the proposals for own resources.
Moving from the ‘clarification phase’ into the ‘negotiating phase’, the objective
of the Danish Presidency was to ‘to produce a solid basis for a substantial discussion on
the future MFF at the European Council meeting in June 2012’ (CEU 2012a). Following
the approach of the previous MFF negotiations in 2005–2006, the Presidency focused on
 Cohesion policy reform and the Council  ­131

developing the first Negotiating Box, a document setting out the allocations, methodo-
logical provisions and options on all elements of the MFF. A guiding principle stated at
the outset in many of the negotiating documents was that ‘nothing is agreed until every-
thing is agreed’. The first full version of the Negotiating Box containing all sections was
tabled in May 2012 as a basis for GAC discussion (CEU 2012b, 2012c).
The differences between member states on the overall size of the future budget
were now becoming clearer. A non-­ paper was circulated by seven member states
(Austria, the Czech Republic, Germany, Finland, the Netherlands, Sweden and the
United Kingdom) stating that ‘the Commission’s proposal is significantly in excess of
what is needed for a stabilisation of the European budget’. France was not a signatory
as it was still developing its formal position, although it did sign a ‘Friends of Better
Spending’ non-­paper (along with Austria, Germany, Finland, Italy, the Netherlands
and Sweden) a few days prior to the GAC meeting, calling for a more effective use of
Cohesion policy funds. In response, the so-­called ‘Friends of Cohesion’ group circu-
lated a document defending Cohesion policy as ‘a major tool for investment, growth
and job creation’ and stating that ‘better spending’ should not imply ‘further cuts in
the cohesion envelope’.6
In the GAC ministerial debate, a number of member states expressed strong reserva-
tions about the proposed use of macroeconomic conditionalities to sanction excessive
deficits. There was also opposition to a reduction in the EU co-­financing rate (from
the 85 per cent of 2007–2013) for less-­developed member states, particularly given
the ongoing effects of the crisis and associated fiscal consolidation efforts (Bulgaria,
Hungary, Lithuania, Portugal and Romania).
A further two revised Negotiating Boxes were tabled in June for discussion at the GAC
of 26 June 2012 (CEU 2012d, 2012e). Most of the key changes were to the structure of
the MFF, including separate subheadings for competitiveness (1a) and cohesion (1b). The
subsequent European Council summit on 28–29 June provided the first opportunity for
heads of state to discuss the MFF in the round. However, with the renewed pressures of
the eurozone crisis and its contagion, the focus was on preparing the ground for a more
sustainable institutional design for Economic and Monetary Union (EMU), particularly
tighter supervision of eurozone banks. The Council conclusions dedicated to the MFF
merely provided an update of the negotiation process, welcoming the progress achieved,
and reiterating the commitment to a deal by the end of 2012 (CEU 2012f).
With a mandate to conclude the negotiations on the MFF, the key goal for the
Cypriot Presidency was to move the debate on to figures. A first GAC meeting of minis-
ters was held on 24 July, including a debate on the updated Commission proposal on the
2014–2020 MFF (CEC 2012). This highlighted continued differences on the overall size
of the budget, the large-­scale programmes and flexibility instruments to be included in or
excluded from the MFF ceilings, macroeconomic conditionality, the ‘reverse safety net’
requested by some net payers,7 and the progressive reduction of CAP direct payments for
the EU15 (Cyprus Presidency 2012).
A new Negotiating Box was published by the Presidency on 18 September 2012, in
advance of the GAC of 24 September (CEU 2012g). This was the first Negotiating Box
to recognise explicitly the ‘inevitable’ need for a reduction in the total level of expenditure
proposed by the Commission (including all elements inside and outside of the MFF), and
for all headings, subheadings and sub-­ceiling to be subject to reduction efforts. However,
132  Handbook on Cohesion policy in the EU

the document still did not contain the numerical ranges for the overall budget, headings
and policies, which was causing increasing frustration among member states.
In the absence of concrete figures, the European Council meeting on 18–19 October
was dedicated mainly to eurozone crisis issues rather than the MFF as originally planned
(CEU 2012h). The Cyprus Presidency was struggling with the development of a credible
Negotiating Box that would command sufficient support, and it was coming under fire
from the Commission and member states for not providing a balanced set of proposals.
Consequently, the European Council President Van Rompuy decided to take the initiative
and convene a special summit for 22–23 November 2012. However, the President found
it difficult to determine the basis for a compromise; at this stage some member states
were unwilling to pre-­empt the discussion by revealing the scope for compromise. The
second Van Rompuy Negotiating Box, therefore, showed relatively little movement, and
the likelihood of agreement was downplayed by Germany, which immediately lowered
expectations among member states.
By the time of the next European Council in February 2013 under the Irish
Presidency, Van Rompuy was better prepared with a more realistic Negotiating Box
that took account of many fundamental concerns of key member states. National gov-
ernments were more aware of the red lines of their counterparts, and they were under
time pressure: an MFF had never been agreed so late in the planning cycle. The Council
was conscious, too, that negotiations with the European Parliament still had to be con-
ducted, as well as a backlog of implementing regulations. Nevertheless, there were still
major divisions on the budget among member states, and the Council negotiations were
fraught, with a key role played by Germany in supporting a small group of net payers
to secure an outcome (over the objections of net payers such as France and Italy, as well
as other member states).
The European Council agreement of 8 February 2013 (European Council 2013) con-
tained significant changes in EU spending. The upper limit of budget commitments
was set at 1 per cent of EU gross national income (GNI) (€959 billion), with payments
expected to be 0.95 per cent of EU GNI (€908 billion). These involved reductions of
around 3 per cent in real terms compared to the limits in 2007–2013: 1.12 per cent
(€994 billion) and 1.06 per cent (€942 billion), respectively. The Cohesion policy budget
for 2014–2020, €325 billion, was projected to decline by 8.4 per cent, bringing its share
to a third of the overall budget, on a par with the Common Agricultural Policy. The
official publication of national allocations in August 2013 confirmed a significant shift in
the allocation of Cohesion policy resources across member states. Although the overall
cohesion budget was less, it included an increase in funding in six countries and a very
significant reduction in a range of member states, notably Germany, Spain, Greece, the
Czech Republic and Hungary.
The final stages in the MFF process were the negotiations to reach an Interinstitutional
Agreement with the European Parliament, achieved in December 2013. The Parliament
initially rejected the European Council conclusions and called for more flexibility and effi-
ciency within the budget. Following institutional negotiations, a political agreement was
reached with the European Parliament in late June 2013. The deal did not alter the total
budget of €960 billion set by the European Council in February 2013, but provided for
more frontloading of expenditure (to allow more immediate spending on youth employ-
ment measures) and increased flexibility for transferring unspent funds to other years and
 Cohesion policy reform and the Council  ­133

priority areas, which was important for budget management. Lastly, a new budgetary
review clause allowed the budget to be revised in 2016 for implementation in 2017.

Legislative Package

Negotiations on the legislative package for Cohesion policy started in the Council in
October 2011, following the (delayed) publication of the draft legislative package by
the Commission. Prior to this, the Hungarian and Polish Presidencies had organised an
extensive programme of public and high-­level meetings and conferences on key strategic
themes. Structured exchanges of views on both strategic and operational issues had been
also facilitated by the establishment of the High-­Level Group to Reflect on the Future
of Cohesion Policy (as noted above) bringing together Commission and member state
policy-­makers for a series of informal meetings over the 2009–2011 period.
The Presidency Trio (Poland, Denmark and Cyprus) developed a common approach
by dividing the regulatory proposals into thematic blocks for negotiation at Council level
via the GAC, Friends of the Presidency Group and Structural Affairs Working Group
(SAWG). The first phase under the Polish Presidency began with the presentation of
the whole legislative package by the Commission, followed by detailed discussions on
five blocks: strategic programming, thematic concentration, ex ante conditionality and
performance review, and territorial development. Denmark took over the EU Presidency
at the start of 2012, focusing on elaborating the first formal compromise texts and achiev-
ing preliminary agreement on key blocks. Partial agreement was achieved in the GAC
of April 2012 on technical elements of the proposals (such as programming and ex ante
conditionality) and in June 2012 (in areas such as thematic concentration and financial
instruments).
The Cypriot Presidency sought to close the outstanding negotiation blocks and issues,
and broad agreement on key programming issues was achieved by the end of 2012,
enabling the development of Partnership Agreements and Operational Programmes
(OPs) to progress with a certain degree of legal clarity and certainty. During this period,
formal interinstitutional negotiations between the Council, Commission and Parliament
were launched (in July 2012) through an intensive programme of tripartite (so-­called
‘trialogue’) meetings as well as preparatory and follow-­up technical meetings, which
continued throughout 2013 under both the Irish and Lithuanian Presidencies.8 The final
and most politically salient and challenging negotiation block was on macroeconomic
conditionality – given the divergent views among the institutions – along with several
finance-­related issues (co-­financing, pre-­financing and the performance reserve) that
were left to the last stages to agree.
After two years of negotiations, and parliamentary approval at plenary in November
2013, the legislative package was finally agreed in December 2013 with approval of the
Common Provisions Regulation (European Parliament and Council 2013), Fund-­specific
Regulations for the ERDF, ESF, Cohesion Fund and European Agricultural Fund
for Rural Development (EAFRD), and European Territorial Cooperation (ETC) and
European Grouping of Territorial Cooperation (EGTC) Regulations. Although these
set the framework for programming the Funds for the 2014–2020 period, work contin-
ued through 2014 and into 2015 on the preparation of a large number of Delegated and
Implementing Acts on specific aspects of management and delivery.
134  Handbook on Cohesion policy in the EU

INSTITUTIONAL INFLUENCES ON THE REFORM

Assessing the influence of the different institutions on the regulatory outcomes is chal-
lenging because of the complexity and sheer volume of regulatory provisions, changes
and inputs from different institutions as well as the closed nature of the negotiations.
Nevertheless, in comparing the reform proposals with the legislative outcomes and review-
ing the limited literature on the negotiations, several points can be highlighted about the
respective roles and relations among institutions. Beginning with the Commission, it
clearly remains a powerful institution by virtue of its agenda-­setting and legislative ini-
tiative powers, its technical capacities to propose compromise solutions, and its ability to
play off different inter-­and intra-­institutional interests against each other. As under the
previous reform for the 2007–2013 period (Bachtler et al. 2013), a key measure of success
is that the final substantive outcomes were largely in line with the strategic goals of the
reform proposed from the outset by the Commission.
Nevertheless, considerable changes were made to the Commission’s proposals by the
Council of Ministers, largely with a view to increasing the flexibility available to member
states in implementing programmes. Moreover, the role of the European Council and the
negotiations among heads of state and government over the MFF and addressing the
eurozone crisis has acquired greater significance and are increasingly shaping the goals,
instruments and governance of Cohesion policy. Yet, contrasting with intergovernmental
interpretations of Cohesion policy-­making that highlight the ability of the Council to roll
back unwanted obligations in subsequent reform rounds (e.g. Pollack 1995), it is strik-
ing how many new administrative obligations and restrictions were imposed on member
states’ use of Cohesion policy funding under the latest reform, given the constant calls for
simplification by the Council and stakeholders.
The European Parliament is in many respects an ally of the Commission in seeking to
develop a strong and Europeanised Cohesion policy and, by virtue of its enhanced co-­
legislative power (with the Council of Ministers), was able to have a stronger influence on
negotiation outcomes than previously. Key areas where the Parliament claimed negotiat-
ing victories include: greater involvement of local and regional authorities in planning
and implementation (including the reinstatement of the code of conduct on partnership
opposed by the Council); more flexibility with regard to thematic concentration (in line
with Council wishes); including the Common Strategic Framework within the Common
Provisions Regulation as opposed to a Delegated Act (against the Commission’s
wishes); and a particular focus on cross-­cutting priorities such as the environment, non-­
discrimination and institutional capacity, amongst a range of other issues (Cremades
2014). On the other hand, the Parliament remains the junior partner in negotiating
financial issues embedded in the regulations and which have high-­level support from the
Council and Commission (such as macroeconomic conditionality).

CONCLUSIONS

The reform of Cohesion policy in 2013 featured many of the institutional dynamics of
the previous rounds of reform – most notably the divisions in the Council on budgetary
matters between net contributors and net beneficiaries, and tensions on the legislative
 Cohesion policy reform and the Council  ­135

package between the Council, Commission and Parliament over the EU conditions
and controls on member state implementation of European Structural and Investment
Funds. Nevertheless, the above account of the reform debate, negotiations and substan-
tive outcomes reveals several distinctive aspects in the roles and relationships of the key
actors.
Beginning with the European Commission, the reform of Cohesion policy must count
as a significant success. The policy emerged from the negotiations retaining a third of the
commitment appropriations under the MFF 2014–2020, despite continued criticism of
the policy from net payers and questions over its added value in the 2008 budget review.
Further, the Commission’s objectives for the content of the policy were largely achieved;
all the key proposals set out by the Commission in 2011 were approved in some form. At
one time, the prospects for thematic concentration were considered doubtful by many
member states, and there was strong opposition from a range of countries (and parts of
the Commission) to the creation of a new category of transition regions (and the prec-
edent it created) until late in the negotiations.
There were three features that made the Commission’s approach different from that
taken in the early 2000s at a similar point in the planning cycle. First, the Commission
recognised the need to take a more strategic approach to Cohesion policy reform, which
was not just about retaining the policy’s share of the EU budget but also sought to rede-
fine the policy’s objectives in a changing economic and political context. In this respect,
presenting the policy as a ‘delivery agent’ for Europe 2020 objectives helped to neutral-
ise some opposition to the policy within the Commission and provided a convincing
counter-­narrative to external critics. Second, DG REGIO considered that the justifica-
tion of the policy needed to be placed on stronger analytical foundations with reference
to evidence for the policy’s effectiveness and efficiency. Although it had a mixed reception
when it was published, the Barca Report is credited with influencing external views of the
policy, in particular the Commission’s credibility in seeking a more performance-­focused,
results-­oriented policy. Third, while the preparatory work on the reform of Cohesion
policy in the early 2000s had been conducted largely in secret, the Commission decided to
open up the policy review to external inputs and a more consultative approach involving
the member states. The use of High-­Level Groups gave at least the semblance of member
states having some ownership of the emerging Commission proposals and in practice
provided a valuable forum for strategic discussion.
Tactically, the Commission was aided by two factors with respect to specific propos-
als relating to transition regions, conditionalities and the results orientation. From the
start, DG REGIO recognised that a new category of transition regions would be critical
for ensuring that the richer member states would receive a significant share of Cohesion
policy funding (Mendez 2013; Pazos-­Vidal 2014). The opposition of key member states
(France and Germany in particular) appeared to undermine the proposal, but the French
elections in 2012 changed the French policy stance on Cohesion policy and specifically
on the transition regions, which Germany then accepted. The other factor was the crisis
which initially had both negative implications for Cohesion policy (some argued that
EU funding had played a part in the indebtedness of crisis countries) and positive ones
(southern, central and eastern member states needed the public investment at a time
of crisis). It also created a climate where increased conditionalities on EU spending
became more acceptable to strengthen governance and performance – and indeed, in the
136  Handbook on Cohesion policy in the EU

case of macroeconomic conditionalities, were deemed obligatory by countries such as

Germany  – as part of the reform package.
One other notable feature of the Commission’s position was the insistence of the
Commission President Barroso to use part of the Cohesion budget heading for a new
Connecting Europe initiative.9 This reflected a frustration during the crisis at the limited
policy levers (and associated funding) available to the Commission to demonstrate inno-
vation and responsiveness. It presaged a much bigger initiative by his successor Jean-­
Claude Juncker with the Investment Plan for Europe and establishment of the European
Fund for Strategic Investments (see Bubbico et al., Chapter 12, this volume), with the
same motivation, and may also set precedents for future Commission ambitions.
Turning to the Council (and focusing on the budgetary aspects), its rejection of the
Commission’s proposals for the MFF has led to the EU budget falling as a percent-
age of EU GNI for the first time, particularly with respect to payment appropriations
(where the gap with commitment appropriations had serious implications for budget
management). The arguments of a group of net payers – notably the United Kingdom
(UK), the Netherlands and Sweden – that national austerity needed to be matched by
budget restraint at EU level had powerful resonance, most notably with Germany which
provided critical support for a smaller MFF in the final stage of the negotiations. In this
respect, the individual power of German Chancellor Angela Merkel once again played
a major role; her decision to support UK Prime Minister David Cameron for wider
political reasons came as a shock to the Commission and other national leaders such as
French President François Hollande.
The negotiations also saw a shift in the power of the Council chair. Cyprus, which
took on the rotating EU Presidency in the crucial second half of 2012, struggled to
manage the MFF negotiations and produce a balanced Negotiating Box. The decision
of the first European Council President Herman Van Rompuy to take over the negotia-
tions, convene a Council meeting and present his own Negotiating Boxes also came as a
surprise to other actors. The initiative failed in the first instance due to inexperience and
poor tactics, but, in tandem with a more experienced Irish EU Presidency, Van Rompuy
helped the February 2013 Council to achieve agreement. A precedent has now been
set for the role of the European Council President which will doubtless be a feature of
future MFF negotiations; and may be welcome to some national governments whose
EU presidencies come at a time when they would prefer the freedom to pursue national
interests.
Moreover, a distinctive feature of the 2013 reform is that the European Council had a
stronger impact on the regulatory framework than previously by issuing conclusions on
the MFF that impinged directly on the competence of the co-­legislators (Council and
Parliament) over the substance of the Cohesion policy regulatory package, notably in
the areas of macroeconomic conditionality, definitions and eligibility, the Connecting
Europe Facility, the performance reserve and co-­financing rates, amongst others.
Lastly, the role of the European Parliament should be noted. As noted above and
elsewhere in this volume (see Hübner, Chapter 9, this volume), the European Parliament
(EP) acquired new powers to shape decisions under the Lisbon Treaty and was more
closely involved in the debate. The Hungarian EU Presidency initiated a process of
holding a Council–Parliament meeting before and after each GAC, and the EP increas-
ingly participated in key informal Council meetings. Following the European Council
 Cohesion policy reform and the Council  ­137

agreement in February 2013, the key strategic decision taken by the Parliament was not to
reject the overall MFF ceilings but to seek modifications to its structure. In this respect,
it gained some reorganisation of spending in specific areas, but its major achievement
was to secure flexibility on the management of the budget, which is reducing the impact
of the difference between commitment and payment ceilings in the Council conclusions
of February 2013. Overall, however, the Parliament is a long way from being an equal
partner to the Council on the MFF. By contrast, the Parliament has become a stronger
force in the regulatory negotiations by virtue of its enhanced co-­legislative power over the
regulatory package and proactive approach to informal pre-­legislative development of
ideas, debate and scrutiny of the Commission and, to an extent, Council.
Finally, the negotiations surrounding the financial framework and wider EU objec-
tives are increasingly determining in large part the goals, instruments and governance
of Cohesion policy. The role of the European Council and the negotiations that take
place therein among heads of state and government has acquired greater significance
in this respect. Aside from increasing the politicisation of Cohesion policy reform
negotiations, an unintended consequence of serving a greater array of inter-­and intra-­
institutional objectives is that Cohesion policy is becoming even more complex to
manage, presenting challenges for effective implementation and its legitimacy amongst
stakeholders. These will doubtless be among the central issues for the post-­2020 reform
of Cohesion policy.

NOTES

1. Now the Coordination Committee for the European Structural and Investment Funds (COESIF).
2. Interinstitutional Agreement between the European Parliament, the Council and the Commission on budg-
etary discipline and sound financial management, Official Journal of the European Union, C139, 14 June
2006.
3. The argument for a market orientation and performance focus of Cohesion policy was strengthened in a
later contribution by Danuta Hübner’s short-­term successor, Commissioner Paweł Samecki (see Samecki
2009).
4. Council preparatory body responsible for preparing legislation on Cohesion policy issues.
5. Standing committee of the European Commission with the function to discuss the application of Structural
and Cohesion Fund regulations.
6. The signatories were Bulgaria, the Czech Republic, Cyprus, Estonia, Greece, Hungary, Latvia, Lithuania,
Malta, Poland, Portugal, Romania, the Slovak Republic, Slovenia and Spain.
7. The term ‘reverse safety net’ was sometimes used to describe a proposed ceiling on national allocations and
was designed to constrain spend in poorer but high-­growth countries.
8. For a comprehensive review, see Cremades (2014) and Reinhart (2014).
9. With funding of €27.4 billion, the Connecting Europe Facility was created to finance strategic European
energy, transport and digital infrastructure links.

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Hübner, D. (2007b), Speech on future of cohesion policy to the Informal Ministerial Meeting on Territorial
Cohesion and Regional Policy, Punta Delgada, 24 November, Azores, Portugal.
Hübner, D. (2008a), Speech at the Conference of CRPM and CoR, ‘What Future for Regional Policies after
2013?’, Seville, 18 January.
Hübner, D. (2008b), ‘Reflections on future of cohesion policy’, Conference on the future of cohesion policy
organised by Slovenian Presidency, Maribor, 7 April.
Hübner, D. (2008c), ‘EU regional policy post-­2013: more of the same, or a new beginning?’, Speech at European
Policy Centre Breakfast Policy Briefing Brussels, 1 July.
Hübner, D. (2009), ‘Reflection paper on future Cohesion policy’, Informal Meeting of Ministers for Regional
Policy, Mariánské Lázne, 22–24 April.
Marks, G. (1992), ‘Structural policy in the European Community’, in A. Sbragia (ed.), Europolitics: Institutions
and Policy Making in the ‘New’ European Community, Washington, DC: Brookings Institution, pp. 191–224.
Marks, G. (1993), ‘Structural policy and multilevel governance in the EC’, in A. Cafruny and G. Rosenthal
(eds), The State of the European Community, New York: Lynne Rienner, pp. 391–410.
Mayhew, A. (2004), ‘The financial framework of the European Union, 2007–2013: new policies? New money?’,
Sussex European Institute.
Mendez, C. (2013), ‘The post-­2013 reform of EU cohesion policy and the place-­based narrative’, Journal of
European Public Policy, 20 (5), 639–659.
Mendez, C., J. Bachtler and F. Wishlade (2011), ‘A budget and cohesion policy for Europe 2020: let the nego-
tiations begin’,  European Policy Research Papers, No. 81, European Policies Research Centre, University
of  Strathclyde, Glasgow.
Pazos-­Vidal, S. (2014), ‘The partnership principle in cohesion policy 2014–2020: breaking new ground in multi-­
level governance?’, European Structural and Investment Funds Journal, 2(4), 277–288.
Pollack, M. (1995), ‘Regional actors in an intergovernmental play: the making and implementation of EC
structural policy’, in C. Rhodes and S. Mazey (eds), The State of European Union. Vol. 3, Building a European
Policy, Boulder, CO: Lynn Riener Publishers, pp. 361–390.
Reinhart, S. (2014), ‘The role of the European Parliament in the reform of cohesion policy and its contribu-
tion to economic, social and territorial cohesion’, European Structural and Investment Funds Journal, 2(4),
267–276.
Samecki, P. (2009), ‘Orientation paper on future Cohesion policy’, Conference of Regional Representatives in
Brussels, 18 December.
Schild, J. (2008), ‘How to shift the EU’s spending priorities? The multi-­annual financial framework 2007–13 in
perspective’, Journal of European Public Policy, 15(4), 531–549.
Tarschys, D. (2011), ‘European public goods: which selection criteria for the Multiannual Financial Framework?’,
Report No. 3, Swedish Institute for European Policy Studies, Stockholm.
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the ERDF (Objective 1 & 2)’, Synthesis Report to the European Commission (DG REGIO), Brussels.
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for presentation at the BEPA Workshop ‘The political economy of EU public finances: designing governance
for change’, 5 February, Brussels.
9.  The European Parliament and Cohesion policy
Danuta Hübner

INTRODUCTION

This chapter explores the process of the unprecedentedly intense interinstitutional coop-
eration leading to the adoption of the legislative package for the 2014–2020 phase of
Cohesion policy and the contribution of the European Parliament (EP) to the final result
of the negotiations.
The close collaboration that sprang up between the Commission’s Directorate-­
General for Regional and Urban Policy (DG REGIO) and the European Parliament’s
Committee on Regional Development (EP REGI Committee) at the time of the discus-
sion of the new 2014–2020 legislative package was aimed at improving Cohesion policy’s
efficiency and effectiveness, but also at making it the lynchpin of the EU’s development
strategy for the years to come: the new Europe 2020 strategy (European Commission
2010).
Drawing on the direct experience of the author as Chair of the EP REGI Committee
during the negotiation process and on a vast body of unpublished sources, the chapter
illustrates the role played by the European Parliament during the negotiations, the
challenges the EP encountered during this process and how they were addressed, and
highlights the value of the intense pre-­legislative effort made within the EP under the
leadership of the REGI Committee.
After this introduction, the chapter describes, first, the process of dialogue and
­collaboration between the European Parliament and the European Commission; it then
appraises the benefits of the intense pre-­legislative effort, before turning to discussing
some substantive themes over which the EP placed particular emphasis in the nego-
tiation process (thematic concentration, role of cities, territorial dimension and subsidi-
arity). The chapter closes with an assessment of the EP’s impact on the legislation and
concludes that in several areas – including on aspects relating to the strengthening of
partnership and results orientation, restating the territorial character of the policy, and
introducing elements of simplification for beneficiaries – the EP left a strong substantive
footprint. Most of all, it achieved one of REGI’s main strategic objectives of confirm-
ing the status of the Cohesion policy as the Union’s investment policy. In other words,
the EP’s advocacy has allowed the new ‘territorial cohesion’, introduced by the Lisbon
Treaty (European Union 2007), to acquire a more encompassing significance, becom-
ing a veritable meta-­strategy for the whole Union, despite the reluctance of the member
states to endow Cohesion policy with the financial support that it would need to achieve
true economic, social and territorial cohesion.

140
 The European Parliament and Cohesion policy  ­141

TIGHTER COLLABORATION BETWEEN PARLIAMENT AND

COMMISSION

Thanks to the entry into force of the Lisbon Treaty, in 2009 (European Union 2007), for
the first time in the history of European integration the 2014–2020 legislative package of
Cohesion policy was adopted under the ordinary legislative procedure, with the Council
and the Parliament as co-­legislators on an equal footing (see Brunazzo, Chapter 1, this
volume). This introduced the need for a pre-­legislative effort on the European Parliament
side. The fact that Cohesion policy is a complex, multi-­objective, territorially sensitive
investment policy, based on shared management and multilevel governance, and that
it is subject to rigorous scrutiny by various levels of the auditing system (as illustrated
by Karakatsanis and Weber, Chapter 11, this volume), added further challenges to this
effort.
Within the EP, the REGI Committee embarked as a fully fledged co-­legislator on an
unprecedented and exceptionally intense pre-­legislative preparatory work effort, estab-
lishing close working relations with other European institutions, other EP committees,
experts and stakeholders. The intention was not only to prepare Committee members
for informed negotiations but also to raise awareness of Cohesion policy within the EP
and make other institutional partners aware of the priorities of the Parliament in this
sphere. The pre-­legislative work was instrumental to achieving a better understanding
of the policy across the Parliament. The REGI Chair participated as a member in the
work of two special committees established by the Parliament: the Special Committee
on the Policy Challenges and Budgetary Resources (SURE),1 focused on building the
Parliament’s position on the Multiannual Financial Framework (MFF), and the Special
Committee on the Financial, Economic and Social Crisis (CRIS).2 The purpose was to
raise awareness on the potential of Cohesion policy as a growth-­oriented EU investment
policy.
Within the SURE Committee, the architecture and machinery of Cohesion policy
was recognised as a model for shared management. During the pre-­legislative phase, in
response to the European Commission’s first draft of the Europe 2020 strategy, which
did not envisage any involvement of Cohesion policy as a delivery mechanism of the
strategy, a letter was addressed to the President of the European Commission underlin-
ing Cohesion policy’s potential in this respect.3 This rather astonishing intention of the
Commission to propose a ‘Cohesion policy-­less’ Europe 2020 was quickly abandoned.
It was clear that Cohesion policy could be a good ready-­to-­use vehicle to move Europe
forward on its path toward more growth and competitiveness while at the same time
delivering on European social policy responsibilities.
Normally, the legislative process starts with the release of the draft legislative Act by
the European Commission. However, while awaiting the proposal, the REGI Committee
undertook serious preparatory work, including a series of rather unprecedented steps
and procedures. During this pre-­legislative phase, well-­functioning channels of coopera-
tion with the European Commission were established. Frequent meetings also took place
between the Chair of the REGI Committee and subsequent Council presidencies. At the
same time, a mechanism for the exchange of views with other European institutions, in
particular with the Committee of the Regions, was set up (see Schönlau, Chapter 10, this
volume). Contacts with Cohesion policy stakeholders4 became more frequent than ever
142  Handbook on Cohesion policy in the EU

before. A number of hearings with experts, both practitioners and academics, as well as
non-­governmental organisations, were organised. Ministers in charge of regional devel-
opment and Cohesion policy in the member states were invited to the meetings of the
REGI Committee, to report on the implementation of the policy and their future expec-
tations. In a short time, the Committee became a partner to be listened to. Its responsibil-
ity and authority were underpinned by its role as the leading EP committee on Cohesion
policy, as envisaged by the Rules of Procedures of the European Parliament.5
The pre-­legislative work included preparation of non-­legislative reports, oral questions
to the European Commission and the Council,6 resolutions and plenary debates. As of
2009, the Chair of the Committee started to participate in the informal Council meetings
of the ministers for regional policy.7 From the very beginning of the 2009–2014 legisla-
ture, the REGI Committee emphasised the need for enhanced coordination across all the
EU budget’s investment funds through an umbrella-­type horizontal regulation, comple-
mented by fund-­specific regulations. Further developments proved how difficult it was to
overcome the traditional ‘sectoral approach’ –in both the European institutions and the
national governments – to thinking and acting. The Committee consequently opposed
strongly the Commission’s intention to sectoralise Cohesion policy, meaning the separa-
tion of the regional dimension from the social one, in particular removing the European
Social Fund from the Cohesion policy framework.8 As a result, this issue eventually dis-
appeared from the Commission’s narrative.
The emphasis on the need for better coordination between the individual funds of
Cohesion policy led to the establishment within the European Parliament of an inter-
committee Working Party on the Future Cohesion Policy,9 presided over by the REGI
Committee Chair. This would become a platform for political groups and members not
only of the REGI Committee but also of all other committees involved, to debate, make
recommendations, coordinate and exchange views with the European Commission, and
in particular with DG REGIO. The Working Party developed into an extremely useful
informal way of facilitating agreements, acquiring knowledge and information, as well
as building confidence among all those that would become involved in the negotiating
process. It provided a platform that allowed substantial reduction of the potential for
conflicts of competences between Committees and rapporteurs, related to the role of the
REGI Committee as a coordinating committee for Cohesion policy in line with the EP
Rules of Procedures. It proved useful throughout the whole process leading up to and
during the negotiations. This platform also allowed linking of the negotiations of the
Financial Regulation (European Parliament and Council 2012) with those on Cohesion
policy. It helped to achieve an unprecedented level of cooperation between European
institutions and committees of the EP, contributed to the efficiency of the process,
enhanced ownership of the policy by the European Parliament, and became a problem-­
solving forum. It contributed as well to the legitimacy of the negotiating process, provid-
ing the room for a regular dialogue between the REGI Committee and all stakeholders.
An informal position paper prepared within the framework of the Working Party was
adopted by the REGI Committee on 22 June 2010 (unpublished).
Thereafter, the Chair of the REGI Committee tabled the first resolution on the post-­
2013 Cohesion policy to the EP plenary. It was eventually adopted by a vast majority on
7 October 2010.10 This resolution established the main elements of the Parliament’s posi-
tion on the 2014–2020 Cohesion policy, including issues that at the time were still debated
 The European Parliament and Cohesion policy  ­143

by the member states, such as the European Union (EU)-­wide territorial coverage and the
renationalisation of the policy. Probably the most relevant message at this time was that
the EP would not accept a renationalisation of Cohesion policy, which it considered the
Union’s investment policy. The resolution was welcomed by the European Commission
which was in that period still working on the new legislative package.
It proved important for the REGI Committee to establish its clear position on the
geographic scope of Cohesion policy as early as possible. The idea, strongly supported
by the British Presidency back in 2005, to limit the policy to the poorest member states
and regions was again on the table. The REGI Committee opposed this view and
obtained the support of the entire EP through its vote on the October 2010 resolution.
The Committee’s position also underlined the need to strike the right balance between
the role of Cohesion policy in contributing to the Europe 2020 strategy and the pursuit
of the objectives assigned to it by the Treaty of Lisbon (European Union 2007). Thanks
to the interactions within the Working Party and between this and the Commission, both
the European Parliament and the Commission could better understand in advance their
respective concerns and priorities and, therefore, shape from an early stage a common
approach to the key elements of the new policy framework.
The intense pre-­legislative preparatory activities included the launch of five pre-­
legislative own-­initiative reports.11 The work of the REGI Committee on these included a
substantial number of exchanges of views with the European Commission and, through
opinions of other EP committees, contributed to a closer understanding of the chal-
lenges and the solutions needed to address them. The debates related to these reports saw
the involvement of experts from academia, and a number of studies were also commis-
sioned.12 The REGI Committee’s intention was to have, on the basis of the own-­initiative
reports, a plenary debate on the future of Cohesion policy early enough to influence in
a concrete way the preparatory work of the European Commission. A second goal was
to further increase the awareness of the members of the European Parliament about the
relevance of this policy for the European growth, jobs and competitiveness agenda of
Europe 2020. The five own-­initiative reports created a basis for a plenary debate on the
2014–2020 Cohesion policy which took place on 23 June 2011. Two weeks later a more
detailed resolution responding to the Fifth Cohesion Report was voted.13

THE BENEFITS OF THE INTENSE PRE-­LEGISLATIVE EFFORT

This unprecedented pre-­legislative effort allowed the EP to enter the legislative process
with a deep understanding of what kind of Cohesion policy would best serve Europe,
and provided a good basis for well-­informed Commission–Parliament–Council nego-
tiations, known as ‘trialogues’.14 It also made it possible for the Parliament to react to
several ideas coming from the European Commission – for example on the geographic
scope of Cohesion policy, on its sectoralisation and on a cohesion-­less Europe 2020 – that
the EP regarded as ‘unacceptable’.
The pre-­legislative work also contributed to the transparency of the negotiation
process, as it strengthened cooperation with other institutions, notably the Committee
of the Regions and numerous regional and urban associations. It therefore seems justi-
fied to argue that such a pre-­legislative process, while maintaining the autonomy and
144  Handbook on Cohesion policy in the EU

prerogatives of individual institutions, was an important element of transparency and

accountability, providing information and improving the baseline knowledge of all those
involved. It also made the EP views public, allowing stakeholders and member states to
take note of potential negotiation challenges.
Evaluating this pre-­legislative interinstitutional experience, one could say that the EP
fully exploited the added value of the collective institutional effort throughout the whole
negotiation cycle. Entering into negotiations with a position established through inten-
sive and lengthy preparatory pre-­legislative work ensured that the EP was in a relatively
strong position during the legislative negotiations.
The pre-­legislative work proved helpful in identifying issues of particular importance
for the negotiating mandate and facilitated compromise-­building. Further, the procedure
applied allowed for a constant process of adjustment of the negotiation mandate. The
fact that the Working Party on the Future Cohesion Policy was maintained throughout
the negotiation period facilitated debates both within the REGI Committee and with
representatives of other EP committees involved in the trialogues.
Another challenging dimension of negotiating the legal framework of Cohesion
policy was linked to the fact that, while the horizontal regulation (Common Provision
Regulation) covering all funds was negotiated, parallel negotiations were taking place
with regard to individual funds. The option of negotiating first the Common Provisions
Regulation (CPR; European Parliament and Council 2013) and then the funds’ regula-
tions was ruled out due to time pressure, but this created a challenging situation as the
CPR was providing not only horizontal rules for all funds but also fund-­specific rules.
The fact that most trialogues were chaired by same person – that is, the Chair of the
REGI Committee – facilitated the internal consistency of the entire negotiating package.
The actual legislative work could start only with the adoption by the Commission
of the legislative package and its submission to Council and Parliament.15 When the
Commission’s proposal of the new legal framework was finally made public on 6
October  2011, it revealed both continuity and change vis-­à-­vis past regulations: some
solutions were wholeheartedly supported by the EP while on others additional reflection
was needed as they either raised doubts or required clarifications.

LINKING COHESION POLICY TO EUROPE 2020: THEMATIC

CONCENTRATION AND THE ROLE OF CITIES

It was good news that those in the European Commission – who had believed that a
completely new sectoral approach to delivering Europe 2020, without the support of
Cohesion policy, could be established overnight – had in the end taken note of the poten-
tial of Cohesion policy in this sphere. The Commission understood that the linkage with
Europe 2020, along with the proposed thematic concentration (European Parliament and
Council 2013: Art. 18), would allow for mutual strengthening of both policy objectives.
For Cohesion policy, this linkage certainly enhanced its European value added.
However, this thematic concentration – in essence an enhanced form of the spending
‘earmarking’ that had already been in place during 2007–2013 – had to take into account
the lessons learned in 2007–2013. In particular, these lessons led to a substantial increase
of Structural Funds involvement in financing investment in the field of innovation. What
 The European Parliament and Cohesion policy  ­145

was proposed by the Commission anticipated a Cohesion policy for all countries and
regions but at the same time was also carefully tailored to the challenges of three different
categories of regions (illustrated in Brunazzo, Chapter 1, this volume).
The EP could support the proposed architecture. It was obvious, however, that well-­
tailored programmes would be needed. There were different post-­crisis realities in the dif-
ferent member states, regions and cities, but there were also cross-­cutting common issues.
Competitiveness based on education, knowledge, innovation and resource efficiency
should be a long-­term goal for all regions, but those for whom catching-­up remained a
challenge should be more generously supported by the policy in terms of the scope of
priorities and aid intensity.
While concentration on a limited number of priorities was clearly desirable, there was
a contradiction between the requirement of a limited number of priorities for member
states with very low allocation of Cohesion policy funding, and the requirement of
a certain minimum number of compulsory priorities for all. This deserved further
consideration.
It was also undeniable that in the years to come more territorial cooperation, especially
cross-­border cooperation across the EU, would be needed. In the pre-­legislative phase,
the REGI Chair, Danuta Hübner,16 requested that this strand of Cohesion policy be
offered a much more prominent space in the policy than it was currently the case. She
recommended more a generous financial envelope for European Territorial Cooperation
(ETC), as well as a separate regulation dedicated exclusively to this. The second idea was
taken on board by the Commission.
The Commission proposal also met the EP’s expectations in relation to the need for
the enhanced use of evaluation to promote a more performance-­oriented policy. On the
other hand, the jury is still out on whether the negotiations succeeded in striking the
right balance between this ambition to enhance results orientation and the need to make
Cohesion policy less burdensome for beneficiaries. It was clear that simplification would
remain a major challenge throughout the negotiations.
The EP expected an ambitious proposal from the Commission on the urban agenda
and local development. It was hoping that the challenges related to expanding metropoli-
tan areas and their growing populations (also due to increased migration flows) would be
acknowledged. But the EP also expected a stronger focus on local development, as well
as clear progress on the management and financing of the urban agenda. Commission
proposals largely met those expectations.
The new legislative proposal for 2014–2020 strengthened the urban dimension of
Cohesion policy, including through strategic and coherent planning and programming
(see Atkinson and Zimmermann, Chapter 26, this volume). However, the EP, in its nego-
tiating mandate, expected more significant delegation of powers to the cities.17 According
to the Commission’s proposals, the Partnership Agreements would have to contain the
principles for identifying the urban areas for integrated actions. The EP saw the need
to delete the ‘list of cities’ proposed by the Commission because it was convinced that,
to ensure that cities play their role as engines for the smart, inclusive and sustainable
development of Europe, they have to pursue strengthened cooperation and networking,
beyond administrative borders and towards the functional territories that allow for inte-
grated development.
The EP was aware that in 2007–2013 there had been very few cases where member
146  Handbook on Cohesion policy in the EU

states decided to delegate responsibility for managing programmes to the cities. For the
EP, a bold step forward was needed, supported by adequate provisions in the final version
of regulatory framework, but including capacity-­building instruments for local authori-
ties. What would change in relation to urban development in the 2014–2020 Cohesion
policy depended on negotiations, but the starting point was promising.

ENHANCING THE TERRITORIAL DIMENSION OF THE

POLICY

The Lisbon Treaty, by adding the territorial dimension to cohesion, underlined more
decisively than before the integrated nature of Cohesion policy. As noted, the EP made
a strong argument in favour of the European Social Fund (ESF) remaining in the frame-
work of the general Structural Funds regulation. Without any doubts there was a need
for a set of ESF-­specific rules, but sufficient experience had been accumulated to induce
the EP to believe that the efficacy of ESF implementation depended on its ability to
adapt to situations emerging from local and regional specificities. Consequently, the EP
strongly encouraged a bottom-­up, region-­specific approach in the identification of ESF
objectives, and asked the Commission to grant maximum flexibility in the use of ESF
funds and pursue maximum synergy among the Structural Funds. In particular, the EP
recommended establishing a minimum threshold with regard to the national allocations
to ESF within Cohesion policy’s national envelopes. The EP considered the possibility of
setting differentiated thresholds to take into account different conditions in the member
states, both in the post-­crisis situations and due to nuances in social models.18
The Commission proposed to grant greater autonomy and discretion in the use of
financial instruments too. This greater flexibility notwithstanding, overcoming regula-
tory complicacies, reducing administrative costs, better tailoring the instruments to the
needs of cross-­border cooperation, local development and business support, and fulfill-
ing audit requirements, would continue to remain major challenges. Giving the planned
increased use of financial instruments, the quality of new regulation on financial instru-
ments was of particular relevance for the EP.
By linking Cohesion policy with Europe 2020, the policy was placed at the heart of the
Union’s economic, social and territorial development. The EP knew that it would not be
enough to administer Cohesion policy swiftly; what was needed was the responsible col-
laboration of all levels of government and all governance actors. Political debates would
have to take place and difficult political choices would have to be made. The EP would
need to reiterate its political message in order to maintain the level of political ambition
and ensure a similar level of ambition across all other involved actors. Continued, strong
political involvement was needed to ensure that sufficient resources would be secured
and that policy dialogue was not limited. The EP was convinced that to allow this – the
involvement of a formal, and thus permanent, ministerial structure (as opposed to ad
hoc meetings within the General Affairs Council) – would be needed to fully exploit the
potential of Cohesion policy and ensure the alignment of Cohesion policy programmes
with the national reform programmes of Europe 2020.
The EP welcomed the fact that the new architecture proposed for Cohesion policy
by the Commission took on board a more results-­oriented approach by introducing
 The European Parliament and Cohesion policy  ­147

new ex ante conditionalities to make sure that the preconditions necessary for effective
disbursement of the European Structural and Investments Funds (ESIF) would be in
place in member states and regions, and avoid situations where unpreparedness or lack
of strategic orientation in certain sectors determine slow or inadequate absorption.
The underlying rationale was that a consistent, standard system of objectively assess-
able ex ante conditionalities would ensure that the prerequisites and conditions needed
for the efficient implementation of programmes would be in place before the disbursal
of funds. However, to enable this, according to the EP these conditionalities would
have to have a direct and genuine link with, and direct impact on, the effective and effi-
cient achievement of Cohesion policy-­specific objectives. In other words, they would
not have to relate to the wider policy framework and be only loosely related to the
policy (an issue that will be discussed in more detail to follow). As a counterbalance to
the tighter conditionality, a performance framework, and a performance reserve con-
nected to it, were also predisposed in order to incentivise good performance, offering
a roadmap and motivating programme authorities towards good performance through
extra resources. It was also clear to the EP that, throughout the negotiations on the
package, a shared aim of the co-­legislators would be to ensure that the new Cohesion
policy machinery would make it possible for EU resources to reach the ground in
a simpler way and that the policy could act as a trigger for economic and societal
development.
The Parliament was convinced that more would need to be done on the territorial
dimension of Cohesion policy.19 The Single Market is, in principle, territorially blind.
In fact, most European policies are territorially blind. At the time of the negotiations,
the territorial impact of Europe 2020 was not very well known: the crisis would most
likely draw a new socio-­economic map of Europe. Deep post-­crisis restructuring would
affect unevenly different European territories. New challenges – climate change, resource
efficiency, demography, global competition – and, even more so, the responses to these
challenges would probably have a strongly asymmetric impact on Europe’s territory.
New growth factors would emerge, influencing spatial location of economic activity
and giving a new meaning to the role of geographic distance. Macroeconomic imbal-
ances would draw new economic, social and political dividing lines across the European
economy. In short, there were and there would be huge territorial consequences of the
euro crisis and of the measures taken to respond to it. It was clear that it would be a great
mistake to ignore the territorial impact of the crisis: the legitimacy of European project
required territorial sensitivity.
The EP was convinced that it would be fundamental to exploit the advantages that ter-
ritoriality offers and to ensure that territorial diversity, territorial synergies and territorial
planning could become assets for European integration. This was regarded as much more
important than taking territorial impacts into account. Introducing territorial cohesion
into primary law of the Union, that is, in the Treaty on the Functioning of the European
Union (TFEU) (European Union 2012), gave Europe a chance to use more this asset
effectively and efficiently. Building on Europe’s territorial strengths would mean tapping
a potential which was still largely underexploited, it would also mean expanding Europe’s
growth basis through its becoming more territory-­specific (see Faludi, Chapter 31, this
volume).
148  Handbook on Cohesion policy in the EU

INTERINSTITUTIONAL RELATIONS AND COHESION POLICY:

TOWARDS A NEW MEANING OF SUBSIDIARITY?

In this context, the democratisation of EU politics and the ‘reinvention’ of subsidiarity

seemed essential. For the EP, subsidiarity should be seen less in terms of separation of
competences and powers between levels of governance and more in terms of sharing and
cooperating. There was broad agreement, based on the recent experience of Cohesion
policy, that territorial cohesion required strategic orientation and subsidiarity-­based
implementation.
The EP was aware of the fact that territorial cohesion could be realised through
Cohesion policy as well as other territorially sensitive policies. On a more political note,
territorial cohesion could be seen also as a policy concept which could be given a concrete
meaning when applied through multilevel governance (see Schönlau, Chapter 10, this
volume). The intention of Parliament was, therefore, to make Cohesion policy work for
territorial cohesion, exploiting the potential of multilevel governance.
The analysis of the Commission’s proposal left no doubt that the REGI Committee
would suggest a more ambitious interpretation of the partnership principle, including
the involvement of subnational layers of government and other ‘partners’ at all stages
of the preparation of Partnership Contracts and progress reports, as well as throughout
the preparation, implementation, monitoring and evaluation of programmes, from the
earliest stage possible. The alignment of the new Cohesion policy with the Europe 2020
Strategy was fundamental. But, in the EP view, investment in smart, sustainable and
inclusive growth should to lead towards economic, social and territorial cohesion, which
had been put under severe strain due to the crisis.
The work of the REGI Committee on the mandate started on 6 October 2011 and
lasted until the vote on amendments of 11 July 2012. The mandate was adopted in line
with Rule 70 of the Rules of Procedures in force at that time, in the form of ­amendments.20
This gave the negotiating team a sufficient amount of flexibility to consult the Committee
during the negotiations. The flexibility embedded in this approach allowed for further
modifications of the mandate during the process of negotiations.
During trialogues, the Working Party was also used to discuss issues requiring con-
sultation with the respective EP committees. This mattered, because after lengthy pre-­
legislative work, the option of having one reading only continued to be the first choice of
the Committee. This option allowed the new rules to be in place as of January 2014. The
delayed submission of the legislative package by the Commission, initially planned for
July 2011 but actually delivered on 6 October 2011, left less time for the adoption of the
legislation which was supposed to be in force by 1 January 2014. Although the intention
from the beginning in REGI was to have one reading, the link with the negotiation of the
Multiannual Financial Framework (MFF) established by the decision of the Conference
of Presidents and then via EP resolutions, generated additional risk of delays. Those
in charge of the negotiations were fully aware of the time pressure and at this stage it
became clear that the well-­used pre-­legislative period was paying off.
The REGI Committee warned the Conference of Presidents early on that, because
of the tight relationship between the negotiations on the Cohesion policy legislative
framework (based on ordinary procedure, that is, co-­decision) and those on the MFF
(based on consent procedure), the EP could not be bound by the European Council,
 The European Parliament and Cohesion policy  ­149

which according to the Treaty does not have legislative powers on issues which belong to
co-­decision. This is why the EP made its consent to the MFF conditional upon reaching
an agreement on Cohesion policy regulations. This, however, put additional pressure on
the negotiations.
The thorough pre-­legislative effort by the Parliament contributed to generating an
unprecedented level of interest by many members of the Parliament in tabling amend-
ments. This factor added to the natural interest of Members of the European Parliament
(MEPs) in this policy, given the policy’s particular visibility on the ground in many
MEPs’ constituencies. This combination of political interest and awareness produced a
total of 3096 legislative amendments to the whole package (the opinions received from
other committees accounted for a total of 781 amendments).
The structure of the legislative package, the REGI role as the leading, coordinating
Committee, as well as the multisectoral nature of the policy, made cooperation with other
committees during elaboration of the negotiation mandate not just necessary but also
difficult. Whereas with some committees cooperation was smooth and uncontroversial
(Committee on Fisheries, PECH; Committee on Agriculture and Rural Development,
AGRI), with others it was full of tensions (Employment and Social Affairs, EMPL;
Committee on Transport and Tourism, TRAN). There was a risk that one of the most
important elements of the new framework, namely the avoidance of its sectoralisation,
could be lost. The risk of sectorialisation of European Cohesion policy, the important
value of which lies in its comprehensive approach to development, is a good example of
how difficult it is to overcome the silo approach to policy-­making. A reform of the EP
Rules of Procedure21 will have to consider, among others, this weakness of European
decision-­making.
In the end, 11 committees decided to draft opinions on the REGI mandate.22 The vote
on 11 July 2012 was therefore a challenge in itself. Finally, as a result of compromise-­
building effort, 304 amendments, including 86 compromises, were voted and constituted
the negotiation mandate. The Committee also approved the negotiating team. The Chair
of the Committee became the Chair of the trialogues.
An enormous amount of the REGI Committee work was invested in the legislative
process between October 2011, when Commission proposal was put on the table, and
December 2013, when the package was signed and published in the Official Journal.
During the negotiations, new challenges emerged. In the middle of the legislative pro-
cedure the Commission amended the CPR text four times. This was not only a political
challenge, but also a procedural one. The EP demonstrated a very open attitude to this
additional challenge.
The trialogues took place between July 2012 and November 2013. With regard to the
fund-­specific regulations, the consolidated texts were voted in REGI on 10 July 2013.
The vote on the CPR proved more complicated, however. There was no final agreement
until October 2013. The main problematic issue was macroeconomic conditionality: that
is, linking the ESIF to the system of economic governance of the Union, allowing for the
suspension of Funds and changes to optional programmes in case macroeconomic obli-
gations were not respected by member states. In the Parliament’s negotiation position,
the article on the macroeconomic conditionality had been deleted (Article 21 in the initial
Commission’s proposal, Article 23 in the final CPR). However, the Commission proposal
was adopted in extenso by the European Council as the Council position. The Lithuanian
150  Handbook on Cohesion policy in the EU

Presidency often referred to this, in an effort to make the Council’s position impossible to
change. This shows the effort of the Council to become a quasi-­legislative body, despite
this not being envisaged in the Treaty. The final compromise solution was negotiated only
during a night-­long political trialogue on 23 October in Strasbourg.
Trialogues were a fascinating experience, proving how decisive a good pre-­legislative
effort can be for the quality of negotiations. They also showed how much the good
quality of the secretariat of a committee matters. More than 100 trialogues took place,
all preceded by preparatory EP meetings and supplemented by technical meetings of the
co-­legislators and the European Commission. To make the process more efficient, written
procedures were also used.
Even though only three presidencies were directly involved in the negotiations (Cyprus,
Ireland and Lithuania), two others (Poland and Denmark) also participated in some form
in the pre-­legislative work with the EP. Unfortunately, and as mentioned, the European
Council, which according to the Treaty is not a legislative body, also intervened, adopting
Council’s negotiating positions in its Conclusions.
The resulting compromise was voted by the REGI Committee on 7 November 2013.
The plenary debate on the entire package took place on 19 November and the vote
on 20 November. The vote gave the green light to a single reading agreement between
co-­legislators. The final approval took place in the plenary on 20 November 2013, was
published in the Official Journal on 20 December 2013, and entered into force a day after
its publication.

A BALANCE SHEET OF THE NEGOTIATIONS: THE EP’S

CONTRIBUTION TO SHAPING 2014–2020 COHESION POLICY

In conclusion, what were the European Parliament’s main contributions to the new
policy framework? The EP influenced both the process of shaping the 2014–2020
Cohesion policy and the content of the new regulatory framework. Its activities in the
pre-­legislative phase blocked the initial intention of the European Commission to exclude
Cohesion policy from the delivery mechanism for the Europe 2020 strategy, the separa-
tion of the European Social Fund from the policy and a weakening of multilevel govern-
ance. The activities undertaken by the REGI Committee also strengthened the position
of the Commissioner in charge of regional policy within the college, by showing the EP’s
strong endorsement to the policy.
The lengthy preparatory phase contributed to a better visibility of the policy and to the
transparency of the decision-­making. The openness to dialogue with stakeholders, other
European institutions, representatives of regions and cities, and public administrations
from across the EU member states was one the main factors that enhanced transpar-
ency. The EP’s way of delivering the new policy framework worked toward improving
the democratic legitimacy of the negotiating process, while at the same time providing a
critical mass of knowledge to decision-­makers. This process provided sufficient evidence
in favour of cooperation between European institutions in the course of the legisla-
tive process. In particular, the cooperation between the Parliament and the European
Commission made the whole legislative process a joint effort.
There were many factors which facilitated the EP’s contribution to both the process
 The European Parliament and Cohesion policy  ­151

and the content of the policy framework. One of these was certainly the capacity of
the Committee to deliver. First, there was substantial amount of core expertise in the
Secretariat of the Committee, as well as among the political advisors in the political
groups. This type of support is often underestimated in legislative procedures. Second,
the Committee’s rapporteurs were experienced members. Third, among the legal services
and the lawyer linguists in both the Council and the Parliament, there was an attitude of
openness and commitment to hard work. Fourth, there was extraordinarily good coop-
eration between the EP and the Commission, facilitated by the high level of competence
of those responsible for the negotiating process on both sides.23 And, lastly, the fact that
the Chair of the REGI Committee was the former hands-­on Commissioner for Regional
Policy facilitated the exchanges on substance and helped to establish a good working
atmosphere between the three institutions during the trialogues.
In several areas, the EP left a strong substantive footprint. One of the main strategic
objectives of REGI was to confirm the status of the Cohesion policy as the Union’s
investment policy. The EP’s contribution ranged from the focus on priorities, to the
renaming of the funds; from insisting on partnership mechanisms (through opposing the
Council’s rejection of the new European code of conduct on partnership), to making ref-
erence to National Reform Programmes; from the flexibility and transparency of proce-
dures, to a better balance between Europe 2020 and Treaty objectives, and much more.24

Partnership

The Parliament, while agreeing with the Commission that the programming of develop-
ment activities for a territory requires at the same appropriate strategies and sufficient
funding time, saw the need for establishing a reliable system of partnership between
different governmental levels and the various stakeholders involved in the policy.
Partnership and multilevel governance were essential in this context, as they constituted
an opportunity for enhanced subsidiarity and transparency, reinforcing the debate on
the content of various strategic and operational documents, at both programming and
implementation phases.
In the new Cohesion policy the partnership principle is reinforced in all stages of the
policy cycle through the introduction in the common provisions of a new European
Code of Conduct, aimed at supporting member states in implementing the partnership
principle. The Code of Conduct lays down good practices in involving partners during
preparation of Partnership Agreements and programmes, internal procedures in moni-
toring committees, and others.

Results Orientation

The EP has also put a lot of energy into developing and supporting new solutions aiming
at strengthening the impact of the policy on the ground. A lot of that effort was directed at
the question of ex ante conditionalities, to introduce an improved balance to the scope and
scale of this instrument, as opposed to the initial proposal by the Commission. There was
a risk that the implementation of Cohesion policy’s programmes and projects would be
paralysed by the scope of ex ante conditions covering an extremely broad range of issues,
not necessarily strictly linked to the policy. Historically, the Commission has u­ tilised the
152  Handbook on Cohesion policy in the EU

policy to compensate for its weak enforcement capacity in other areas, such as the scrutiny
of the internal market. The Commission’s inability to monitor the concrete transposition
of internal market directives was usually compensated through the control of Cohesion
policy implementation. It is still the case that, for example, the public procurement defi-
ciencies of member states are detected by the auditors that control Cohesion policy pro-
jects. As a result, Cohesion policy has often been blamed for the deficiencies that pertain
to the functioning of the internal market. The extensive scope of ex ante conditionalities
foreseen by the Commission’s initial proposal presented this exact same risk. The inten-
tion of the EP in the negotiation of the ex ante conditionalities was to focus these only
on issues directly related to Cohesion policy, so as to avoid making the ESIF investment a
‘hostage’ of other deficiencies (such as the lack of ratification of an international conven-
tion by a member state, or a pending reform of the welfare system, which have nothing
to do with the investments of Cohesion policy programmes and projects). In other words,
while accepting that conditionality is an important principle, the EP insisted on its ration-
alisation. Despite having achieved this to a degree, some concerns about the efficacy of
this measure remain (for instance in relation to the Smart Specialisation Strategies).25

A Place-­Based Policy, Tailored to Territorial Needs

For the Parliament it was always important to take account of the territorial differences
within member states and to ensure a place-­based approach tailored to territorial needs
and potentials. This was particularly important given the stronger thematic and sectoral
approach pursued. And indeed, the future framework insists particularly on the need to
take account of and address key territorial challenges.
The new framework is less territorially blind than during previous programming
periods. This is good news. Taking account of the territorial differences within member
states and regions, and keeping a place-­based approach tailored to territorial needs and
potentials, will be the rule. This is particularly important given the stronger thematic and
sectorial approach of Cohesion policy for 2014–2020. And indeed, the future framework
insists particularly on the need to take account of and address key territorial challenges,
providing for tools for better addressing different and multiple development needs at
subregional and local level.

More Powers to the Cities

Further, the EP has supported an agenda of increased delegation of powers to the cities.
The provision concerning the level of delegation assured the flexibility that was necess-
sary by defining a whole spectrum of possible delegations – from the simple selection of
operations to a full delegation in the form of a global grant – to be established by the
managing authorities with the urban authorities.

Simplification

The EP has put a lot of effort into seeking a better balance between sound rules and simpli-
fication for beneficiaries. Whilst acknowledging that there is still room for further improve-
ment, member states and regions implementing Cohesion policy in 2014–2020 should be
 The European Parliament and Cohesion policy  ­153

able to focus more on the impact of programmes and projects, and concern themselves less
with the administrative technicalities linked to the implementation of the policy.

CONCLUSIONS

The reform of the EU Cohesion policy for the 2014–2020 period is the fifth reform since
1988. It launched the implementation of 28 new Partnership Agreements and more
than 300 national and regional Operational Programmes in 28 member states, mobilis-
ing more than €350 billion. When looking back at the results of more than two years
of hard work, one can see that much has been achieved. The complex interinstitutional
negotiation process described in this chapter was crowned with a strong result: a forward-­
looking policy which combines existing key principles with important changes (hope-
fully, improvements).
The new policy framework should enable the Union, its member states, its regions and
other stakeholders to plan and realise investment programmes that are strongly aligned
with the growth objectives of the Europe 2020 strategy, and geared to deliver competi-
tiveness and better long-­term, quality jobs, in such a way as to reinforce both the com-
petitiveness of the Union in a globalised context and the economic resilience of regions,
particularly the weakest regions.
Cohesion policy, as a European investment policy for all regions, has been in place for
a long time. Its key strengths have been its ability to constantly build upon its achieve-
ments and learn from past experience, and its remarkable ability to reform and adapt
to continuously evolving political and economic contexts at local, national, European,
and even global level. During this round of negotiations, the EP has been a fundamental
actor in this reflexive process, and will likely continue to be so in future rounds, acting as
a counterbalance to the Council in the interest of the citizens of Europe.

NOTES

 1. European Special Committee on the Policy Challenges and Budgetary Resources for a Sustainable
European Union after 2013: Activities and Documents, July 2010–June 2011, Volumes 1 and 2: http://
www.europarl.europa.eu/document/activities/cont/201106/20110624ATT22583/20110624ATT22583EN.
pdf. http://www.europarl.europa.eu/document/activities/cont/201106/20110624ATT22585/20110624ATT
22585EN.pdf.
  2. European Parliament Special Committee on the Financial, Economic and Social Crisis, Documentation
relating to the Committee’s work from October 2009 to July 2011, http://www.europarl.europa.eu/docu​
ment/activities/cont/201109/20110901ATT25750/20110901ATT25750EN.pdf.
  3. Letter of Danuta Hübner, Chair of the Committee on Regional Development in the European Parliament
to the President of European Commission José Manuel Durão Barroso, 15 July 2010.
  4. Among others: Assembly of European Regions, Conference of Peripheral Maritime Regions of Europe,
Council of European Municipalities and Regions, Association of European Border Regions.
  5. ‘Rules of Procedure of the European Parliament’, Annex 6 (under Annex 7 during 2009–2014 legislature),
January 2015, http://www.europarl.europa.eu/sides/getLastRules.do?language5EN&reference5TOC#G
AX7.
  6. Oral Question to the European Commission, ‘Cohesion Policy after 2013’, O-­0121/2009, B7-­0229/2009,
14 December 2009; Oral Question to the European Commission, ‘EU Cohesion and Regional Policy after
2013’, O-­0110/2010, B7-­0539/2010, 7 October 2010.
  7. There is no formal Council formation dedicated to Cohesion policy. Formal decisions in this area are
154  Handbook on Cohesion policy in the EU

taken by General Affairs Council meetings dedicated to this policy. However, ministers in charge of
Cohesion policy meet within a format of informal Cohesion policy council: Swedish Presidency: 10–11
December 2009, Kiruna; Spanish Presidency: 19 February 2010, Zaragoza and 22 June 2010, Toledo;
Belgian Presidency: 22–23 November 2010, Liège; Hungarian Presidency: 31 March 2011, Budapest and
19 May 2011, Gödöllő; Polish Presidency: 24 November 2011, Poznań; Cyprus Presidency: 6 November
2012, Nicosia; Lithuanian Presidency: 26 November 2013, Vilnius.
 8. Letters of Danuta Hübner, Chair of the Committee on Regional Development in the European
Parliament to the President of European Commission José Manuel Durão Barroso, 26 October 2009 and
29 June 2010.
  9. The Working Party on the Future Cohesion Policy was established by the REGI Committee decision
of 3  November 2009 and included representatives of the following European Parliament Committees:
REGI, EMPL, AGRI, PECH, TRAN, Committee on Budgets (BUDG) and CONT.
10. European Parliament resolution of 7 October 2010 on EU Cohesion and regional policy after 2013, http://
www.europarl.europa.eu/sides/getDoc.do?pubRef5- ­// EP // TEXT 1 TA 1 P7 -­ TA -­ 2010-­0356 1 0 1DOC1 
XML1 V0//EN.
11. Reports were prepared between October 2011 and July 2012: ‘Report on the amended proposal for a regu-
lation of the European Parliament and of the Council laying down common provisions on the European
Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural
Fund for Rural Development and the European Maritime and Fisheries Fund covered by the Common
Strategic Framework and laying down general provisions on the European Regional Development Fund,
the European Social Fund and the Cohesion Fund and repealing Council Regulation (EC) No 1083/2006,
A7-­0274/2013, 2011/0276(COD)’; ‘Report on the proposal for a regulation of the European Parliament
and of the Council on specific provisions concerning the European Regional Development Fund and
the Investment for growth and jobs goal and repealing Regulation (EC) No 1080/2006, A7-­0268/2013,
2011/0275(COD)’; ‘Report on the Proposal for a regulation of the European Parliament and of the
Council on the Cohesion Fund and repealing Council Regulation (EC) No 1084/2006, A7-­0270/2013,
2011/0274(COD)’; ‘Report on the Proposal for a regulation of the European Parliament and of the
Council on specific provisions for the support from the European Regional Development Fund to the
European territorial cooperation goal, A7-­0280/2013, 2011/0273(COD)’; ‘Report on the proposal for a
regulation of the European Parliament and of the Council amending Regulation (EC) No 1082/2006 of
the European Parliament and of the Council of 5 July 2006 on a European grouping of territorial coop-
eration (EGTC) as regards the clarification, simplification and improvement of the establishment and
implementation of such groupings, A7-­0309/2013, 2011/0272(COD)’.
12. Among others: ‘Comparative study on the visions and options for cohesion policy after 2013’, European
Parliament Directorate-­General for Internal Policies, Policy Department Structural and Cohesion poli-
cies, European Parliament, 2011.
13. ‘European Parliament resolution of 5 July 2011 on the Commission’s fifth Cohesion Report and the strat-
egy for post-­2013 cohesion policy’, http://www.europarl.europa.eu/sides/getDoc.do?type5TA&language
5EN&reference5P7-­TA-­2011-­0316.
14. ‘Rules of Procedure of the European Parliament’, July 2014, Rule 73: Interinstitutional negotiations in
legislative procedures.
15. The European Commission adopted its legislative proposals to frame Cohesion Policy for 2014–2020
on 6  October 2011: an overarching regulation setting out common rules for the European Regional
Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund, the European
Agricultural Fund for Rural Development (EAFRD), the European Maritime and Fisheries Fund
(EMFF), and further general rules for the ERDF, ESF and Cohesion Fund; three specific regulations for
the ERDF, the ESF and the Cohesion Fund; and two regulations on the European territorial cooperation
goal and the European Grouping of Territorial Cooperation (EGTC).
16. Speech of the Chair of the Committee on Regional Development, Danuta Hübner during the Informal
Meeting of the Ministers in charge of Cohesion Policy Liège, 22–23 November 2010 in the framework of
Belgium Presidency.
17. ‘Report on the proposal for a regulation of the European Parliament and of the Council on specific provi-
sions concerning the European Regional Development Fund and the Investment for growth and jobs goal
and repealing Regulation (EC) No 1080/2006, (COM(2011)0614 – C7-­0328/2011 – 2011/0275(COD))’.
18. ‘Report on the amended proposal for a regulation of the European Parliament and of the Council laying
down common provisions on the European Regional Development Fund, the European Social Fund, the
Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and
Fisheries Fund covered by the Common Strategic Framework and laying down general provisions on the
European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing
Council Regulation (EC) No 1083/2006 (COM(2013)0246 – C7-­0107/2013 – 2011/0276(COD))’.
19. ‘Report on on the proposal for a regulation of the European Parliament and of the Council on specific
 The European Parliament and Cohesion policy  ­155

provisions for the support from the European Regional Development Fund to the European territorial
cooperation goal (COM(2011)0611 – C7-­0326/2011 – 2011/0273(COD))’.
20. ‘Rules of Procedure of European Parliament’ from July 2010, Rule 70 on Interinstitutional negotiations in
legislative procedures: (a) negotiations with the other institutions aimed at reaching an agreement in the
course of a legislative procedure shall be conducted having regard to the Code of Conduct for negotiating
in the context of the ordinary legislative procedure; (b) before entering into such negotiations, the commit-
tee responsible should, in principle, take a decision by a majority of its members and adopt a mandate, ori-
entations or priorities; (c) if the negotiations lead to a compromise with the Council following the adoption
of the report by the committee, the committee shall in any case be reconsulted before the vote in plenary.
21. Since the beginning of the European Parliament’s mandate 2014–2019 the Committee on Constitutional
Affairs under initiative of its Chair Danuta Hübner launched a Working Group on the reform of the EP
Rules of Procedures.
22. Opinions of the EP Committees: CULT PE485.907, PECH PE487.807, ITRE PE486.188, AGRI
PE483.804, TRAN PE486.053, FEMM PE487.962, BUDG PE488.045, ECON PE486.023, ENVI
PE487.721, EMPL PE486.190, CONT PE480.661.
23. The negotiating team on the Commission side was chaired by the Deputy Director General for Regional
Policy, Nicolas Martyn.
24. For a full review of the EP’s impact in the negotiations, see the document ‘European Union Cohesion
Policy 2014–2020, A comprehensive presentation of the legislative package and the role of the European
Parliament’, REGI Committee, July 2014, http://www.europarl.europa.eu/document/activities/cont/2014
07/20140728ATT87362/20140728ATT87362EN.pdf.
25. The Smart Specialisation Strategies are part of the ex ante conditionality system but they are also key
vehicles for an innovation-­rich Europe (see McCann and Ortega-­Argilés, Chapter 22, this volume). There
is, however, the risk that national institutions in charge of Smart Specialisation Strategies would tend to
follow already existing trajectories and that whilst good Smart Specialisation Strategies may be estab-
lished, grants allocation may continue to go through a parallel, more traditional, selection process. The
theme of macroeconomic conditionalities should be mentioned too. Two years before the Commission
submitted the draft of the new regulations, the issue linking the ESIF to efficient economic governance
was raised by the Commission and the Council in the context of the crisis and the lack of respect for the
Stability and Growth Pact. This led to the concept of macroeconomic conditionality. The Commission’s
and the Council’s attitude to this policy measure remained under the strong influence of the austerity nar-
rative. ‘Growth-­friendly’ consolidation was not yet on the political agenda of the EU. For the Parliament,
macroeconomic conditionality system did not match the logic of a decentralised regional policy. The
Parliament stood against this proposal on the grounds that penalising the stakeholders of Cohesion policy
for the inefficiency of another policy was unacceptable as a matter of principle. This issue stayed on the
negotiation agenda until the very end. In the end, the Chair of REGI proposed a change in the logic of the
mechanism, converting the macroeconomic conditionality into a mechanism linking the effectiveness of
ESI funds to sound economic governance. In this way the Parliament managed to incorporate Cohesion
policy into the economic governance machinery. The final compromise included numerous additional
conditions proposed by the EP, reducing the automaticity of the mechanism and enhancing its transpar-
ency through the incorporation of the European Parliament in the application of the measures.

REFERENCES

European Commission (2010), Europe 2020, A European Strategy for Smart, Sustainable and Inclusive Growth,
Communication from the Commission, COM(2010)2020, Brussels.
European Parliament and Council (2012), Regulation (EU, Euratom) No 966/2012 of the European Parliament
and of the Council of 25 October 2012 on the Financial Rules Applicable to the General Budget of the Union
and Repealing Council Regulation (EC, Euratom) No 1605/2002, OJEU L 298/1.
European Parliament and Council (2013), Regulation of the European Parliament and of the Council (EU)
No 1303/2013 Laying Down Common Provisions on the European Regional Development Fund, the European
Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European
Maritime and Fisheries Fund, OJEU L 347/320.
European Union (2007), Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing
the European Community, OJEU 2007/C 306/01.
European Union (2012), Consolidated Version of the Treaty on the Functioning of the European Union, OJ
C326/47.
10. The European Committee of the Regions and EU
Cohesion policy
Justus Schönlau*

INTRODUCTION

The Committee of the Regions (CoR) was created in 1991–1992 with the Maastricht
Treaty, and even though the Treaty article setting up the Committee (Art. 198 of
the Maastricht Treaty) does not specify the role of the CoR with a view to any par-
ticular policy area, it is obvious that the creation of a body representing local and
regional authorities is, at least partly, a product of the development of the European
Union’s (EU) Cohesion policy. The reform of the Structural Funds in 1988, with the
­introduction of the principle of partnership between different levels of governance,
created the need and the opportunity for new forms of involvement of subnational
governments (SNGs) in EU affairs; either with or even against ‘their’ respective
national governments. For these ‘SNG actors it appeared logical to seek institutional
reinforcement of this new policy making role’ which then took the shape of the crea-
tion of the Committee of the Regions (CoR) (Warleigh 1999: 9). In fact, as Warleigh
also notes, the European Commission, and in particular the then Commissioner for
Regional Policy Bruce Millan, was one of the key promotors of the setting up of
the CoR during the Maastricht Intergovernmental Conference (IGC), because for a
while the Commission had been concerned by the ‘poor implementation of regional
policy by member states’ and had sought to improve it by ‘involving other stakehold-
ers in its design and execution’ (Warleigh 1999: 10). In this sense, the Cohesion policy
principle of ‘partnership’ between different levels of governance, and the concept of
multilevel governance which was to grow out of this, both as an analytical and as
a political concept, were there at the origin of the CoR and provide the basis upon
which the  involvement of the Committee in the following steps of Cohesion policy
took shape.
It is thus also no coincidence that the CoR was created at the very same moment
as ‘economic and social cohesion’, within the context of Economic and Monetary
Union, were elevated to become key objectives in Article 2 of the Maastricht Treaty
and a new instrument, the Cohesion Fund, was created to help in particular Greece,
Ireland, Portugal and Spain to move closer to the requirements for Economic and
Monetary Union (EMU) (Manzella and Mendez 2009). In fact, the new Title XIV of
the Maastricht Treaty on economic and social cohesion duly inserted the CoR alongside
the Economic and Social Committee among the bodies to be consulted on the ‘actions
leading to a strengthening of its [the EU’s] economic and social cohesion’ (Art. 130a),
and Art. 198c set out the five initial areas of mandatory consultation as: ‘social and
economic cohesion, public health, trans-­European networks in the fields of energy,
transport and telecommunications, e­ ducation and youth, culture’. Last but not least, it

156
 157
The European Committee of the Regions and EU Cohesion policy  ­

should also not be overlooked that the CoR was created at the very moment when the
principle of subsidiarity was also inserted into the Treaty (Art. 3b of the Maastricht
Treaty). Even though it took a number of years and several successive Treaty reforms to
operationalise the principle, and the debate on what role subnational levels of govern-
ance (in general) and the CoR (in particular) should play in implementing it, continue
(see below), clearly the principle forms part of the DNA of a body which tries to influ-
ence EU Cohesion policy from below.
The CoR gradually inserted itself into the debates on cohesion that were punctuated by
the three-­yearly reports on the state of Cohesion in the EU (required by Art. 130b TEU).
The central role played by cohesion in the new structure’s self-­perception is proven by the
fact that, from the outset, one of the original eight CoR commissions (reduced in 2002 to
six), was dedicated to ‘economic and social cohesion’. But even beyond the elaboration
and delivery of Opinions – both in response to mandatory consultations on propos-
als from the European Commission and as own initiatives launched by the Committee
itself  – the activities around EU Cohesion policy remain a defining aspect of the CoR’s
existence and activity.
The next section will briefly set out some of the major contributions of the Committee
to the successive rounds of Cohesion policy reform through the more formalised process
of Opinions, notably referring to the 2000, 2006 and 2013–2014 debates. The following
section will then look at some of the other tools and activities which the Committee
and its members have developed over the years to support Cohesion policy as such, or
particular elements or a specific brand of it. The chapter will then briefly focus on the
specific contribution of the CoR to the concept of ‘multilevel governance’ as both a
descriptive and a normative policy concept intimately linked to the EU Cohesion policy
debate, and on the CoR’s activities to promote subsidiarity. The concluding section
will try to assess the extent to which the CoR over the first 20 years of its existence has
managed to become a significant part of the EU Cohesion policy fabric.

THE COMMITTEE OF THE REGIONS IN THE SUCCESSIVE

ROUNDS OF COHESION POLICY REFORM
Created in 1991–1992 and formally starting its political work in 1994, the CoR came
on the stage at a moment when the emphasis, according to most observers, was not on
major  reform of the Cohesion policy, but rather on ‘fine-­tuning, decentralisation and
effectiveness’ (Manzella and Mendez 2009: 2). After the major overhaul of 1988, and
against the backdrop of important Treaty changes (1991 and 1996) and impending
enlargement (1995–1996), the Cohesion policy reforms of 1993 and 1999 were more
evolutions than revolutions. In this sense, Christiansen observed that ‘little in the area of
regional policy was left for the CoR [to do]’ (Christiansen 1996: 101). Nevertheless, a sub-
stantial increase in the Cohesion policy budget following the Delors II package1 meant
that the 1994–1999 period saw a doubling of Cohesion policy resources, including the
new Cohesion Fund created with the Maastricht Treaty (see Brunazzo, Chapter 1, this
volume). This fact, and the persistent challenge of how to adapt Cohesion policy to an
increasingly diverse Union, did nevertheless give the CoR the possibility to get involved
in the debates, playing on its new position and on the strengths of its diverse m
­ embership
158  Handbook on Cohesion policy in the EU

in formulating its own particular view. In particular, the controversial discussions on

concentration (in terms of fewer member states benefiting from cohesion funding, espe-
cially as a consequence of enlargement, but also in terms of thematic priorities), pressure
to further decentralise the policy, attempts to improve the implementation of the policy
notably through simplification, and in return the demand for stricter controls and audit-
ing by the Commission, are all issues in the debate which were, one way or another, of
direct concern for those subnational governments represented in the CoR.
In one of the first ever CoR Opinions to be adopted (by the CoR plenary in April 1994)
on the proposal for a regulation establishing a Cohesion Fund (CoR Opinion 16/1994),
the Committee already put the emphasis on the subsidiarity and partnership principles
as cornerstones of Cohesion policy which meant, for the CoR, that the ‘competent
authorities at regional and local level should be closely involved in the management of the
Cohesion Fund’ (point 1.3). The CoR also commented favourably on the concentration
of the Cohesion Fund, but warned that those regions outside the original four cohesion
countries which face ‘deprivation’ should not ‘fall further behind the Community average
standard of living’ (point 1.5). The CoR called on the Council to be careful when apply-
ing ‘macro-­economic conditions for assistance’ (that is, the suspension of assistance in
case of excessive government deficits of the member states concerned), namely to have
due regard to the ‘goals of the convergence programmes’ (point 2.3). Thus the need to
balance the interests of different categories of recipients of Cohesion policy funds within
the CoR, as well as the battle to prevent conditionalities applied at member state level
from damaging regions’ access to the funds, already formed a central part of these very
early CoR contributions, as they do still today.
As indicated, the Cohesion Reports published by the European Commission every
three years from 1996 onward provide regular appointments for the CoR to feed its
point of view into the policy process. On the occasion of the First Cohesion Report
(CoR Opinion 76/1997), the CoR reiterated some of the key points mentioned above,
which have become recurrent concerns up to the present day. After taking note of the
Commission’s analysis that disparities overall had been reducing (in the context of the
EU12) in the years between 1989 and 1996, the CoR issued its rather critical assessment
both of the Cohesion Report, for a number of methodological issues, and of the overall
results of Cohesion policy until then. The methodology of the report was found wanting
because ‘it glosses over the work of regional and local authorities, even though these
authorities have a considerable responsibility for regional development’ (point 2.2). The
CoR also regretted ‘that the analysis is descriptive rather than explanatory’ (point  2.6)
(CoR 76/1997: 3). As for the results of Cohesion policy, the CoR stated that it ‘cannot
hide its concern at how little the relation between the EU’s central and outlying regions
has changed . . . [since] the disparities between the richest and poorest regions remained
unchanged or even worsened, despite the existence of an EU Cohesion policy which
ploughed significant funds into reducing development disparities’ (point 2.9). The
Committee Opinion then called for a careful balancing between social and geographical
cohesion (that is, the need to address both inequalities within regions and between differ-
ent parts of the Union), which was indeed one of the key debates during the 2012–2013
round of reforms also for the CoR (see below). Moreover the CoR demanded greater
coherence between different EU and member state policies, as well as a strengthening of
the principle of ‘additionality’ (point 3.4.23) while making use of the ‘flexibility offered
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The European Committee of the Regions and EU Cohesion policy  ­

by the subsidiarity and partnership principles so as to involve the local and regional
authorities in the framing of appropriate measures and action for tackling the problems
of each region’ (point 3.4.29).2
Indeed, these core issues of the governance of Cohesion policy have become hallmarks
of the CoR’s contributions to the debate, with the Committee also trying to develop this
aspect in a number of different ways beyond the main discussions of concrete policy pro-
posals. In analysing this phase of the CoR’s work, Caroll notes that ‘the largest numbers
of opinions are in areas where the CoR’s interests are clearly recognised: Territorial and
Cohesion Policy, Sustainable Development, Culture and Education, and Economic and
Social Policy’ (Caroll 2011: 346). Hönnige and Kaiser, looking back at these early days
in 2003 and analysing cleavages in the CoR, observe that Cohesion policy falls in an
intermediate category as far as internal conflict is concerned, while the general policy ori-
entations are usually largely consensual (Hönnige and Kaiser 2003: 15). This observation
points to the fact that the complex cleavage structure of the CoR – the Committee repre-
sents not only subnational actors from rich and poor member states, but also regional as
well as local authorities, with a wide variety of socio-­economic structures and different
political viewpoints – seems to have been conducive to avoiding more permanent divi-
sions along the net recipients/net contributors fault line.
The next important step in developing the role of the CoR on Cohesion policy was
clearly the ‘strategic turn’ (Manzella and Mendez 2009) which marked the reform of
Cohesion policy before the 2007–2013 financial planning period. The impending enlarge-
ments which eventually took place in 2004 and 2007, together with the new emphasis on
‘growth and jobs’ in the wake of the Lisbon Strategy for the years 2000–2010, provided
the context for these changes. This turn was also shaped, however, by the wider debate
about EU governance launched by the White Paper on Governance in 2001 (European
Commission 2001) and followed through with the Convention on the Future of Europe
and the Lisbon Treaty, which also had an impact on the Committee and its standing in
the EU’s interinstitutional discussion on how to promote cohesion within an increasingly
diverse Union.
In its Opinion on the Second Cohesion Report in 2001 (CoR Opinion 74/2001), the
CoR noted that ‘the forthcoming enlargement will directly aggravate territorial imbal-
ances within the Union’ (point 3), and defended those regions under Objective 1 ‘which,
but for enlargement, would have qualified for Objective 1 after 2006 [and thus] must
retain their eligibility in the framework of an enlarged European Union’ (point 14.1).
This statement shows that one key challenge that had by now clearly come to the fore was
the need to reconcile the diverging interests between different categories of (potential)
beneficiaries of EU Cohesion policy within the CoR. At the same time, the governance
debate and the ongoing constitutional process (with six Committee members as observers
in the Convention on the Future of Europe in 2002–2003) also led to a greater emphasis
on the CoR’s role in enforcing the subsidiarity principle and in the efforts to ‘bring the
EU closer to its citizens’ (Schönlau 2010).
With the Opinion on the Third Cohesion Report (CoR Opinion 120/2004), the CoR’s
contribution changed somewhat in terms of the level of detail. Rather than focusing pri-
marily on general comments on the policy, the Opinion assessed in quite some detail the
statistical effect of EU enlargement3 and the resources of Cohesion policy, the different
objectives (convergence, competitiveness and employment, and territorial cooperation),
160  Handbook on Cohesion policy in the EU

the links with other EU policies, and concluded by reinforcing earlier calls for further
simplification. It is worth noting that it is also in the run-­up to the 2004 enlargement that
the CoR started developing its direct cooperation with the local and regional levels of
the candidate countries, notably with a view to helping them to prepare for the absorp-
tion of EU Structural Funds. Through the creation of Joint Consultative Committees
(JCCs), the CoR began giving elected local and regional representatives from the future
EU member states the possibility to discuss with their EU peers both the strategic direc-
tion of EU policies and Cohesion policy in particular, and the practical needs in terms of
administrative capacity to use EU funds successfully both pre-­and post-­accession.
Despite the controversial debates in 2003–2005 over the very concept of a territorially
defined EU Cohesion policy (see Faludi, Chapter 31, this volume), and notwithstanding
the pressure from some to refocus the policy radically towards the EU’s growth and jobs
agenda (Manzella and Mendez 2009), the final agreement on the 2007–2013 financing
period did preserve the fundamental structure of EU Cohesion policy. In which way
and to what degree the 2007–2013 framework shifted the balance of emphasis (from the
redistributive elements of Cohesion policy to the horizontal priority on growth and jobs)
and influence (from the Commission and/or subnational actors to the member states)
was and still is subject to political and academic debate (Bachtler and Mendez 2007).
What is clear, however, is that the concept of ‘territorial cohesion’ gained traction in
the following years, not least because it was included, also at the insistence of the CoR
members in the Convention, as an aim of the European Union in Article 3.4 of the Treaty
on European Union (TEU). The Committee of the Regions continued to argue this case
also after agreement had been reached on the 2007–2013 planning period (for example
in its Opinion on the Fourth Cohesion Report, CoR 97/2007) and thus became part
of the growing coalition of those arguing for a ‘place-­based policy approach (Mendez
2013; Leonardi and Hoguin, Chapter 27, this volume). The CoR also made proposals
on how this objective should be operationalised when it responded to the European
Commission’s Green Paper on territorial cohesion (European Commission 2008), calling
for example on the Commission to ‘develop relevant indicators (where necessary, at sub-
regional level) for the particular socio-­economic problems facing specific types of region’,
and stated clearly that ‘territorial cohesion aims to give each Community territory access
to infrastructure and services of general economic interest in order to help citizens enjoy
better living conditions in line with 21st century European standards’ (CoR Opinion
274/2008, points 9 and 11).
As Mendez (2013) notes, a particularly influential element in this debate was the
report of Italian economist, Finance Ministry official and later Minister for Cohesion
Fabrizio Barca, requested by the EU Commissioner for regional policy, Danuta Hübner,
published in 2009. The CoR contributed to the debate launched around this report by
an Opinion on the Future of Cohesion Policy (CoR Opinion 210/2009), which endorsed
the fundamental orientation of Barca’s suggestions. In fact, throughout the discus-
sions which led up to the 2014–2020 agreement on Cohesion policy, the CoR tried to
support the idea that indeed an EU-­level policy, structured along EU-­defined goals and
targets, would ultimately deliver more added value than 28 different, often contradictory,
national policies, particularly against the backdrop of the economic and subsequent
financial crisis which started to affect the EU from 2010 onward.
As noted elsewhere (Piattoni and Schönlau 2015), the CoR tried its utmost in the
 161
The European Committee of the Regions and EU Cohesion policy  ­

­ iscussions before the 2014–2020 Cohesion policy agreement and financial framework to
d
influence the institutional partners, notably the European Commission and the European
Parliament, in this sense. Key battlefields in these discussions were the issue of a separate
category of ‘transition regions’ – that is, those regions with an average gross domestic
product (GDP) per capita between 75 per cent and 90 per cent of the EU average; the
question of how local and regional authorities were to be involved by their member states
in drafting and implementing EU-­funded policies (that is, the partnership principle and
its operationalisation); and finally, the debate about macroeconomic conditionality in
the context of the increasingly agitated debate about the sovereign debt crisis within
the eurozone. The CoR contributed at least seven Opinions to the debates in the period
2010–2014, repeating a number of its key demands again and again, trying to forge alli-
ances with the European Parliament, notably the Regional Policy Committee where pos-
sible, but also trying to mobilise the CoR members to lobby their respective governments.
The results of these efforts were inevitably mixed, given that the overall political
climate was particularly sensitive regarding EU expenditure, but the CoR was in any
case an active part of the coalition defending certain key principles of Cohesion policy:
notably the establishment of a category of transition regions in the 2014–2020 frame-
work, and the eventual codification of the partnership principle through a delegated
Act, providing a Code of Conduct on what partnership agreements should contain and
how different levels of governance should be involved (European Commission 2014),
can be seen as successes for the CoR’s point of view as formulated in its Opinions, and
of its activities to promote the concept of multilevel governance (MLG, see below).
Even though the delegated Act on the Code of Conduct was not the full ‘legislative’
result which the CoR had initially advocated, the first assessment of the ‘outcome of the
negotiations on the partnership agreements and operational programmes’ (CoR Opinion
6248/2014) showed how the Committee may use the Code of Conduct as a benchmark
against which to measure member states’ implementation of the principle of partner-
ship, and to urge the European Commission to enforce its own standards (for a critical
early assessment, see Pazos-­Vidal 2014). On the other hand, on an issue such as ‘macro-
economic conditionality’4 the CoR could not prevent an outcome which in its view risks
subnational levels of governance being held hostage to budgetary problems at national
level. On this issue, the vast majority of member states, and ultimately even the European
Parliament, saw a strengthening of conditionalities in the Cohesion policy framework
as an appropriate tool and important political signal for fiscal prudence against the
backdrop of the ongoing sovereign debt crisis (Reinhart 2014: 274). It remains to be
seen whether the Committee of the Regions with its critical position on this point will be
proven right by future developments, or not.
This short overview over the CoR’s formal contribution via the debate and adoption
of its Opinions to the successive rounds of Cohesion policy reform has tried to show how
the Committee has sought to exercise its consultative function from a subnational point
of view. In this, the CoR obviously has to reconcile often rather divergent interests of dif-
ferent categories of regional and local authorities, which shape their attitudes as actual or
potential ‘users’ of Cohesion policy. Over the first two decades of its existence, the CoR
has had to develop both the internal mechanisms to produce coherent political messages,
and the interinstitutional and wider links to feed them into the process, and to exercise
influence beyond the letter of the Treaties. The following section will present some of the
162  Handbook on Cohesion policy in the EU

activities other than adopting Opinions which the Committee has introduced to contrib-
ute to the Cohesion policy debates.

BEYOND CONSULTATIVE OPINIONS: OTHER ACTIVITIES TO

CONTRIBUTE TO THE COHESION DEBATE

Recognising the limits of its influence in the EU policy and legislative processes due to the
merely consultative role, the CoR has also sought to explore other avenues to contribute
to the development of EU Cohesion policy (Kaniok and Dadova 2013). In these efforts it
has been conditioned by the dual (and not always easily reconcilable) expectations which
it faces, mainly from the European Commission, but also from other players in the politi-
cal process shaping Cohesion policy: on the one hand, the CoR is expected to provide
expertise and practical feedback on the implementation of EU Cohesion policy on the
ground, based on the subnational authorities’ role as both managers and beneficiaries
of the policy; and on the other hand, the Committee and its members are called upon to
provide political legitimacy to EU policies in general and Cohesion policy in particular,
both through their elected status and by providing a communication channel between the
EU and its citizens. In trying to balance these different tasks, the Committee has to try
and bolster its credibility and its visibility both vis-­à-­vis the policy-­makers of the other
EU institutions, notably through cooperation with the European Parliament and the
European Commission (Piattoni and Schönlau 2015), and with the ‘­practitioners’ of EU
regional policy on the ground.
One of the key initiatives in trying to meet these expectations is the annual Open Days
event which currently brings together more than 5000 experts, practitioners, policy-­
makers and EU institutional representatives including CoR members, to discuss issues
of EU regional and Cohesion policy in more than 100 workshops in Brussels and addi-
tional activities organised in the participating regions.5 The Committee of the Regions
had started the Open Days originally in 2003 as a networking platform between ten
regional offices in Brussels, in order to increase its own cooperation with these represen-
tations of some of the more influential (and wealthy) regions, and to raise the profile of
Cohesion policy within the Brussels debates. This event attracted 1500 visitors to more
than 30 workshops (CoR 2014: 21), and the following year the European Commission’s
DG REGIO became an institutional partner for organising the Open Days. Since then,
both the scope and the range of partners of the Open Days have expanded, now bring-
ing together not only different Directorates-­General of the European Commission, the
European Parliament’s Committee on Regional Development (REGI) as well as other
thematic committees, and other partners such as the European Investment Bank, the
Organisation for Economic Co-­operation and Development (OECD) or the respective
EU presidencies, but also participants from beyond the European Union and a number
of global organisations (Neacsu and Petzold 2015).
The Open Days, which have also seen a degree of ‘decentralisation’ over the years with
a growing number of events organised not in Brussels but in different partner territories,
since 2007 also contain a focus on the scientific-­academic debate about Cohesion policy,
and have become one of the central platforms for the exchange of ideas and research
on Cohesion policy. Considering that Neacsu and Petzold, following a study by the
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The European Committee of the Regions and EU Cohesion policy  ­

European Commission, estimate that a ‘hybrid EU Cohesion Policy Community’ of

‘no less than 50 000’ has emerged (Neacsu and Petzold 2015: 1–2) and that many of these
individuals in one way or another are connected to the Open Days, it is clear that the
event plays an important role for ‘spreading excellence, exchanging good practice, devel-
oping ideas and learning more about EU Cohesion Policy’ (ibid.: 12). The Committee
of the Regions tries to use this stage and its key organisational role to influence both
the political and the wider debates about Cohesion policy, particularly when important
reforms of the policy and its finances are discussed. At the same time, the Open Days
represent an opportunity to disseminate information about the evolving EU level frame-
work for Cohesion policy, as well as an incentive to communicate the opportunities and
results of this policy back to the citizens, and thus hopefully increase the legitimacy of
European integration as a whole.
Other activities of the Committee of the Regions, while not so directly aimed at pro-
moting Cohesion policy and its development, are nevertheless also closely linked with,
and conditioned by, the EU-­level debates about this policy and seek to influence them. In
2006, for example, the Committee of the Regions set up a network of regions (at executive
and/or administrative level) in an effort to monitor the implementation of the (revised)
Lisbon Strategy for growth and jobs. Given that the instruments of Cohesion policy have
become increasingly linked to the aims of the Lisbon Strategy, and later on the Europe
2020 strategy, it is clear that the effectiveness of both policies needs to be assessed not
least on the basis of their impact at local and regional level (Ricci 2011). Following the
first ‘territorial dialogue’ asking for a stronger involvement of local and regional authori-
ties in the Lisbon Strategy in 2006, the CoR subsequently set up a network of regional
or local partners who volunteered to participate in targeted surveys on specific policies
or programmes, or on the general direction of EU policies. On the basis of these surveys,
the Committee produces reports which are forwarded to the other EU institutions, feed
into CoR opinions, and are discussed and disseminated at events such as the Open Days
or the annual territorial dialogue before the spring Council meetings on the progress
on growth and jobs. Currently, the platform (which, after 2010, has been relaunched as
the Europe 2020 Monitoring Platform) has more than 180 members, including towns,
cities and regions, but also regional associations, intercommunal bodies and European
Groupings of Territorial Cooperation (EGTCs).6 Especially since the assessments of the
Lisbon Strategy in 2010 found that the missing involvement of regions and local authori-
ties and the insufficient coordination between them, the member states and the EU was
one of the possible reasons for the lack of success of the Strategy, the CoR’s activities in
bringing concrete experience of local and regional players to the EU-­level debate seem
to respond to a real need (Schönlau 2011). As a further step in the attempt to make the
expertise of the local authorities represented in the CoR available to the Commission
and improve EU policy-­making from a local and regional point of view, the CoR also
adopted, in early 2014, its own strategy for developing ‘territorial impact assessments’ to
complement the Commission’s assessments of the economic, social and environmental
impacts of its proposals.7
In a similar vein, trying to mobilise the experience and expertise of local and regional
administrations which are dealing with EU instruments for cohesion on a daily basis, and
combining this with the political legitimacy of the elected representatives in the CoR,
the Committee also provides a platform and a registry for the European Groupings of
164  Handbook on Cohesion policy in the EU

Territorial Cooperation. The EGTC legislation adopted in 2006 includes a provision

that any new Grouping created has to inform the Committee of the Regions, which
had lobbied hard to have the legal conditions for this instrument to be put in place. The
CoR’s EGTC platform, which allows for the exchange of best practice, monitoring of
developments, and specific events and studies, was created in 2011.8 The CoR in early
2015 listed more than 50 functioning EGTCs and a further 14 under construction, with
their activities ranging from tourism and planning cooperation, to joint healthcare pro-
vision or participation in EU-­funded projects for competitiveness and employment (see
Gänzle, Chapter 24, this volume). Under the 2014–2020 Cohesion policy framework, the
‘European Territorial Cooperation objective has become the second of two remaining
goals of EU cohesion policy’ (Neacsu and Petzold 2015: 3), and the EGTC is one instru-
ment to implement this objective. In this context, it is also noteworthy that the review
of the EGTC regulation in 2012, which aimed at making the creation of EGTCs easier
and more effective, was the first case in which ‘a committee of the European Parliament
had taken on every single legislative amendment put forward by the CoR in a legislative
dossier’ (CoR 2012: 38), illustrating that the specialised CoR input on this rather techni-
cal, but highly significant element of Cohesion policy was recognised as being crucial to
make the instrument work properly. The revised regulation (European Parliament and
Council 2013) entered into force in mid-­2014, and indeed most of the modifications pro-
posed by the CoR are included in the final text.9
Another area of activity of the CoR which is also related to Cohesion policy, albeit in a
somewhat more abstract sense, is its promotion of the concept of multilevel governance.
As noted elsewhere (Piattoni and Schönlau 2015; Schönlau 2011), the CoR took up the
originally analytical concept of multilevel governance developed in the context of EU
Cohesion policy (Hooghe and Marks 2001), as a normative approach for its own political
contribution to the EU governance debate launched with the 2001 White Paper by the
Prodi Commission (European Commission 2001; see Piattoni, Chapter 4, this volume).
Following the 2007 Berlin Declaration of the Heads of State and Government marking
the fiftieth anniversary of the Treaty of Rome, the CoR held a number of Ateliers on
Multi-­Level Governance in 2008–2009 which were meant to act as a ‘laboratory where
new concepts are tested, views shared, and innovative ideas developed and integrated in
the EU decision making process’ (CoR Multilevel Governance website).10 These ideas
were subsequently assembled into an own-­initiative Opinion which was given the some-
what ambitious title of White Paper on Multilevel Governance (CoR Opinion 89/2009).
This political statement set out a number of proposals by the CoR in order to strengthen
multilevel governance in the interest of European integration, including the Committee’s
own commitment to ‘draw up a European Charter of Multilevel Governance’ (see
below), the call on the Commission to ‘set up coordinated territorial action plans between
the Commission and the CoR for each major EU reform; [and to] consolidate the prac-
tice of partnership’, or also more operational suggestions such as the request to ‘simplify
and rationalise administrative procedures so as to have more decentralisation in the
management of the Structural Funds’ or to ‘allocate extra resources to the three stages of
territorial cooperation and develop the potential of the EGTC’, and finally the call to set
up European territorial pacts (CoR Opinion 89/2009: title page). All these elements show
the clear cohesion focus on multilevel governance as seen by the CoR.
The concept was then further promoted through an own-­ initiative Opinion in
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The European Committee of the Regions and EU Cohesion policy  ­

2­ 011–2012 on building a European culture of multilevel governance (COR 273/2011),

which in turn led in 2014 to the adoption of a Charter on Multilevel Governance which
was proposed to EU cities and regions, both CoR and non-­CoR members, as well as
regional associations and networks, for their signature. While just over 200 signatories
had endorsed the Charter by early 2015,11 it is clearly not this element which marks the
main significance of the initiative, but rather the CoR’s ability to use the multilevel gov-
ernance label in its various policy declinations, to promote the role of local and regional
authorities in the EU system. Cohesion policy, as the area in which the multilevel govern-
ance concept has been developed and is most institutionalised, is indeed also one where
the Committee has tried to realise the expectations of the subnational levels of govern-
ance most strongly, as illustrated for instance by the above-­mentioned battle to develop
EU-­wide standards for the implementation of the partnership principle. In this sense, the
CoR’s political campaign for a culture of multilevel governance in the EU can be seen as
an attempt to extend its influence beyond the more narrow contribution to the Cohesion
policy discussions, by stressing the positive elements of MLG (such as legitimacy, trans-
parency, shared responsibility and so on) as useful principles also in other domains like
economic development or even foreign policy.
Finally, another element of growing significance which may be linked less directly to
the EU’s Cohesion policy, but which certainly has an impact on the standing of the CoR
in the interinstitutional debates, including those on Cohesion policy, is the Committee’s
role in enforcing the principle of subsidiarity. As noted, the CoR was created at the same
moment as the subsidiarity principle found its way into the formal body of EU law with
the Maastricht Treaty, and for many years the Committee has pointed to the fact that
the focus of the EU subsidiarity debate is mainly on the distribution of competencies
between the EU and the national level. The Committee of the Regions, on the other
hand, for obvious reasons, has repeatedly demanded greater attention to be given also
to the subnational dimension of subsidiarity. Even though such a demand is somewhat
in conflict with the EU’s commitment not to interfere with the internal organisation of
its member states, the CoR’s contribution to the Convention and the subsequent clari-
fications of the subsidiarity principle in the Lisbon Treaty did bring some considerable
progress in this regard: the subsidiarity principle as formulated in Art. 5 (3) of the TEU
now does make an explicit reference to the ‘regional or local level’, and the CoR itself has
been granted the right to bring cases before the European Court of Justice to defend the
principle.12
Even though the CoR has not formally taken a case to the European Court of Justice
(ECJ) so far, it frequently invokes this new right in order to strengthen its argumentative
position vis-­à-­vis the other EU institutions, including in the debate about the reforms
of Cohesion policy of 2012–2013. Even the European Parliament’s own internal ser-
vices, when assessing the impact of the Lisbon Treaty on regional policy, note that the
­‘provisions on the local and regional entities in EU policy decision-­making require a close
cooperation between the European Parliament – especially the Committee of Regional
Development – and the CoR’ (European Parliament 2010: 8). Similarly to the related
concept of multilevel governance discussed above, the CoR has for a number of years
organised conferences (the so-­called subsidiarity assises, since 2004) and used its opinions
to promote the local and regional perspective on subsidiarity. Moreover, in 2009 it set up a
subsidiarity monitoring network which by 2015 counted 150 members, including regional
166  Handbook on Cohesion policy in the EU

parliaments, regional governments, associations of regions, but also national parliaments.

The network partners have volunteered to participate in consultations organised by the
Committee on proposed new legislation and examine it from a subsidiarity perspective
based on a set of criteria developed by the CoR network.13 The results of such consul-
tations are fed into CoR opinions, which in any case have to contain, according to the
Committee’s rules of procedure (CoR rule 55.2), an explicit reference to the principles of
subsidiarity and proportionality whenever they concern legislative proposals.
Thus, the CoR has for instance used the subsidiarity principle in the most recent
reform of Cohesion policy to insist on the fact that ‘regional and competent local
authorities should be responsible for choosing investment priorities and distributing
the Structural Funds between the ERDF [European Regional Development Fund] and
the ESF [European Social Fund]’ (CoR Opinion 4/2012: point 11), or rejecting, in the
same opinion, the proposal that managing authorities in the member states should be
accredited by independent auditing bodies at EU level (ibid., proposal for Amendment
59). These two examples show how the CoR’s understanding of subsidiarity applies to all
levels of governance and is used, in the argument of the subnational representatives in the
Committee, to defend both their own or their peers’ prerogatives and, in the appropriate
cases, those of the member states. Moreover, the political debate about subsidiarity and
its control in the Committee of the Regions testifies to the dynamic and political nature
of the concept. Through cooperation on subsidiarity matters with national and regional
parliaments (notably those with legislative powers) via the network and the subsidiarity
conferences, the CoR seeks to build its credibility and influence on different levels, cer-
tainly not least with a view to improving EU Cohesion policy and its functioning.

CONCLUSION

This brief overview of the Committee of the Region’s contribution, both through its
formal advisory role in the EU’s legislative process and through the other activities it
has developed over the years, has tried to show that Cohesion policy is clearly one, if not
the, central focus of the CoR’s activity. As a relatively young institution whose structure,
working methods and very identity are still somewhat in flux, the CoR has endeavoured
to bring its members’ expertise and political legitimacy on matters of EU regional and
Cohesion policy as key elements of its contribution to the EU policy process, notably in
relation to the other EU institutions. Considering, however, the rather limited role the
advisory Committee plays in the institutional set-­up of the Union, it also had to develop
additional channels and instruments to make its voice heard and feed its ideas into EU
decision-­making. Caught between the – sometimes compatible, sometimes competing –
expectations of being both an expert body and a tool to legitimise EU policy-­making (in
general, and with regard to Cohesion policy in particular), the CoR and its members have
to try and play different games in parallel. The opinions on major Commission docu-
ments such as the tri-­annual cohesion reports, or on the successive rounds of Cohesion
policy reforms, as has been argued, aim to put forward major policy recommendations,
while the activities through the consultative networks seek to mobilise local knowledge
from the practical administrative level to back up the political demands. Campaigns such
as the Charter for Multilevel Governance, which tries to fill the initially rather abstract
 167
The European Committee of the Regions and EU Cohesion policy  ­

concept of multilevel governance with concrete meaning through both academic and
institutional channels, aim at influencing institutional partners both at the EU and
member state level, while major annual events such as the Open Days bring these various
strands of political activity together, engaging the wider Cohesion policy community in
Brussels and beyond.

NOTES

  * The author works in the Party of European Socialists Group Secretariat in the Committee of the Regions.
The views expressed in this chapter are those of the author and do not necessarily represent the opinion
of the Committee of the Regions. The CoR cannot be held responsible in any way for any use of the infor-
mation contained in this chapter. The author would like to thank Matthieu Hornung, Wolfgang Petzold,
Chiara Strigini and other colleagues in the CoR for suggestions and support.
  1. A Communication of the Commission issued in 1992 that was the basis for an interinstitutional agreement
for the reform of the EU budget, including by extending the duration of financial perspectives from five
to seven years, establishing a ceiling for own resources, reducing Common Agricultural Policy expendi-
ture and doubling the resources of Cohesion policy. It followed what is known as the Delors I package, a
Commission Communication issued in 1987 which was the basis for the reform of the EU budget of 1988.
  2. On the additionality principle and other principles underlying cohesion policy, see Brunazzo, Chapter 1
and Leonardi and Holguin, Chapter 27, this volume.
  3. The ‘statistical effect’ refers to regions which were below a given threshold of GDP per capita before
enlargement (for example, 75 per cent of the EU average), but which found themselves to be above this
threshold after the accession of new member states with relatively poorer regions which brought down the
EU average.
  4. The term ‘macroeconomic conditionality’ refers to a set of rules which make EU cohesion funds condi-
tional upon the respect, by the member state in question, of the economic governance procedures under
the Economic and Monetary Union (European Parliament 2012).
  5. Committee of the Regions Open Days Factsheet available at http://ec.europa.eu/regional_policy/confer-
ences/od2014/doc/factsheet/od_factsheet_en.pdf (accessed 22 April 2015). NB: since 2015, the event is
referred to as ‘Open Days – European Week of Cities and Regions’.
  6. For a full list see: https://portal.cor.europa.eu/europe2020/Knowledge/Pages/CurrentMembers.aspx (accessed
20 April 2015).
 7. CoR Territorial Impact Assessment website https://portal.cor.europa.eu/subsidiarity/activities/Pages/
Territorial-­Impact-­Assessment.aspx (accessed 27 April 2015).
  8. See CoR website: https://portal.cor.europa.eu/egtc/Pages/welcome.aspx (accessed 20 April 2015).
  9. CoR Opinion 371/2011 proposed a total of 11 amendments to the EGTC regulation, dealing both with
substantive matters of what kind of EGTCs should be approved and under which conditions, and more
technical issues on how the CoR would fulfil its task of keeping the EGTC register.
10. http://cor.europa.eu/nl/activities/governance/Pages/cor-­ateliers.aspx (accessed 21 April 2015).
11. CoR website on the MLG Charter: https://portal.cor.europa.eu/mlgcharter/Pages/default.aspx (accessed
20 April 2015).
12. Protocol No. 2 on the application of the principles of subsidiarity and proportionality as annexed to the
Treaty on European Union, Art. 8.
13. http://cor.europa.eu/en/activities/networks/Pages/subsidiarity-­monitoring-­network.aspx (accessed 22 April
2015).

REFERENCES

Bachtler, J. and C. Mendez (2007), ‘Who governs EU cohesion policy?’, Journal of Common Market Studies,
45 (3), 535–564.
Carroll, W.E. (2011), ‘The Committee of the Regions: a functional analysis of the CoR’s institutional capacity’,
Regional and Federal Studies, 21 (3), 341–354.
Christiansen, T. (1996), ‘Second thoughts on Europe’s “third level”: the European Union’s Committee of the
Regions’, Publius, The Journal of Federalism, 26 (1), 93–116.
168  Handbook on Cohesion policy in the EU

CoR (2012), The Future of EU Cohesion Policy as Seen by Regions and Cities: Interinstitutional Negotiations on
Cohesion Policy Post-­2013, 2nd edn, Brussels: CoR.
CoR (2014), Milestones in the History of the Committee of the Regions 1994–2014, Brussels: CoR.
European Commission (2001), EU Governance. A White Paper (COM(2001) 428 final) Official Journal C 287 of
12.10.2001.
European Commission (2008), Green Paper on Territorial Cohesion: Turning Territorial Diversity into Strength,
Communication from the Commission to the Council, the European Parliament, the Committee of the
Regions and the European Economic and Social Committee of 6 October 2008, COM(2008) 616 Final.
European Commission (2014), Commission Delegated Regulation (EU) No  240/2014 of 7  January 2014 on
the European code of conduct on partnership in the framework of the European Structural and Investment
Funds, Official Journal L 74, 14.3.2014.
European Parliament (2010), Research Note on ‘The Impact of the Treaty of Lisbon on Regional Policy’,
Brussels, PE 431.586.
European Parliament (2012), Research Note on ‘Macro-­Economic Conditionalities in Cohesion Policy’, Brussels,
PE 474.552.
European Parliament and Council (2013), Regulation of the European Parliament and of the Council (EU)
No 1303/2013 Laying Down Common Provisions on the European Regional Development Fund, the European
Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European
Maritime and Fisheries Fund, OJEU L 347/320.
Hönnige, C. and A. Kaiser (2003), ‘Opening the black box: decision-­making in the Committee of the Regions’,
Regional and Federal Studies, 13 (2), 1–29.
Hooghe, Liesbet and Gary Marks (2001), Multi-­Level Governance and European Integration, Lanham, MD:
Rowman & Littlefield Publishers.
Kaniok, P. and L. Dadova (2013), ‘Committee of the Regions: from advisory body to the second chamber of
the European Parliament?’, Transylvanian Review of Administrative Sciences, 40 (E), 114–136.
Manzella, G.P. and C. Mendez (2009), ‘The turning points of EU Cohesion policy’, Working Paper produced
in the context of the report ‘An agenda for a reformed Cohesion Policy’, Brussels, European Commission.
Mendez, C. (2013), ‘The post-­2013 reform of EU cohesion policy and the place-­based narrative’, Journal of
European Public Policy, 20 (5), 639–659.
Neacsu, M. and W. Petzold (2015), ‘Policy learning and transfer in EU Cohesion Policy: the impact of events’,
Paper presented at the conference ‘Cross-­National Policy Transfer in Regional and Urban Policy’, Regional
Studies Association and the Technical University Delft 19 January 2015, Delft, the Netherlands.
Pazos-­Vidal, S. (2014), ‘The partnership principle in Cohesion Policy 2014–2020: breaking new ground in multi-­
level governance?’, European Structural and Investment Funds Journal, 2 (4), 277–288.
Petzold, W. (2013), ‘Conditionality, flexibility, unanimity: the embedded 2013 reform of EU Cohesion Policy’,
European Structural and Investment Funds Journal, 1 (2), 7–14.
Piattoni, Simona and Justus Schönlau (2015), Shaping Policy from Below: EU Democracy and the Committee of
the Regions, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing.
Reinhart, S. (2014), ‘The role of the European Parliament in the reform of Cohesion Policy’, European
Structural and Investment Funds Journal, 2 (4), 267–276.
Ricci, Silvia (2011), ‘The Committee of the Regions and the challenge of European governance’, in
Carlo Panara and Alexander De Becker (eds), The Role of the Regions in EU Governance, Berlin: Springer
Verlag, pp. 109–129.
Schönlau, Justus (2010), ‘The Committee of the Regions. The RECON models from a subnational perspective’,
RECON Online Working Paper 2010/10, accessed 4 May 2015 at http://www.reconproject.eu/main.php/
RECON_wp_1010.pdf ?fileitem550511993.
Schönlau, Justus (2011), ‘The Committee of the Regions in the post-­ Lisbon EU: smart, sustainable
and   inclusive multi-­level governance?’, in Attila Agh (ed.), European Union at the Crossroads: The
European Perspectives after the Global Crisis, Budapest: College of Communication, Business and Arts,
pp. 235–261.
Warleigh, Alex (1999), The Committee of the Regions: Institutionalising Multi-­Level Governance, London: Sage
Publications.

Committee of the Regions (CoR) Opinions

CoR 16/1994: Opinion on the Proposal for a Regulation establishing a Cohesion Fund  & Proposal for a Council
Regulation (EC) laying down detailed rules for implementing Regulation (EC) No . . .. . .. establishing a
Cohesion Fund, Official Journal C 217 of 6.8.1994, p. 1.
CoR 76/1997: Opinion on First report from the Commission on Economic and Social Cohesion, Official Journal
C 379 of 15.12.1997, p. 34.
 169
The European Committee of the Regions and EU Cohesion policy  ­

CoR 74/2001: Opinion on Second Report from the Commission on Economic and Social Cohesion, Official
Journal C 107 of 3.5.2002, p. 27.
CoR 120/2004: Opinion on Third Report from the Commission on Economic and Social Cohesion, Official
Journal C 318 of 22.12.2004, p. 1.
CoR 97/2007: Opinion on Fourth Report from the Commission on Economic and Social Cohesion, Official
Journal C 53 of 26.2.2008, p. 6.
CoR 274/2008: Opinion on Green Paper on Territorial Cohesion: Turning Territorial Diversity into Strength,
Official Journal C 120 of 28.5.2009, p. 23.
CoR 89/2009: Opinion on White Paper on Multi-­Level Governance, Official Journal C 211 of 4.9.2009, p. 1.
CoR 210/2009: Opinion on The Future of EU Cohesion Policy, Official Journal C 232 of 27.8.2010, p. 14.
CoR 273/2011: Opinion on Developing A European Culture of Multilevel Governance: Follow-­ up to the
Committee of the Regions’ White Paper, Official Journal C 113 of 18.4.2012, p. 62.
CoR 371/2011: Opinion on the Proposal for a Regulation of the European Parliament and of the Council
amending Regulation (EC) No 1082/2006 of the European Parliament and of the Council of 5 July 2006 on a
European grouping of territorial cooperation (EGTC) as regards the clarification, simplification and improve-
ment of the establishment and implementation of such groupings; Official Journal C 113 of 18.4.2012, p. 22.
CoR 4/2012: Opinion on the Proposal for a Regulation laying down general provisions on the ERDF, the ESF and
the Cohesion Fund, Official Journal C 225 of 27.07.2012, p. 58.
CoR 6248/2014 (COTER-­VI-­001): Opinion of the Outcome of the Negotiations on the Partnership Agreements
and Operational Programmes, to be adopted by the CoR plenary in July 2015.
11.  The European Court of Auditors and Cohesion
policy
George Karakatsanis and Martin Weber*

INTRODUCTION

Against the backdrop of the increasing role played in European Union (EU) finances by
the European Court of Auditors (hereinafter: ‘the Court’) as the EU’s external auditor,
this chapter deals with external audit and internal control arrangements in Cohesion
policy. The chapter is organised as follows: it first sets out the Court’s role as a supreme
audit institution within the overall accountability chain in the implementation of
Cohesion policy and its specific mandate as the EU’s external auditor. The chapter then
describes internal control arrangements in Cohesion policy (as one of the two areas of
shared management in the EU budget), and discusses the costs of these arrangements
and how the Commission has implemented the ‘single audit’ concept in accordance
with the Court’s opinion published in 2004 (European Court of Auditors 2004). Next
it presents the Court’s audit approach in the area of Cohesion policy and the Court’s
increased focus on performance audit in recent years. It also includes a short summary
of the Court’s input into the Commission’s legislative proposals for the 2014–2020
period.

THE EUROPEAN COURT OF AUDITORS’ ROLE AS THE EU’S

EXTERNAL AUDITOR

Trust is integral to the management of public funds and it is auditing that guarantees
the objective assurance which sustains trust. External audit is not an end in itself but
an indispensable part of a regulatory system that aims to uncover deviations from
accepted standards and violations of the principles of legality, efficiency, effectiveness
and economy1 of financial management early enough to enable corrective action to
be taken, make those accountable accept responsibility, obtain compensation, or take
steps to prevent or at least minimise such breaches (INTOSAI 1977). External scrutiny
by supreme audit institutions (SAIs) – the technical name for national audit offices –
­contributes to improving the operations of governmental or public sector organisations
and, hence, ensuring accountability.
These external audit bodies, which are not part of the executive branch of government,
often play an overlooked part in ensuring good governance. They can play a major role
in enhancing trust in public institutions while positively influencing policy-­making. This
influence is mainly exerted on how policies are designed and implemented, and on how
policy-­makers comply with standards that ensure their behaviour is in the interest of
citizens (OECD 2014).

170
 171
The European Court of Auditors and Cohesion policy  ­

The European Court of Auditors is the EU’s external auditor.2 The main purpose of
the Court’s work is to provide impartial information to the EU’s legislative authorities
(that is, the European Parliament and the Council) and to the wider public on how the
EU budget is spent. Based on its mandate, it examines the EU’s financial management
and assesses whether EU policies and programmes achieve their intended objectives
(European Union 2012: Art. 287).3
To this end, the Court prepares an annual report on revenue and expenditure of the
EU budget also containing a ‘statement of assurance’, which certifies the reliability of the
accounts and the legality and regularity of the underlying transactions. It also carries out
performance audits, the main findings of which are summarised in its special reports and
in a separate section of the annual report. Both the annual report and the special reports
are presented to the European Parliament, the Council and the national parliaments. The
Court also prepares opinions on legislative proposals, either on its own initiative or at
the request of the Commission, the European Parliament and the Council. Annual and
special reports and opinions are also published in the EU’s official journal and/or on the
Court’s website.
The Court enjoys full independence in the execution of its tasks. It has the power to
examine all bodies entrusted with managing EU funds and to request any documents it
considers relevant to its work. These examinations also include inspections of what was
actually financed which, in turn, entails on-­the-­spot checks on beneficiaries or recipients
of EU funds.
Through its activities, the Court plays an important role in improving EU public
finances and influences public perception of EU policies and programmes (Laffan  1997;
Mendez and Bachtler 2011). When granting the annual budgetary discharge to the
Commission,4 the European Parliament and the Council adopt political resolutions
requiring the Commission to take corrective action in light of the audit findings and rec-
ommendations made in the Court’s reports. Moreover, the Court’s observations during
the audit process often result in considerable technical improvements in the implementa-
tion of policies and programmes, since the Commission and national administrations
often address shortcomings identified by the Court even before the publication of the
audit reports. This is one important way in which the Court’s work influences policy-­
making, but one which remains scarcely visible to the public.
In its work, the Court takes account of the internal control systems put in place to
implement the EU budget. In the EU context, internal controls are understood as a
process designed to provide assurance regarding the achievement of an organisation’s
objectives in terms of the effectiveness and efficiency of operations, the reliability
of financial reporting, the safeguarding of assets and its compliance with laws and
regulations (COSO 1992, 2013). This definition of internal control encompasses both
compliance and performance aspects. The effectiveness of internal controls is a key con-
sideration for an external auditor when carrying out its work. The next section of this
chapter therefore presents some key aspects of the internal control system in Cohesion
policy, before dealing with the Court’s audit approach in this area of the EU budget in
the final section.
172  Handbook on Cohesion policy in the EU

INTERNAL CONTROL ARRANGEMENTS IN COHESION

POLICY

Cohesion policy is one of the two areas of the EU budget based on ‘shared ­management’,5
whereby implementation is delegated to the member states. The Commission has overall
responsibility for the implementation of the EU budget (European Union 2012: Art.
317), while member states have primary responsibility for the implementation and
control of interventions (Council of the European Union 2006: Recital 65 and Art. 12).
Such a set-­up has the potential to create an ‘accountability gap’, since the Commission is
responsible for the use of funds by member states whose interests do not always coincide
with those of the Commission. Unlike the Commission, member states are not held to
account politically at EU level for the performance of their duties (Cipriani 2010; Porras-­
Gómez 2014).
Cohesion policy is implemented through three EU funds: the European Regional
Development Fund (ERDF), the Cohesion Fund (CF) and the European Social
Fund (ESF). For the 2014–2020 budgetary period, these three funds, together with
the European Agricultural Fund for Rural Development (EAFRD) and the European
Maritime and Fisheries Fund (EMFF), form the European Structural and Investment
Funds (ESIF) (European Parliament and the Council 2013). Cohesion policy is one of
the biggest spending areas of the EU budget, accounting for more than a third of all
payment appropriations. In 2014, total payments from the EU budget amounted to more
than €54 billion (European Court of Auditors 2015). In total, the seven-­year budget for
the 2007–2013 programming period, in terms of EU and national public and private
funding, is more than €490 billion. Cohesion expenditure, together with rural develop-
ment, is also one of the areas of the EU budget where the Court reports a persistently
high level of irregularities (European Court of Auditors 2015).
In recent years there has been an increased focus on improving financial management,
internal control and audit in Cohesion policy. Over the last three programming periods,
the legislators have put in place an increasingly complex system of checks and balances
aimed at verifying the legality and regularity of expenditure. Accordingly, the scale, scope
and intensity of audit activities have significantly increased. As a result, the number of
authorities and staff involved in these internal control activities has also increased, both
in member states and within the Commission (Davies et al. 2008; Mendez and Bachtler
2011). Moreover, the Commission applies a ‘single audit’ approach to its supervision of
the member states’ financial management of Cohesion policy which, since the 2007–2013
period, is also enshrined in the legal basis for Cohesion policy (Council of the European
Union 2006: Art. 73).
The Court’s audit findings show that these changes have contributed to a decreasing
trend in the level of irregularities: for expenditure incurred under the 2007–2013 program-
ming period since 2009, the Court has estimated that the error rate is at least 3 per cent.
This is significantly below the rate reported for the 2000–2006 period in 2007 and 2008,
when at least 11 per cent of expenditure was estimated to be affected by error. Even if
the rates were to increase in the years until the closure of the 2007–2013 period in 2017,
it is unlikely that they will reach the error levels observed for the 2000–2006 period. This
shows that the strengthened internal control arrangements have had a considerable effect
in ensuring better compliance with the applicable EU and national rules in Cohesion
 173
The European Court of Auditors and Cohesion policy  ­

policy (Porras-­Gómez 2014). However, the error rate remains persistently above the
two per cent materiality threshold6 used by both the Court and the Commission to assess
whether expenditure has been incurred in conformity with the applicable rules (European
Court of Auditors 2015). The following subsections set out the main components of the
internal control system for Cohesion expenditure, provide some estimates of their cost
and describe how the Commission uses them to implement its ‘single audit’ concept.

A Significantly Reinforced Internal Control System for the 2007–2013 Programming

Period

At national level, internal control for each Operational Programme7 (OP) is the joint
responsibility of several authorities: the managing authority, often regional authorities
or national ministries in charge of a certain policy area, carries out first-­level checks on
the operations and on the related expenditure declared by the beneficiary. Thereafter,
the certifying authority, generally located within a Ministry of Finance or other internal
control body under ministerial authority, certifies their legality and regularity (European
Commission 2009).
In addition, member states are required to set up audit authorities, which must be
(functionally) independent from managing authorities. In most cases, the audit authori-
ties are therefore located in separate departments within the chief executive offices of
a member state, or within the Ministry of Finance (or other ministries).8 Overall, 113
audit authorities have been set up for the 440 ERDF/CF and ESF OPs approved for the
2007–2013 period within the 28 EU member states by the end of 2014 (European Court
of Auditors 2015). A similar number of bodies can be expected to be in place for the
2014–2020 programming period.
For each OP (or group of OPs), the audit authority develops an audit strategy and, on
an annual basis, carries out compliance audits for a statistically representative sample of
operations (generally selected on the basis of payments made by the managing authority)
and selected parts of the management systems (such as IT systems, specific procedures or
implementing bodies). It reports its findings to the managing and certifying authorities
for the OP concerned. Managing authorities must then decide whether financial correc-
tions are to be applied as a result of these audits and/or whether alternative corrective
action should be taken (see Figure 11.1). If the audit authority considers that the manag-
ing authority has not taken appropriate corrective action, it must draw the Commission’s
attention to the matter.
The audit authorities’ findings are summarised in an annual control report and form
the basis for an audit opinion. In 2014, 199 annual control reports and audit opinions
were prepared by audit authorities for a combined total of 440 OPs (European Court
of Auditors 2015). During the 2014–2020 programming period, audit authorities will
additionally have to issue an audit opinion on the annual management declaration and
accounts prepared by the managing authority.
The Commission must be satisfied, for each OP, that the member states have set up
robust internal controls and that these function effectively (Council of the European
Union 2006: Art. 72). This means that the internal controls in place at national level must
ensure that errors are either prevented or identified (and corrected) before the expendi-
ture is certified as legal and regular to the Commission (European Parliament and the
174  Handbook on Cohesion policy in the EU

European Commission

Certified Report on Annual

Implementation
expenditure financial control report &
report
declaration corrections audit opinion

Certify Report on financial

expenditure corrections System
audit reports
at OP level implemented
at OP level
System audit
Certifying reports
authority
System Audit
Declare Check MA’s audits
authority
expenditure expenditure
at OP level declaration
System audit
reports
Managing authority Audits of
operations
Reports on
audits of
Claim Check operations
expenditure expenditure
at project level claimed by beneficiaries

Beneficiaries

Source:  European Commission, copyright European Union.

Figure 11.1   2007–2013 programming period: reporting and control obligations

Council 2012: Art. 32). To this end, national audit authorities have to provide assurance
to the Commission regarding the effective functioning of the internal controls established
for an OP (and, as a consequence, the legality and regularity of the expenditure certified).
The Commission’s two main Directorates-­General in charge of Cohesion policy (the
Directorates-­General for Regional and Urban Policy and for Employment, Social Affairs
and Inclusion) perform a detailed assessment of the work of national audit authorities
and, in particular, of the error rates stated in their annual control reports for each OP (or
group of OPs). This information is examined against the Commission’s own audit results
and other information at the disposal of the Commission. The Commission’s assess-
ment is then published in the Directorate-­General’s annual activity reports (European
Commission 2015a, 2015b).
If the Commission finds that a member state has failed to remedy serious shortcom-
ings in the management and control systems and/or to correct irregular expenditure
which has been declared and certified, it may interrupt or suspend payments. If the
member state does not remedy any detected system failures or withdraw the irregular
 175
The European Court of Auditors and Cohesion policy  ­

expenditure (which may be replaced by expenditure which is eligible), the Commission

itself may apply financial corrections, leading to a net reduction in EU funding for the
OP concerned (Council of the European Union 2006: Art. 91, 92, 99).
Strengthened internal control arrangements for Cohesion policy come at a cost. For
the 2007–2013 programming period, the Commission estimated an overall administrative
cost for implementation of 3.2 per cent (or around €15.7 billion) of the total ERDF/ CF
and ESF budget (European Commission 2011).9 This is accounted for in part by costs
associated with the internal controls in place, relating to the verification, certification
and audit activities carried out by member state authorities. This ‘cost of control’ has
been estimated by the Commission to account for less than 30  per cent of the total
administrative cost. Around a fifth of this ‘cost of control’ (around €860 million for the
entire 2007–2013 programming period) relates to audit authorities (Weber et al. 2014).
Obviously, these estimates are averages which may hide huge variations between member
states, regions, funds, OPs and funding instruments used (Davies and Polverari 2011;
Weber et al. 2014). Moreover, they are based on a 2010 study carried out in the early
phase of the 2007–2013 period, which may have resulted in an underestimation of the
‘costs of control’ by member states.
The Court has estimated that around 2600 full-­time staff members were employed
by national audit authorities in 2012 (European Court of Auditors 2013). The Court’s
analysis also shows that staff numbers rose by around 10 per cent between 2010 and
2012. Moreover, nearly a third of the audit authorities considered that they do not have
sufficient staff resources for their work, and half of them have outsourced a part (or all)
of their audit work to private sector audit firms. This indicates a considerable increase in
the workload of audit authorities since 2010 resulting from the use of (statistically) rep-
resentative, and therefore larger, samples. This has also led to a significantly higher audit
coverage compared to the 2000–2006 period when only 5 per cent of all operations had
to be verified (Weber et al. 2014).
Compared to previous periods, the regulatory set-­up of Cohesion policy during the
2007–2013 period also entailed higher administrative costs for member states, in par-
ticular as regards the ‘costs of control’ (Mendez and Bachtler 2011). In almost all cases,
however, these costs are borne entirely by the EU budget in the form of technical assis-
tance, which can be up to 4 per cent of the total OP budget (Council of the European
Union, 2006: Art. 46). The Court has proposed that the Commission provide updated
and more specific estimates of these administrative costs, and in particular the ‘costs
of control’, for the 2014–2020 programming period so that good practices and possibili-
ties for cost savings in the implementation of Cohesion policy can be identified based on
benchmarking of OPs and member states (European Court of Auditors 2013).

‘Single Audit’ Model in Cohesion Policy Follows the Proposal Made by the Court in 2004

The internal control system for the 2007–2013 programming period is designed in
accordance with the ‘single audit’ principle. In the context of the EU budget, the term
‘single  audit’ refers to a system of internal controls and audits that is based on the
idea that each level of control builds on the preceding one. In 2004, the Court recom-
mended applying this approach to all EU funding systems, including those in the area of
Cohesion (European Court of Auditors 2004).
176  Handbook on Cohesion policy in the EU

European
National
Court of
SAIs
European Auditors
Commission

Audit Authority

Certifying Authority

Managing Authority

Beneficiaries

Figure 11.2   The ‘single audit’ pyramid for Cohesion policy

The Commission, which holds ultimate responsibility for the implementation of the EU
budget, resides at the top of the ‘single audit’ pyramid. In supervising how Cohesion
funds are spent, it relies on the assurance provided jointly by the managing, certifying
and audit authorities in the member states (see Figure 11.2). The Court and the national
SAIs are not part of the internal control system for Cohesion policy and are therefore
likewise not part of the Commission’s ‘single audit’ system (Mendez and Bachtler 2011).
Provided the Commission is satisfied that the internal controls in place function
effectively, it can rely on the audit opinion prepared by the audit authority. For such
OPs, the Commission will no longer carry out its own on-­the-­spot checks unless there
is evidence to suggest shortcomings in the system affecting the legality and regularity of
the expenditure certified to the Commission for that year. Even then, it may not need to
carry out its own checks if the audit authority has adequately addressed these issues in its
audit opinion (and the managing authority has agreed to take corrective action). Legally
speaking, the Commission can then grant a ‘single audit’ status to this OP and inform
the member state that it will rely on the work of the national audit authority for this OP
(Council of the European Union 2006: Art. 73). This system builds on the ‘contracts
of confidence’ initiative from the 2000–2006 programming period (European Court of
Auditors 2013).
For 2014, the Commission considered that it had reasonable assurance that 250 of
the 440 ERDF/CF and ESF OPs (57 per cent) were free from a material level of error:
audit authorities had reported error rates below the Commission’s materiality threshold
of 2  per cent, and these rates had been validated by the Commission. These 250 OPs
represent around 55 per cent of the 2014 payments for Cohesion policy (European Court
of Auditors 2015).
OPs to which ‘single audit’ status has been granted by the Commission need not
comply with any additional requirements, but there are also no tangible benefits for
 177
The European Court of Auditors and Cohesion policy  ­

member states. In particular, ‘single audit’ status does not imply that the Commission
will not impose financial corrections for the OP, including corrections based on findings
reported by the audit authority. Moreover, subject to the results of its monitoring, the
Commission may decide to suspend (or withdraw) an OP’s ‘single audit’ status at any
time. As a result, the incentive for member states to obtain the ‘single audit’ status for
their OPs has been limited during the 2007–2013 programming period (European Court
of Auditors 2013). In fact, ‘single audit’ status had been granted to only 76 of the 250
OPs (57 ERDF/CF and 19 ESF OPs) by the end of 2014.
Prior to the 2007–2013 programming period, it was expected that the introduction of
the ‘single audit’ principle in Cohesion policy would avoid the duplication of control
work, reduce the overall cost of control and decrease the administrative burden for
auditees (Commission of the European Communities 2005). In fact, this has not been
the case. Instead, audit activities at national level have been drastically increased, mainly
due to the requirement on audit authorities to submit an audit opinion based on a (sta-
tistically) representative, and therefore much larger, sample of checks (European Court
of Auditors 2013). This increase has more than compensated for the reduction in audits
carried out by the Commission as a result of ‘single audit’ status being granted to a
limited number of OPs.
While the implementation of the ‘single audit’ concept in Cohesion policy is still in
progress, it is already evident that this new approach has given the Commission a much
better overview of the effectiveness of the internal controls in place and of how national
administrations implement Cohesion policy. The unprecedented level of information
from the large number of audits has also allowed the Commission to draw up more tar-
geted action plans to address the deficiencies identified by the national audit authorities
and to monitor whether this corrective action is delivering results. Compared to the 2000–
2006 period, it has also resulted in more (and more frequent) financial corrections and
payment suspensions earlier in the programming period (European Court of Auditors
2015). The ‘single audit’ approach has therefore provided the basis for significantly more
robust supervision by the Commission of the compliance of Cohesion spending with the
EU and national rules and regulations.
Since the early 2000s, following the Commission’s administrative reform programme,
there has also been a trend towards performance-­based management in the EU. The
Treaty on the Functioning of the European Union has also introduced the obligation for
the Commission to present an annual evaluation report on the Union’s finances based
on the results achieved (European Union 2012: Art. 318). This report is based on the
information in the annual implementation reports and evaluations provided by manag-
ing authorities to the Commission (see Figure 11.1). This would suggest that the internal
control system also addresses the results of Cohesion spending (Mendez and Bachtler
2011).
However, this is not the case. Moreover, for the 2014–2020 period, the internal control
system for Cohesion policy remains focused on compliance rather than performance. In
particular, national audit authorities have no legally binding responsibility to examine
the reliability of performance-­related information. However, the Court’s audits have
consistently shown serious shortcomings in the quality of the monitoring, evaluation and
performance data produced by member states. Moreover, the aim of making EU funds
conditional upon results would require significant improvements as these data could
178  Handbook on Cohesion policy in the EU

trigger EU disbursements and, as a result, should be subject to independent verification

and control (European Court of Auditors 2011).

EXTERNAL AUDIT OF COHESION POLICY BY THE COURT:

AN INCREASED FOCUS ON PERFORMANCE

This section sets out the Court’s approach to compliance audit and how the Court
takes account of the internal controls at Commission and member state level for its own
audits. It also explains the concept of performance audit and describes how the Court
increasingly assesses the results of EU policies and spending through its work. Finally, it
presents the main contributions made by the Court in its opinions on the Commission’s
legislative proposals for the 2014–2020 programming period.

Compliance Audit: The Court’s ‘Statement of Assurance’ Implemented Since the

Mid-­1990s

As part of the annual discharge procedure, the Court provides, in its ‘statement of
assurance’, an audit opinion on the financial statements of the European Union to the
European Parliament and the Council, certifying whether the accounts are reliable and
whether the transactions underlying these accounts are both legal and regular. Such a
declaration has been provided by the Court since the 1994 financial year. For the main
policy areas of the EU budget, such as Cohesion policy, the Court also publishes a spe-
cific assessment in its annual report.
The ‘statement of assurance’ and the specific assessments mainly rely on the compli-
ance (and financial) audit work undertaken by the Court throughout the year in the dif-
ferent areas of the EU budget. There are two main sources of audit evidence underlying
these assessments. First, the verification of the legality and regularity of a randomly
selected and statistically representative sample of transactions relating to both revenue
and expenditure, down to beneficiary and recipient level (also commonly referred to as
substantive testing). For each specific assessment in the area of Cohesion policy, the
Court examines a sample of around 150 to 180 transactions each year, including, where
appropriate, on-­the-­spot inspections of projects co-­financed from the EU budget. The
selection of these transactions is made as follows: firstly, payments from the EU budget
to OPs are selected; followed, secondly, by a number of payments from the OP to indi-
vidual projects. These second-­level payments are selected from the OP’s expenditure
declaration that have been certified as legal and regular by the certifying authority after
all first-­level checks at national level have been carried out. Generally, the examination of
the project’s expenditure declaration is also based on a randomly selected subsample of
cost items (European Court of Auditors 2015).
The Court’s testing is based on a standardised procedure covering the entire project
cycle: project selection, the correct calculation and recording of transactions, the physical
existence of the project, and the compliance with the Cohesion policy regulations (see
Brunazzo, Chapter 1, this volume), with national eligibility rules and other horizontal
rules at EU and national level such as state aid and public procurement rules (Weber and
Witkos 2013; Weber and Gantzer-­Houzel 2014).
 179
The European Court of Auditors and Cohesion policy  ­

For each project sampled, the Court also determines whether it has already been
checked by an audit authority after the submission of the expenditure declaration. If the
managing authority has since corrected the irregularity detected by the audit authority,
the Court reports no finding. If no corrective action has been taken, this is reported as
a deficiency in the internal control system (European Court of Auditors 2015). In this
way, the Court also takes account of the internal controls in place. Finally, if the Court
believes there is reason to suspect that fraudulent activity has taken place, the case is
reported to the European Anti-­Fraud Office, OLAF, which is responsible for carrying
out any resulting investigations.
The second main source of audit evidence is the verification of the effectiveness of the
internal control systems applied in the collection and disbursement of European funds
by the EU institutions, member states and third countries. For Cohesion policy, every
financial year since 2009, the Court has examined the reliability of annual control reports
submitted by audit authorities to the Commission and, in some years, has re-­run a
sample of audits to check whether the audit authorities have carried out their work prop-
erly. Moreover, every year, the Court reviews the Commission’s annual activity reports
and assesses the Commission’s supervision of the national audit authorities and how
effectively its Directorates-­General verified the information reported by audit authorities.

Performance Audit: Increasingly Broad Range of Topics in Cohesion Policy Examined by

the Court

Performance audit is seen by some as a review activity that is ‘auditing’ in name, but not
in concept (Barzelay 1997). Performance audits usually apply similar methods as evalua-
tions. They also consider the results of evaluations with a view to assessing their quality
and, when they are considered to be satisfactory and relevant, use evaluation information
as audit evidence (European Court of Auditors 2006).
The main difference between performance audit and evaluation, however, lies in their
purpose and the context in which they take place. First, performance audit is superim-
posed on an accountability framework under which, in the case of Cohesion policy, the
Commission is responsible for managing EU funds and, based on information provided
by member states, should be in a position to demonstrate and take responsibility for the
results achieved. Second, performance audits are carried out by auditors who maintain
their independence to determine how to conduct their work and report the results to the
legislative authorities (that is, the European Parliament and the Council).
Performance orientation is particularly important for a political reason: how the EU
budget is executed and EU policies and programmes are implemented is immediately
linked to wider questions about the future of the EU as a political entity. This is particu-
larly the case when results from such EU spending are not easily visible. In such a situa-
tion, questions about the efficacy of the EU and its institutions are likely to arise (Laffan
and Lindner 2005).
The Court has examined performance aspects of EU policies and programmes since it
was established in the mid-­1970s. These findings have generally been set out in the Court’s
annual and special reports. However, over the years, and in particular since it started
presenting its annual ‘statement of assurance’ in the mid-­1990s, the perception has arisen
that the Court mainly produces compliance audits.
180  Handbook on Cohesion policy in the EU

Moreover, the Commission’s administrative reform starting in the early 2000s (which
was inspired by the New Public Management movement) entailed an increased focus on
performance. It thus became even more important for the Court, as the EU’s external
auditor, to provide impartial and trustworthy information on the results and impact of
EU policies and spending. In 2005, the European Parliament’s Committee on Budgetary
Control observed, in the discharge resolution, that the Court’s annual report, by focusing
on compliance aspects, provided no indication about value for money of EU policies and
programmes (European Parliament 2005).
The Court addressed this concern with a wide-­ranging reform of its audit practice.
Following the examples of SAIs in North America, Scandinavia and the United Kingdom,
the Court had already started to develop its own performance audit methodology in
2000, producing guidance material and training for its auditors. In 2005, the Court pro-
duced a first version of its Performance Audit Manual, which explains in broad terms
how performance audits should be planned, conducted and reported (European Court
of Auditors 2006). Moreover, within the Court’s audit departments, staff members
working on performance and those working on compliance audits were allocated to
various organisational units so that auditors could better focus on their respective type
of audit.
These measures led to a significant increase in the number of special reports
­focusing on performance issues. Each year between 2010 and 2015, the Court has pub-
lished between four and nine special reports dealing with performance aspects in the
area of Cohesion. A recent example of a special report on Cohesion policy is the 2014
report on the EU’s funding of airports (European Court of Auditors 2014). In this
performance audit, the Court examined EU-­funded investments at 20 airports in five
member states, which together received EU co-­financing of more than €600 million
between 2000 and 2013. The report illustrates which of these investments have not
yet generated the expected results, and why. For example, some of the EU-­funded
airports were situated too close to one another, while others had overestimated their
air traffic and passenger numbers. Only half of the airports examined were able to
demonstrate that there had actually been a need for EU-­funded investment. Similarly,
only half the EU-­funded infrastructure was fully used and, as a result, was oversized.
These findings demonstrate the importance of robust needs assessments and planning
before  deciding on major infrastructure investments. This is particularly relevant in
the early  stages of the 2014–2020 programming period, when funding decisions are
generally taken.
Special reports dealing with performance issues, such as the above, are also important
sources of information for the European Parliament’s legislative work, and for scru-
tinising the implementation of EU policies and programmes on the ground. In 2014,
the European Parliament’s Committee on Budgetary Control again underlined the
importance it attaches to special reports dealing with performance aspects (European
Parliament 2014). This is also illustrated by the fact that the European Parliament’s
research service provides MEPs with a comprehensive overview of recent special reports
and their legislative follow-­up, such as tabled amendments and parliamentary questions
(European Parliament 2015). The Court’s annual report also includes a chapter on the
results obtained from the EU budget, mainly dealing with horizontal aspects of the
Commission’s performance management (such as the 2014–2020 partnership agreements
 181
The European Court of Auditors and Cohesion policy  ­

or the Commission’s follow-­up of the Court’s recommendations). In 2014, the European

Parliament suggested that the Court should develop a methodology to determine
whether and how results have been achieved through EU-­funded projects (European
Parliament 2014).
As part of a pilot exercise, the Court’s annual report on the 2014 financial year con-
tains a section relating to performance aspects of the ERDF/CF and ESF projects in
Cohesion and a similar section for rural development. This performance assessment is
undertaken as part of the audit of the sample of transactions examined for compliance.
For all projects within the sample that have been physically completed by the time of the
audit, the Court assesses, firstly, whether the performance indicators specified for each
project were in line with the objectives of the OP; and secondly, whether the initially
agreed targets have been achieved (European Court of Auditors 2015). This assess-
ment complements the specific assessment for Cohesion policy and, as requested by
the European Parliament, provides additional performance-­related information on how
Cohesion policy is implemented.

Opinions: The Court’s Contribution to Setting the Policy Framework for 2014–2020

The Court also provides opinions on new legislation, enabling it to exert influence on the
design of EU policies and programmes. In 2011, the Court submitted its first opinion
on the Commission’s draft Common Provisions Regulation (CPR) for the 2014–2020
programming period to the European Parliament and the Council (European Court of
Auditors 2011). This opinion was followed by two further opinions in 2012 and 2013.
In these opinions, the Court noted that:

● A key challenge for the EU is to obtain good qualitative results from a policy where
funds are pre-­allocated to member states and absorption is an implicit objective.
This requires effective supervision and accountability by the Commission on the
use of the funds in view of supporting member states’ capacity to use these funds
successfully.
● The administrative cost for both EU and national administrations remains high
and may become even higher during the 2014–2020 period.
● The proposed regulatory framework for Cohesion policy remains fundamentally
input-­based and therefore oriented towards compliance rather than performance.

The Court also provided a number of specific comments on the proposed arrange-
ments for the management and control systems, most notably on the administrative
capacity of member states to implement Cohesion policy, the assurance model for the
2014–2020 programming period (including management declaration of assurance, clear-
ance of accounts, ‘rolling’ closure and financial corrections), monitoring and evaluation,
national eligibility rules and financial instruments. While the opinions contributed to a
number of specific changes in the final CPR for the 2014–2020 programming period,
the main concerns relating to the input orientation and administrative burden were not
addressed during the legislative process.
182  Handbook on Cohesion policy in the EU

CONCLUSIONS

The European Court of Auditors plays an influential role in Cohesion policy. By pro-
viding impartial information on compliance with the applicable rules over many years,
it has contributed to a significant strengthening of the internal control system. Thus, it
has ensured better implementation and enhanced public trust in the implementation of
public funds. Through its 2004 opinion on the ‘single audit’ concept, it also influenced
the design of this system. The results of the Court’s compliance audits since 2009 indi-
cate that these changes have contributed to a significant reduction of the error rate in
Cohesion spending under the 2007–2013 programming period. This empirical result con-
tradicts previous assumptions that the strengthened audit and internal control arrange-
ments have not been effective (Mendez and Bachtler 2011).
The quest for financial accountability and the emphasis on financial management,
control and audit since the late 1990s has had a strong influence on audit arrangements
in Cohesion policy and has led to a significant strengthening of the internal control
arrangements for the 2007–2013 programming period (Davies and Polverari 2011). The
Commission’s ability to supervise the member states’ financial management of Cohesion
policy has been greatly enhanced by applying the ‘single audit’ concept. Thanks to
the increased audit coverage by the national audit authorities, the Commission has
an unprecedented level of information on how national administrations implement
Cohesion policy and where internal controls are not yet fully effective. This has greatly
enhanced the Commission’s ability to bridge the ‘accountability gap’ in shared manage-
ment and to exert influence (at the least to ensure compliance) on member states and
regions at the policy implementation stage (Cipriani 2010; Mendez and Bachtler 2011;
Porras-­Gómez 2014).
However, these strengthened internal control arrangements for Cohesion policy come
at a cost. For the entire 2007–2013 programming period and all three funds combined,
the Commission has estimated administrative costs of around €15.7 billion (or 3.2
per cent of the total Cohesion budget). This indicates that there is significant potential
for cost savings if better ways of implementing Cohesion policy can be found. It has also
been estimated that around 30 per cent of these costs are ‘costs of control’ relating to the
verification, certification and audit activities carried out by national authorities.
Since the early 2000s, following the Commission’s administrative reform programme,
there has been a trend towards performance-­ based management in the EU. The
Commission has started the move towards activity-­based management since 2001 and
has been progressing further towards a meaningful, results-­achievement management
of the EU budget. This would suggest that the internal control system also addresses the
results of Cohesion spending (Mendez and Bachtler 2011). However, this is not yet the
case and the internal control system for Cohesion policy for the 2014–2020 programming
period remains focused on compliance rather than performance. In particular, audit
authorities have no legal responsibility to examine the reliability of performance-­related
information submitted to the Commission.
For its compliance audits, the Court takes full account of the 2007–2013 internal
control arrangements and has designed its audit procedures in the area of Cohesion
policy accordingly. In its substantive testing of transactions, specific attention is given
to assessing whether all internal controls in place have functioned effectively to prevent,
 183
The European Court of Auditors and Cohesion policy  ­

detect and correct irregularities. Moreover, its system audits focus on the work of the
national audit authorities and on how the Commission uses the information provided by
them. Whether the Court can make an even greater use of the internal control system,
and in particular the work of national audit authorities, during the 2014–2020 program-
ming period remains to be seen.
In recent years, the Court has gradually shifted the focus of its audit work towards
the results and impact of Cohesion policy, and has established and further developed its
performance audit practice. This trend has been strongly encouraged by the European
Parliament and has assumed even greater importance given that, with the induction of
the Lisbon Treaty, the concept of ‘Cohesion’ has been expanded to include economic,
social and territorial cohesion. The inclusion, since 2010, of a dedicated chapter in the
Court’s annual report on results achieved, along with the 2014 pilot review of perfor-
mance aspects in the random sample of transactions examined, signals the way forward
for the Court’s audits to cover performance and not only the matters of legality and regu-
larity. Considering the importance of this policy both in terms of its significant overall
share of the EU budget and as the EU’s main financial tool for achieving the goals of the
Europe 2020 strategy, this would be a positive development in EU financial management.
This may also serve as an incentive for the Commission and the member states to increase
their evaluation activities in future years and to strengthen the internal control system in
order to be able to demonstrate the results and impacts of Cohesion policy.

NOTES

* George Karakatsanis, PhD, is Head of Private Office in the Audit Chamber dealing with revenue, research
and internal policies and EU institutions and bodies, and Martin Weber is Director of the Audit Chamber
dealing with Structural policies, transport and energy at the European Court of Auditors in Luxembourg;
the opinions expressed by the authors in this chapter in no way commit the institution to which they belong.
1. The International Standard of SAIs (ISSAI 300) defines the three principles as follows. The principle of
economy means minimising the costs of resources. The resources used should be available in due time, in
and of appropriate quantity and quality and at the best price. The principle of efficiency means getting the
most from the available resources. It is concerned with the relationship between resources employed and
outputs delivered in terms of quantity, quality and timing. The principle of effectiveness concerns meeting
the objectives set and achieving the intended results.
2. In principle, as far as shared management is concerned, the national SAIs in the 28 EU member states (or
audit bodies at regional level) are also external auditors of the EU’s activities in their respective member
states (and regions), due to national co-­financing and the fact that all EU expenditure is made through the
national (and/or regional) budgets.
3. Article 287(2) of the Treaty on the Functioning of the European Union (TFEU) states that the Court ‘shall
examine whether all revenue has been received and all expenditure incurred in a lawful and regular manner
and whether the financial management has been sound’. Sound financial management in turn, is defined in
the EU Financial Regulation as ‘adhering to the principles of economy, efficiency and effectiveness’.
4. The annual ‘discharge procedure’ is the final approval by the Parliament of a recommendation from the
Council on whether to grant discharge to the European Commission as regards the implementation of the
annual budget of the EU.
5. The other is sustainable growth: natural resources, including the Common Agricultural Policy, Common
Fisheries Policy, rural development and environmental measures.
6. The concept of materiality in audit is complex and is assessed in both quantitative and qualitative terms.
For simplicity, the quantitative materiality threshold noted here refers to the percentage of total expendi-
ture or revenue beyond which errors are considered significant enough to be unacceptable.
7. An OP sets out a member state’s priorities and specific objectives and how the funding (EU and national
public and private co-­financing) will be used during a given period (generally seven years) to finance pro-
jects. These projects must contribute to achieve a certain number of objectives specified at the level of the
184  Handbook on Cohesion policy in the EU

OP’s priority axis. OPs exist for each of the funds in the area of Cohesion (that is, ERDF, CF and ESF).
An OP is prepared by the member state and has to be approved by the Commission before any payments
from the EU budget can be made.
8. In Romania and Latvia, specific departments within the national SAIs act as national audit authorities.
9. It should also be noted that the Commission’s estimates of administrative costs do not take into account the
costs incurred by beneficiaries in applying for Cohesion funding and, if successful, for documentation and
reporting.

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12. Cohesion policy, EU economic governance and
the role of the European Investment Bank
Rocco L. Bubbico, Angel Catalina Rubianes,
Eugenia Kazamaki Ottersten and Maria K. Sioliou1

INTRODUCTION

Cohesion policy (CP) and the European Investment Bank (EIB) have been interlinked
for many years with growing intensity, in line with the evolution of the policy and the
provisions of the Treaty on the European Union (European Union 2012b: Art. 174
and 309). Since the 1990s, economic, social and territorial cohesion have progressed
across the EU regions. However, the economic crisis has halted this convergence trend
and has emphasised the role of macroeconomic and fiscal stability for sustainable
growth. The policy responses of the member states (MSs) and the European institu-
tions in the field of regional policy have been aimed at ensuring that the spending
under Cohesion policy could achieve the policy’s intended goals. This had a relevant
impact on the implementation of Cohesion policy in 2007–2013 and has affected
the design of the 2014–2020 Cohesion policy reform. In a context where most MSs
had limited fiscal space for public investment – as they had to pursue fiscal stability
through tight budgetary targets – Cohesion policy has represented a crucial pillar for
the support of public investment. In the countries most affected by the crisis, and in
the ones where the absorption of the Structural Funds required significant national
and regional co-­financing effort, the role of the EIB (‘the EU Bank’) has further
increased as a key actor for the financing of public investment. The economic and
financial crisis has impacted on the drivers and functioning of Cohesion policy. The
crisis has caused major asymmetric shocks in the macroeconomic context, with dra-
matic shifts in regional and national economies where Cohesion policy was planned
to make a difference in the medium term. As shown in this chapter, the impact of the
recession on gross domestic product (GDP) and employment has been uneven, with
regions in the south of the European Union (EU) being particularly affected. The eco-
nomic imbalances accumulated before 2008 seem to underlie this uneven geographical
impact. In many regions, these impacts generated significant consequences on long-­
term investment strategies. With the European Economic Recovery Plan launched in
2008, Cohesion policy was identified as one of the main pillars for supporting public
investment in 2007–2013, providing ‘an important financial stimulus in the short
term while maintaining focus on medium to long term growth capacity of the MS
economies’ (European Commission 2008: 3). In countries with sufficient fiscal space
for the implementation of an investment-­based stimulus package, the Structural and
Cohesion Funds were, therefore, appropriate additional tools to match a short-­term
countercyclical effort with medium-­term development strategies.
In 2009–2010 the main recipients of Cohesion policy have taken several measures to

186
 Cohesion policy, EU economic governance and the EIB  ­187

accelerate the absorption of the Structural and Cohesion Funds in order to maintain or
boost public investment during the economic crisis, supporting national recovery pack-
ages in the fields of public infrastructure, energy efficiency and research and develop-
ment (R&D) (Directorate-­General for Economic and Financial Affairs 2009; European
Commission 2014). Instead, in countries with macroeconomic imbalances and the need
of fiscal consolidation, the implementation of Cohesion policy has encountered more
obstacles given the accumulated economic imbalances, structural weaknesses, increasing
difficulties in accessing external financing and limited fiscal space for public investment
(and for providing national co-­financing). In most countries, capital investment in key
economic areas was reduced more than current expenditure (Barbiero and Darvas 2014),
with consequences also for public finances at the subnational levels (Allain-­Dupre et al.
2012) and for the potential growth of regions (Bubbico and Catalina Rubianes 2015). In
this context, the Structural and Cohesion Funds have been a resilience factor (Healy and
Bristow 2014) and have supported social policies (Milio 2014).
The establishment of a fertile macroeconomic ground for private and public invest-
ment, aimed at increasing potential growth, is the motivation for the linkages between
Cohesion policy and EU economic governance (described below) and for increased
EU co-­ financing and reprogramming in the countries hit the most by the crisis
(European Commission 2014a). As shown in this chapter, the operations, instruments
and services of the EIB have been strongly interlinked and developed in parallel with
EU Cohesion policy via blending with the European Structural and Investment Funds
(ESIF), lending for territorial cohesion to sub-­sovereign governments, and provid-
ing advisory services for public and private investment, representing a mechanism of
stabilisation complementary to the ESIF (Sioliou et al. 2015), as is illustrated in more
detail to follow.

COHESION POLICY IN A CONTEXT OF ECONOMIC

IMBALANCES

The Impact of the Economic Crisis

One of the most important lessons of the economic crisis for regional policy is the diver-
sity and the geographical concentration of its impact. At the national level, the highest
decline in GDP per head in real terms between 2007 and 2013 are observed in the five
Southern MSs (the ‘South-­5’),1 the United Kingdom and Ireland. Most of the South-­5
are not expected to recover their pre-­crisis real GDP until at least 2017. In contrast, the
group of EU MSs of more recent accession has fared relatively well during the crisis
period. As a consequence, these countries have kept a convergence trend towards the EU
average GDP per head even in times of recession. The suspension of the process of eco-
nomic and social convergence observed in the EU as a whole owes therefore to a limited
group of MSs (see also Notermans, Chapter 29, this volume).
The employment impact of the crisis has also been concentrated in the south of the
EU, in particular in Greece and Spain. Almost 80 per cent of all employment losses in
the EU over the period 2007–2013 are observed in the South-­5. Half of the employment
losses were concentrated in ten regions, and nine of those are located in Spain and Greece.
188  Handbook on Cohesion policy in the EU

Economic recessions may be due to a reduction in the levels of one or more GDP
components. It is rather evident that the current economic crisis is a crisis of investment,
because this is by far the component of GDP which has witnessed the highest decline
during the crisis (European Investment Bank 2013a). Investment has contracted on
average by a quarter in the EU, but more than 40 per cent in the South-­5.
The major collapse of investment compares to the more limited impact of the crisis on
other GDP components in Europe, for instance consumption and exports. Nevertheless,
the countries hit severely by the crisis – such as Greece, Cyprus and Italy – have also wit-
nessed declining exports, clearly signalling a decline in competitiveness.

The Macroeconomic Framework Before and During the Crisis

An analysis of the macroeconomic imbalance indicators suggests that the convergence

trend observed in some Southern MS occurred in parallel with a gradual divergence
in some key macroeconomic indicators (European Commission 2012b). Before the
crisis, trade balances entailed a permanent flow of funding between countries and have
gradually increased the distance between lenders and borrowers. Trade deficits have been
fuelled by the increases in domestic consumption, which has accounted for a significant
share of the economic growth observed in the most recent MSs and in the South-­5 in the
decade before the crisis. Once the economic crisis broke out, the countries of the south
were not able to adjust as quickly as the most recent MS and continued to run trade defi-
cits and net external borrowing until 2011 (Gros and Alicidi 2011).
In the South-­5, net external debt was significantly higher than in the other MSs before
the beginning of the economic crisis, suggesting that some part of their economic growth
was financed from foreign loans. Cecchetti et al. (2011) underline that highly indebted
countries tend to be more vulnerable to asymmetric shocks because the number of
willing lenders is reduced, leading to increased financing costs. A sudden interruption of
financing or higher financing costs undermine the economic activities that are dependent
on foreign financing, leading to subdued demand and high unemployment. The concern
is that the very much needed period of debt reduction (‘deleveraging’) might lead to low
growth in the future (Tang et al. 2010).
High credit growth in some MSs is the underlying reason for their current high levels of
external private debt and has been identified as a major contributory factor to the crisis
in the euro area (Lane 2013). Credit flows have been fuelling domestic consumption and
investment, notably in the South-­5 where credit doubled between 2002 and 2006. They
have increased the propensity to import and to incur persistent trade balance deficits.
Moreover, these resources have been channelled mostly to non-­tradable sectors, such as
construction, that experienced a boom–bust sequence.
The decline in access to credit observed with the crisis has been one of the reasons for
the lower rates of domestic consumption and investment in many MSs. The cost of the
sudden stop of credit has been especially high for countries running large and persistent
current account deficits (Lane 2013). The higher government debts and deficits observed
in parallel are also associated with lower effectiveness of the EU Structural and Cohesion
Funds and with lower socio-­economic development (Tomova et al. 2013). MSs with high
debt-­to-­GDP ratios will be obliged to run significant primary surpluses to limit addi-
tional growth in their debt levels, ensuring debt sustainability. The burden of the debt on
 Cohesion policy, EU economic governance and the EIB  ­189

the government budgets may hinder the ability to carry out policies aimed at boosting
economic growth and achieving economic, social and territorial cohesion in the coming
years.

Impact on Competitiveness

Capital stock, one of the drivers of potential GDP, stagnated between 2008 and 2013 in
the South-­5, while it increased in the most recent MSs (117 per cent) and in the more-­
developed ones (14 per cent). A similar trend is observed for total factor productivity
(TFP). Most recent MSs have undertaken an impressive improvement of their TFP in
the decade before the crisis and have resumed it again after the dramatic decline of 2009.
In contrast, TFP gains were very limited in Southern Europe in the decade preceding
the crisis, despite the significant rates of economic growth observed in Spain, Greece
or Cyprus. The disparities in unit labour costs (ULCs) were increasing within the EU
during the decade before the crisis, with ULCs growing more in less-­developed MSs. As
a consequence, the most-­developed MSs accumulated a comparative advantage in cost
competitiveness in relation to the rest of the EU. In the case of the South-­5, growing
ULCs occurred in parallel with a gradual decline in export market shares and with a
deterioration in their trade balances.

Impact on Regions

The trends described above had a severe impact on European regions. Over the period
before the crisis (2000–2007) GDP per head has grown faster than the EU average in
37 regions out of 61 in the south of the EU, with all Italian regions (except Calabria)
among the 24 worst performers. When the whole period 2000–2012 is considered, just 20
of the 37 fast-­growing regions are still showing rates of growth in GDP per head above
the EU average, and 41 regions of the south of the EU have performed worse than the
EU average.
During the crisis period (2007–2012) just two regions in the South-­5 (Abruzzo and
Bolzano) did better than the EU average in terms of economic growth per head. Within
an overall bleak picture for the south of Europe, the regions growing the least before the
crisis (almost all of them Italian and Portuguese) show in general a lower decline of GDP
per head. This suggests that some or most of the growth they enjoyed in the pre-­crisis
period was not sustainable because it built on major economic imbalances. As a conse-
quence, the crisis has completely wiped out the process of convergence of 17 regions in
the south of Europe out of the 37 that had been able to reduce the gap with the GDP per
head EU average before the crisis.
The data suggest that ULCs and the ability to export may be important determinants
of the ability of regions to be resilient to asymmetric shocks. Four out of the eight fast-­
growing regions in 2000–2012 are also in the top ten in terms of gains in export market
shares over the same period (Açores, Galicia, Asturias and Extremadura).2 Similarly,
Attiki, Galicia and País Vasco are among the top five in the south in terms of trends in
ULC over the period 2000–2010.
ULC declined in just ten southern regions over the period 2000–2010, from which
seven, most of them in Spain, present a real GDP per head in 2012 better than in 2000;
190  Handbook on Cohesion policy in the EU

they were therefore able to improve their position compared to the EU average in terms
of GDP per head. On the other side of the picture there are seven regions (all of them in
Greece) in which the increase in ULC was at least 25 per cent over the period 2000–2010.
In all of them real GDP per head in 2012 was between 5 per cent and 15 per cent lower
than in 2000.
On the external side, 17 regions from the South-­5 increased their export market shares
over the period 2000–2012. However, good trends in exports have not been able to fully
offset the collapse of other GDP components, notably investment related to the con-
struction sector. Most southern Italian regions are in the bottom ten in terms of trends
in export market shares, with losses between 20 per cent and 60 per cent over the period.

COHESION POLICY AND ECONOMIC GOVERNANCE

The trends described above have had significant effects on Cohesion policy. Beyond
facing the effects of the crisis for its implementation (such as challenges related to absorp-
tion in certain expenditure areas and to national co-­financing and match funding), the
policy has adapted and matched the evolution of the EU policy context, mainly driven
by the reinforced economic policy framework.
In this context, a stronger link between Cohesion policy and Europe 2020 priorities has
guaranteed a smooth transition of the policy to an economic rationale based on potential
GDP growth drivers (McCann 2015; Begg et al. 2014). This is consistent with the role of
the policy and its evolution, and has been one of the main policy reasons for the political
support by the MSs in the negotiations on the 2014–2020 financial framework of the EU
(McCann 2015: 8; see also Bachtler and Mendez, Chapter 8, this volume).
The evolution of the relationship between Cohesion policy and the macroeconomic
governance of the EU has generated some debate, especially at the final stages of the
negotiations for the 2014–2020 regulation (Begg et al. 2014; Tokarski and Verhelst 2012;
Thillaye et al. 2014). The linkages between fiscal policies and Cohesion policy (European
Union 2012b: Art.175) find a motivation in the establishment of favourable economic
conditions for investment in physical and human capital and technology (European
Commission 2014a). Macroeconomic imbalances, as mentioned in the previous section,
might affect the correct functioning of national and regional economies, deterring private
investment and therefore undermining the effectiveness of development policies (Tomova
et al. 2013).

Macroeconomic Conditionality

The evolved Cohesion policy rationale, the reinforced EU economic governance and a
dramatically altered macroeconomic context have been the main reasons for the exten-
sion of macroeconomic conditionality. The 2007–2013 regulation for the Cohesion
Fund (CF) (Council of the European Union 2006b) established the possibility for the
Commission to propose the suspension of committed funds in the case of ineffective
action by an MS in the framework of the excessive deficit procedure.3 In the case of the
CF, macroeconomic conditionality has found practical application in February 2012,
when the European Commission proposed to suspend €495 million of CF commitment
 Cohesion policy, EU economic governance and the EIB  ­191

for Hungary, in the context of the 2011 excessive deficit procedure. This proposal was far
from being irrelevant: the suspension was equal to 0.5 per cent of GDP and 29 per cent of
the yearly allocation for 2013.4 The proposal was accepted by the Council in March 2012
and was lifted in June 2012 following the positive assessment of new structural measures
of the Hungarian government (European Commission 2012).
The extension of macroeconomic conditionality to the ESI funds has triggered wide-
spread disapproval from regional and local authorities. As highlighted by Jouen (2015),
the criticism is based on the idea that this imposes unfair penalties on local and regional
authorities, who are not responsible for excessive national deficits (most of them are
bound to balance their budgets), but are potentially facing the suspension of resources
earmarked for their operational programmes.
There are two strands to the macroeconomic conditionality. The first strand envis-
ages the reprogramming of the ESIF (European Commission 2014b). In particular, the
European Commission may request to review the Partnership Agreement and the related
programmes to support the implementation of country-­specific recommendations, the
correction of macroeconomic imbalances and to maximise the impact of ESI Funds in
case of financial difficulties. Where an MS fails to take effective action in response to a
European Commission request, the Commission may propose to the Council the suspen-
sion of part or all payments for the programmes or priorities concerned (Begg et al. 2014).
The second strand relates to non-­compliance within economic governance proce-
dures. According to Art. 23(9) of the Common Provisions Regulation (CPR) (European
Parliament and Council 2013), the European Commission is obliged to propose a suspen-
sion of commitments and payments (in part or the total) of an MS when certain stages in
the economic governance procedures are reached, for instance when the Council has con-
cluded that there is no effective action being undertaken to correct an excessive deficit.
Beyond the application for all the ESIF (instead of the CF alone), there are a few dif-
ferences across the two periods regarding macroeconomic conditionality. The 2014–2020
regulation (European Parliament and Council 2013) extends the scope of this instrument,
envisaging linkages with new processes and procedures of the EU economic governance.
First, there is now a linkage with country-­specific recommendations concerning the
programming of the resources (see Brunazzo, Chapter, 1 this volume). Second, macro-
economic conditionality is applicable for inefficient action related to more processes of
the new economic governance, including excessive imbalance procedure and economic
adjustment programmes, on top of the excessive deficit procedure. Most importantly,
a change in the legal wording, whereby the Commission ‘may’ in the 2007–2013 general
regulation (Council of the European Union 2006a) has been replaced by the Commission
‘shall’ in the 2014–2020 CPR (European Parliament and Council 2013), implies a com-
pletely different approach in applying the conditionality. Finally, the 2007–2013 regula-
tion envisaged the suspension of commitments, while the 2014–2020 CPR establishes the
reprogramming and the suspension of commitments and payments.
The CPR also includes some limitations. Priority is given to suspension of commitments,
rather than payments. Socio-­economic conditions such as high unemployment, recession
and high poverty are to be considered in order to come to a decision. Programmes with
an expected, tangible impact in a recession, such as the Youth Employment Initiative and
the financial instruments for small and medium-­sized enterprises (SMEs), are excluded
from suspension. Moreover, the suspension is capped at 50 per cent of the payments of
192  Handbook on Cohesion policy in the EU

the programmes concerned, and can reach 100 per cent only in the case of persistent
failure of an MS to take effective action.

The Additionality Principle

According to the additionality principle, Cohesion policy is supposed to provide addi-

tional resources to those invested by the MSs and to complement national efforts in this
respect. This implies that governments need to maintain adequate levels of public invest-
ment in the areas covered by Cohesion policy. Each MS negotiates with the Commission,
at the beginning of the programming period, a level of public expenditure reflecting an
additional fiscal effort on top of that required for the co-­financing of Cohesion policy.
This target level can be adjusted in case of adverse economic conditions.
The results of the mid-­term review of additionality carried out in 2011–2012 by the
Commission’s Directorate-­General for Regional and Urban Policy (DG REGIO) have
been heavily affected by the consequences of the crisis on member states’ fiscal policies
and by budgetary commitments taken by the MSs within the EU economic governance
system. The 2007–2013 additionality targets were agreed well before the recession and
many MSs (for example Italy) had optimistic views about the volume of their public
investment programmes. The crisis, the related responses and the diversified budgetary
pressures caused a very diverse impact on structural spending. As has been noted above,
some countries increased their investments through stimulus programmes while some
others reduced investment, facing an unfavourable evolution of public revenues and
expenditures (European Commission 2013). The Commission received a large number of
requests for a downward revision of the additionality targets, largely justified by the need
to pursue fiscal consolidation in line with the economic policy recommendations of the
time. For instance, Portugal and Greece had to comply with their Economic Adjustment
Programmes (ibid.).
Overall, stimulus packages and robust public investment in some MSs before con-
solidation pushed total actual structural spending in the EU to 7 per cent above the
target level established ex ante. As the ex ante target level was based on pre-­crisis macro-
economic assumptions, it was adjusted considering the adverse economic conditions. As
a consequence, the minimum spending requirements were reduced by 15 per cent in total,
and by more than 30 per cent in Portugal and Italy, about 30 per cent in Greece, and by
more than 15 per cent in Latvia, Lithuania and Hungary. Since many MSs continued
registering budgetary issues and reduction of public investment in 2011–2013, it is likely
that further adjustments will also be recorded in the ex post verification of additionality
that will take place in 2016 (ibid.).
For 2014–2020, the verification process has been redesigned. Additionality applies
to MSs where less-­developed regions cover at least 15 per cent of total population, and
in some MSs the verification is performed on a regional basis (see Figure 12.1). The
Commission may apply a financial correction after the ex post verification (in 2023)
if an MS fails to meet the agreed public investment level. MSs subject to additionality
verification have submitted their targets in their Partnership Agreements, indicating the
minimum yearly level of public investment to be maintained, on average, until 2020.
As shown in Figure 12.1, several MSs need to keep a high level of public investment
until 2020 in order to meet their additionality target. Bulgaria and Slovenia, in particular,
 Cohesion policy, EU economic governance and the EIB  ­193

4 25
23
3.5 21
Public investment (left axis) 19
3 Historical low 17
Business, non financial investment (right axis)
15
2.5 13
11
2 9
7
1.5 5
95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13
19

20

20

20

20

20
19

19

19

19

20

20

20

20

20

20

20

20

20
Notes:  * Regional verification, with corresponding national target reported. Italy and Slovenia have reported
a national non-­binding target in their Partnership Agreements, while the target of Greece is estimated.

Source:  Partnership Agreements, AMECO database.

Figure 12.1  Ex ante additionality targets (2014–2020)

should increase their public investment. MSs still facing limited fiscal space, instead, will
not be able to further reduce public investment in order to comply with the additional-
ity target (for example, Portugal, Italy and Greece). In general, the minimum investment
requirements are below the actual average of public investment registered in 2007–2013,
but this is partly justified as the investment requirements are the ‘minimum’ baseline to be
reached. Other factors such as privatisations, reduced needs for basic infrastructure, and
a shift from fixed to soft investments (for example, from basic infrastructure to human
capital) are also expected to cause a reduction of capital expenditure in some MS.

The Investment Clause

The Commission’s Annual Growth Surveys of 2012 (European Commission 2011) and
2013 (European Commission 2012c) presented a first opening for a specific consideration
of public investment expenditure under the EU’s economic governance, recommending
a balance between investment and fiscal consolidation. In 2012, the ‘blueprint for a deep
and genuine EMU [Economic and Monetary Union]’ (European Commission 2012a)
proposed, under certain conditions, that public investment with a proven impact on
the sustainability of public finances could qualify for a temporary deviation from the
medium-­term budget objective or the adjustment path towards it.
Following these moves, an ‘investment clause’ was launched, allowing MSs to tem-
porarily deviate from their medium-­ term budgetary objectives, taking into account
co-­financing of Cohesion policy and the Trans-­European Transport Network (TEN-­
T). The clause can be applied when adverse economic circumstances are observed,
provided that this leads to increased public investment, the deficit is kept under 3 per
cent of GDP, and the deviation is temporary – in other words that this extra ­spending
194  Handbook on Cohesion policy in the EU

is ­compensated within the time frame of the Stability or Convergence Programme

(European Commission  2014b; European Commission 2015a). The clause was applied
in 2013 for Bulgaria and in 2014 for Bulgaria, Romania and Slovakia (European
Commission 2015a). As stated by Prota and Viesti (2013), this proposal was a first,
‘very modest’ step towards flexibility in the Stability and Growth Pact (SGP), while
the European Parliament had proposed a more ambitious approach, supporting the
full exclusion of national co-­financing of the ESIF in the preventive arm of the SGP
(European Parliament 2013). In 2015, the European Commission provided additional
details regarding the application of flexibility instruments in the framework of the SGP
(European Commission 2015a), clarifying its conditions and stating that the investment
clause will be applied irrespective of the economic condition of the euro area or EU, in
order to link it with the cyclical conditions faced in each country. MSs will also be able to
benefit from this clause in times of recession or when their output is well below potential.
In the same document, the Commission also clarifies the flexibility mechanism in the co-­
financing of the European Fund for Strategic Investment (EFSI, discussed below).

THE EUROPEAN INVESTMENT BANK SUPPORTING

COHESION POLICY

The Evolution of the European Investment Bank

The Treaty of Rome provided for the establishment of a Bank intended ‘to facilitate
the economic expansion of the Community through the creation of new resources’
(European Economic Community 1957: Art. 3 (j)). The Single European Act5 envisaged
the European Investment Bank (EIB) to promote the overall harmonious development,
while the Treaty on the European Union established the EIB as a European Community
body and as the European bank for regional development (European Union 2012a: pro-
tocol no. 5 and no. 28). Currently, the EIB’s objectives are to contribute to the balanced
and steady development of the internal market in the interest of the Union to promote
the economic, social and territorial cohesion in the Union (European Union 2012b:
Art. 309) and to support the implementation of the Europe 2020 objectives (European
Commission 2010).
With €77 billion of lending volume in 2014, the EIB is the world’s largest multilateral
lending institution, and throughout its history it has contributed to regional development
in close cooperation with the European Commission. The achievement of economic and
social cohesion is one of the primary lending objectives of the EIB, representing more
than 30 per cent of total lending activity in the EU. The EIB’s activities (blending, lending
and advising – discussed below) have been gradually developed alongside Cohesion
policy, through a wide range of financial products and technical assistance initiatives.
At the onset of the crisis, the EIB contributed to the EU economic recovery plan,
implementing a significant but temporary increase of its activities. A capital injection in
2012 consolidated this increase and was designed to have a countercyclical impact on the
European economy (European Commission and European Investment Bank 2012).
The EIB is now one of the key actors of the Investment Plan for Europe, which
addresses the key challenges of the investment environment within the EU, while targeting
 Cohesion policy, EU economic governance and the EIB  ­195

investment projects that support EU policy priorities. The regulations covering the key
components of the Investment Plan for Europe were only recently approved (European
Parliament and Council 2015) and these also include establishing the European Fund for
Strategic Investment (EFSI) and the European Investment Advisory Hub (EIAH), for
both of which the EIB is the key actor. Member states should be able to use the EFSI to
contribute to financing of eligible projects, thus allowing an appropriate level of comple-
mentarity and synergy (European Parliament and Council 2015).

EIB Activities

The EIB supports Cohesion policy via a number instruments in several sectors, including
innovation, digital economy and SME development. In illustration of the wide array of
measures implemented by the EIB in support of the regional and urban development, in
this section we focus on the main instruments, grouped under three main categories of
EIB activities already mentioned: blending, lending and advisory services.6

Blending with the European Structural and Investment Funds (ESIF): Structural
Programme Loans
The EIB administers a so-­called Structural Programme Loan (SPL) that can support with
additional resources the programmes cofinanced by the Structural and Cohesion Funds.
With the SPL, the EIB offers lending to MSs and regions which complements the EU
resources allocated to the programmes, creating leverage through blending with public
and private funds, and facilitating the implementation of Operational Programmes.
The SPL finances in particular part of the domestic co-­financing contribution of pro-
grammes, and has evolved in parallel with Cohesion policy.
This scheme started during 2000–2006 when some MSs faced liquidity issues in
co-­financing Operational Programmes. Therefore, the EIB addressed this implemen-
tation gap by offering complementary lending in long-­ term loans for the national
and/or regional authorities in order to spur investment and projects in these regions
(European Parliament 2006). Between 2000 and 2006, the EIB approved loans amount-
ing to €4.8 billion, equivalent to €75 billion of investment costs, amounting to approxi-
mately one-­third of the Cohesion policy allocation over the period. In 2007–2013 the
EIB financed approximately 30 SPLs. The geographical distribution of SPLs varies
(Kazamaki Ottersten and Sioliou 2014a), with the bulk of the SPL portfolio benefiting
Hungary (€3.4 billion), Poland (€2.1 billion), Greece (€2.0 billion) and Italy (€1.8 billion).
For the 2014–2020 period, the EIB received requests to assist through SPLs even prior
to the official approval of Partnership Agreements and Operational Programmes. Up to
September 2015, 23 national or regional co-­financing operations have been initiated, for
a potential €11.7 billion pipeline. Of these, €7.3 billion have already been approved by
the EIB governing bodies. SPLs provide financial added value, with low cost of funding,
long maturity and high flexibility in both the timing of disbursements and the alloca-
tion of funds. Meanwhile, as with any other loan, SPLs count as public debt and are
therefore subject to any macroeconomic conditionalities or debt ceilings applied to a MS.
According to an internal evaluation by the EIB on the SPL operations financed over the
last ten years, SPLs are a relevant and effective instrument to achieve the Bank’s objec-
tives in support of cohesion. They have also been a useful tool to maintain the ­significant
196  Handbook on Cohesion policy in the EU

investment activity in countries which were particularly hit by the crisis (European
Investment Bank 2013b).

Blending with ESIF: financial instruments

Financial instruments (FIs) are designed as mechanisms to employ EU budgetary
resources as revolving instruments to be repaid by the final recipients for successive reuse,
with a clear demarcation with non-­recoverable grants. These instruments have been in
use for many years under the umbrella of Cohesion policy, primarily to support enter-
prises. In 2007–2013 the use of financial instruments (then called ‘financial engineering
instruments’) gained more prominence compared to the past. In particular, structured
procedures to establish these instruments were incorporated into the regulatory frame-
work applicable to the European Regional Development Fund (ERDF) and European
Social Fund (ESF). In 2007–2013 financial instruments were employed in three invest-
ment areas: SMEs, sustainable urban development and energy efficiency in buildings.
By the end of 2013, these instruments had received financial support from operational
programmes for a total exceeding €16 billion, mostly directed at SMEs (European
Commission 2015b).
In this context, from 2004 to 2013, the EIB participated in a number of technical assis-
tance initiatives aimed at supporting managing authorities in establishing financial instru-
ments in specific fields. For example, the JESSICA initiative (Joint European Support
for Sustainable Investment in City Areas) was created to assist managing authorities in
establishing financial instruments in the urban development sector. The initiative, which
was managed by the EIB on behalf of the European Commission, has facilitated the
establishment of revolving mechanisms to support urban infrastructure as well as energy
efficiency investment in cities, which at the time were new areas for the use of financial
instruments. Other similar initiatives were launched to support the use of FIs in favour
of SMEs (Joint European Resources for Micro and Medium Enterprises, JEREMIE), for
microcredit (Joint Action to Support Micro-­finance Institutions in Europe, JASMINE)
and specifically to support the EU12 in the period 2004 to 2007. The relevance of FIs has
been strongly reinforced in the 2014–2020 CPR, which has extended the scope of FIs to
cover all the ESIF and Cohesion policy thematic objectives. This strengthening is based
on the belief that FIs offer a strong potential to use scarce EU budgetary resources more
effectively – re-­use of funds, leveraging of private sector resources, stronger incentives to
project quality – in order to achieve CP objectives.

Lending for territorial Cohesion

The EIB operates in a significantly diversified EU sub-­sovereign institutional landscape.
Municipalities remain the foundation of the European territorial organisation despite
the significant differences in their size (even within countries), competences and finan-
cial autonomy. Furthermore, the territorial organisation, as well as the vertical fiscal
management, has evolved with the crisis (Hulbert and Vammalle 2014). Subnational
governments have been key interlocutors in the EIB’s interventions with regard to ter-
ritorial development, and specifically urban regeneration, social housing, urban mobility,
cultural heritage, public buildings and energy efficiency in buildings.
At the EU level, the reinforced economic governance rules triggered in some countries
a symmetric reaction through internal stability pacts, while MSs have to ensure that
 Cohesion policy, EU economic governance and the EIB  ­197

all levels of subgovernments reflect the EU’s budgetary framework. The scissors effect
between increased local needs and more strained local finances for investment observed
during the crisis period (Dhéret et al. 2012; Allain-­Dupre et al. 2012) has put local govern-
ments in a difficult position, facing the consequences of the crisis while simultaneously
performing apparently contradictory roles in promoting sustainable development and
delivering Europe 2020 objectives. In this context, EIB financing acquires an increased
significance, given that it has also proved to be a reliable source of advantageous financ-
ing for successive operations, thus creating a virtuous cycle for investments (Field et al.
2015). In the newer MSs, the EIB has established solid cooperation, based also on the
effects that the Bank’s prevailing protocols (due diligence) have on enhancing the imple-
mentation of EU policies.
The EIB’s approach in territorial development further dictates the financing of
‘planning-­led’ projects stemming from comprehensive and publicly approved strategies,
translated into coherent investment plans, and implemented in line with EU and national
legislation (Kazamaki Ottersten and Sioliou 2014b). This approach adapts to local con-
texts and spatial scales, and includes the assessment of multiple (for instance: institutional,
territorial, social) dimensions of projects, and incorporating the fundamental principles
of the Leipzig Charter. Over the years 2010–2015 the EIB has financed approximately
€56 billion in urban development, as well as technical assistance to support these goals in
a large number of cities.

Advisory services
EIB financial services have long cooperated closely with borrowers and project promot-
ers, as have the EIB’s technical services, albeit in a somewhat different capacity. Several
advisory actions for technical assistance have evolved in parallel with Cohesion policy.
For instance, after the 2004 enlargement, the EIB in cooperation with the European
Commission and the European Bank for Reconstruction and Development (EBRD)
launched Joint Assistance to Support Projects in European Regions (JASPERS), a tech-
nical assistance facility providing support to MSs for the preparation of major projects
co-­financed by the Structural and Cohesion Funds. JASPERS has expanded significantly
in size, scope and importance. It is worth mentioning that SPLs in several cases are com-
plemented with technical and advisory assistance. The work of JASPERS, and foremost
the complementarity of different actions under different EIB technical and financial
assistance, can result in a significant transfer of technical financial knowledge to the MS
throughout the project cycle. Recently the EIB has launched Fi-­compass, an advisory
platform on financial instruments serving the ESIF.
The most recent development in advisory services is the European Advisory Hub,
created along with the EFSI (discussed in the next section). The hub will serve as a
single access point for a wide range of advisory services and it is built on existing expe-
rience and structures, including those mentioned above. The advisory hub will support
project identification, preparation, structuring and implementation including the
use of financial instruments, advice on structuring and implementing public-­private
­partnerships and facilitation of access to finance. It will also serve as a coopera-
tion platform, a peer-­to-­peer exchange and sharing of know-­how regarding advisory
services.
198  Handbook on Cohesion policy in the EU

The European Structural and Investment Funds and European Fund for Strategic
Investments

The Investment Plan for Europe is the key initiative aiming also to unlock up to
€315 billion in additional public and private investment in the real economy via the
European Fund for Strategic Investments (EFSI) (European Parliament and Council
2015). The overarching policy goals are common for both the EFSI and the ESIF
(growth and jobs in line with the Europe 2020 strategy), but the EFSI specifically
addresses the underinvestment still observed in the EU economy. The EFSI and ESIF
differ also in structure, financial management, governance and detailed eligibility rules.
Moreover, the EFSI, despite the definition of ‘fund’, is a risk-­bearing facility, without
specific territorial allocation, supported by an EU guarantee, enabling the EIB to
finance projects with a higher risk profile than those that normally qualify for EIB
support. In fact, if one perceives the ESIF as a redistribution mechanism among the
member states, then the EFSI could be perceived as a mechanism of stabilisation and
countercyclical function against a backdrop of high unemployment and low invest-
ment (Sioliou et al. 2015).
The regulatory framework envisages the EFSI as another complementary source of
financing for projects eligible under the ESIF, if eligibility and regulatory requirements
are met. It is expected that the European Commission will provide guidance so as to
ensure that the combined use of Union instruments with EIB financing under the EU
guarantee allows an appropriate level of complementarity and synergy.

CONCLUSIONS

The current economic crisis marks the first time that disparities have stopped shrinking
in the EU since the early 1990s. The effect is primarily due to the dramatic impact of the
crisis in southern member states, which have traditionally been the main beneficiaries of
Cohesion policy. Some of them (Spain and Greece) had achieved a trend of convergence
that has been suddenly interrupted and almost completely erased. Others (Italy and
Portugal) were growing at lower pace, with development held back by structural deficien-
cies which were not addressed.
Past quantitative analyses of the extent to which disparities have been reducing7 have
tended to overlook critical variables that may indicate how sustainable (or indeed unsus-
tainable) economic growth and unemployment reduction have been, and how likely it is
that they are maintained over time. In other words, the macroeconomic framework and
its intertemporal consequences on economic growth and employment have been largely
ignored factors in the analysis of Cohesion policy. As discussed earlier in the chapter,
the reduction in disparities within the EU occurred in parallel with significant diver-
gences in key macroeconomic variables. These variables are inter alia at the source of
the dramatic impact of the crisis in the member states that have accumulated the highest
macroeconomic imbalances (see also, European Central Bank 2015). The result is that
more than one decade of convergence has disappeared, and levels of development in rela-
tion to the average of the EU are back to those observed in the 1990s. While the macro-
economic factors are of a national nature and some of them cannot be broken down to
 Cohesion policy, EU economic governance and the EIB  ­199

the regional level, they seem to be critical to explain regional development and economic
growth of regions. The main lesson learnt is that the macroeconomic framework seems
to be essential to achieve the objective of Article 174, Treaty on the Functioning of the
European  Union (TFEU). European Cohesion policy is not in a position to achieve the
objective of reducing disparities in the levels of development as enshrined in the Treaty if
it operates in isolation of the macroeconomic context.
The evolution of the economic governance of the EU coupled with the dramatic
impact of the economic crisis in some MSs and regions has actually been a driver of some
redesign of Cohesion policy in its rationale and functioning. It is clear that Cohesion
policy cannot operate in isolation from fiscal and macroeconomic policies. In order to
support Europe’s recovery and to achieve a reduction of regional disparities as set by the
Treaty, MSs cannot rely exclusively on European resources complemented by the required
co-­financing. In a context of slow recovery, where fiscal and macroeconomic stability are
at the core of the EU economic policy’s action, the preservation of additional growth-­
enhancing expenditure, and the implementation of structural reforms making regional
economies more flexible and open to global markets, seem to be unavoidable conditions.
Many local and regional governments have faced the paradox of fiscal limitations on the
one hand and the need to enhance potential growth through public investment projects
on the other. In a context where fiscal stability is a necessary requirement, the need for
additional investment financing for medium-­term investment plans has increased. This is
the context in which the new architecture of the 2014–2020 policy and the enhanced role
of the EIB should be interpreted.
This chapter has highlighted how SPLs, for example, have developed into a solid
financial product that has played a crucial role in enabling Cohesion policy allocations
to be spent (by lending resources to regions and national authorities for the required
domestic co-­financing). Further, the EIB has long supported the sub-­sovereign govern-
ments by providing a reliable and steady source of advantageous financing. The Bank
has also played, and continues to play, an important role in supporting the capacity of
regional governments in implementing investment projects, which is at the same time a
condition for long-­term growth and a contribution to the recovery of Europe. In this
new context, the plan launched to overcome the investment gap (European Commission
2014c), including the creation of the EFSI and of the Advisory Hub, and the decisions
to increase flexibility in the economic governance of the EU with a special provision for
EFSI co-­financing (European Commission 2015a), should guarantee more resources for
investment; while the ongoing implementation of much-­needed reforms should guaran-
tee a more fertile ground for its effectiveness.
Further impacts of the EU economic policy on Cohesion policy are difficult to
decode. On the one hand, a comprehensive Economic and Monetary Union (European
Commission 2015c) could imply shifting away from the place-­based approach, in particu-
lar emphasising a top-­down perspective on EU-­wide goals with less connection to ter-
ritorial issues (Begg et al. 2014). On the other hand, budgetary pressures for investment
policies (at EU and national level) might emphasise the role of revolving instruments that
find their best application in territorial development programmes. In any case, an effec-
tive Cohesion policy has necessarily to be integrated in an evolved framework of fiscal
and growth strategies to support an EU path to long-­term, sustainable development.
Whatever the scenario, given the long path ahead for fiscal consolidation strategies, it
200  Handbook on Cohesion policy in the EU

is likely that the EIB will continue to play a key role in supporting member states and
regions to achieve the goals of regional and urban development.

NOTES

* The authors of this chapter are officials of the EU Commission and/or the European Investment Bank.
The views expressed in this chapter are those of the authors and do not necessarily reflect the position of
the European Commission and/or the EIB.
1. Italy, Spain, Portugal, Greece and Cyprus.
2. Data on exports of goods and services are not available for the Greek regions.
3. The excessive deficit procedure is an action launched by the EU Commission against MSs that exceed the
budgetary deficit ceiling imposed by the EU’s Stability and Growth Pact legislation, comprising several
steps potentially culminating in the application of sanctions. For more detail, see http://ec.europa.eu/euro-
stat/statistics-­
explained/index.php/Glossary:Excessive_deficit_procedure_(EDP) (accessed 3 November
2015).
4. European Commission Evidence (2012), ‘Commission proposes to suspend €495 million of Cohesion Fund
for Hungary for 2013 for failure to address excessive deficit’, accessed 18 October 2015 at http://europa.eu/
rapid/press-­release_IP-­12-­161_en.htm.
5. http://eur-­lex.europa.eu/legal-­content/EN/TXT/HTML/?uri5URISERV:xy0027&from5EN.
6. Full details of all EIB activities can be found in the Bank’s annual reports, published on the EIB’s website.
7. For an overview, see Pieńkowski and Berkowitz (2015).

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13.  Cohesion policy and regional mobilisation
Eve Hepburn

INTRODUCTION

The aim of this chapter is to explore the changing perceptions of European Union (EU)
Cohesion policy by Europe’s diverse regions, and the opportunities it has created for sub-
national engagement. Much has been written about the ways in which the reform of the
Structural Funds in the late 1980s brought regions into the ambit of EU decision-­making,
thereby leading to new forms of ‘multilevel governance’ (Marks 1992; Hooghe   1995;
Jeffery 2000; Marks and Hooghe 2001; Piattoni 2009). However, less attention has been
given to how the regions themselves used the opportunities presented by Cohesion policy,
and European integration more generally, to meet their own political aims (Lynch 1996;
Elias 2009; Hepburn 2010).
The main question this chapter seeks to address is thus: how have substate regions
mobilised on the issue of EU Cohesion policy? This discussion explores the changing
attitudes of regional actors towards European integration over time, and how this has
been linked to EU Cohesion policy. It begins by reflecting on the cautious (and at times
hostile) approach adopted by substate regions towards the European project in the 1970s
and early 1980s. It then considers the ways in which the reform of Cohesion policy –
also known as the ‘regional policy’ of the EU – began to be correlated in the minds of
regional actors with an institutionally reformed ‘Europe of the Regions’ during the 1990s.
At this point, the economic and political empowerment of the regions – through receipt
and implementation of EU regional development funds, as well as access to European
decision-­making – were seen to go hand-­in-­hand.
However, two critical junctures altered this path of regional mobilisation on European
integration. Firstly, the continuing weakness of regional representation in European
institutions disappointed regional actors which had hoped for a stronger voice in
Europe. This perceived weakness of regional representation was manifested through
the purely consultative role of the Committee of the Regions (see Schönlau, Chapter
10, this volume) and the strengthening of member state powers in European treaties
to the perceived detriment of the regions. Secondly, EU enlargement to Central and
Eastern   Europe (CEE) deprived many regions in the west – where autonomy-­seeking
regionalist parties were more active – of Cohesion policy funds, thereby reducing some
of the economic incentives for regional support for Europe. In response, many regionalist
actors adopted more critical stances on Europe as well as more radicalised constitutional
aims, leading to several independence referenda.
This chapter therefore charts the ways in which Cohesion policy was intrinsically
linked to the rise and fall of a Europe of the Regions (Hepburn 2008). It explores how the
reform of the Structural Funds in 1988 created new economic and political opportunities
for regional recognition, and subsequently how these regional opportunities appeared
to dwindle away. Finally, the chapter reflects on the current stance of regionalist parties

203
204  Handbook on Cohesion policy in the EU

on Europe, which have moved from seeking soft forms of autonomy in a Europe of the
Regions to demanding outright independence. Recent plebiscites on independence in
Scotland, Catalonia and elsewhere have created a headache for EU actors, in that there
is no guidance in the current treaties on how to deal with ‘internal enlargement’. This
chapter raises the question of whether the EU is itself partly responsible for the rise of
independence referenda, in that there had been an opportunity for the EU to accommo-
date demands for softer forms of regional autonomy in the 1990s, but this opportunity
slipped through its fingers.

EARLY REGIONAL FRUSTRATION WITH EUROPE

Very few regional political actors have had a consistent line on Europe: either persis-
tently and unconditionally embracing the European project on one hand, or steadfastly
rejecting every aspect of Europe on the other. Instead, regionalist actors have tended
to alter their positions on Europe over time, and often even in a cyclical manner, in
response to developments at the supranational and domestic levels (Hepburn 2010;
Elias 2009). Taking the introduction of European Parliament elections as our starting
point, the first phase in regional mobilisation on Cohesion policy may be described as
the ‘pre-­Structural Fund reform’ period, which lasted from the late 1970s to the late
1980s.
During this first period, regional actors – in particular, parties of varying political
stripes at the regional level – were largely unconvinced by the evolving European project.
Certainly, the introduction of direct European Parliament elections required political
actors at the regional (and indeed state) level to take European issues more seriously, and
to carve out more substantive positions on European policies (Hooghe and Keating  1994;
Ladrech 2002; Bulmer and Burch 2000). However, many regional-­level parties across
Europe – including autonomy-­ seeking regionalist parties – perceived the European
Economic Community (EEC) as a distant, elitist and bureaucratic organisation, which
was run by states for states’ interests alone (Elias 2009). As there were no direct channels
for regions to influence decision-­making in Brussels, many regional parties felt periph-
eralised from the new centres of economic and political power (Hepburn 2010). In turn,
regional governments, parliaments and political parties often demanded more influence
in Brussels through direct and indirect (that is, state delegation) channels (Jeffery 1997,
2000). This demand for more access to and influence over European decision-­making was
a common refrain amongst almost all regional-­level parties, regardless of their ideological
orientation (see Hepburn 2010).
However, the regionalist parties1 on the centre-­left had an additional fight to pick
with Brussels: they opposed the capitalist underpinnings of economic integration and
the deleterious effects of the single market on poorer regions. This critique was evident,
for example, in the party rhetoric of the Scottish National Party (SNP) (Hepburn 2006),
Plaid Cymru – the Party of Wales (Elias 2008a), the Galician Nationalist Bloc and the
Andalucian Party in Spain (Elias 2006; Montabes Pereira et al. 2006; Gómez-­Reino
et al.   2008), Sardignia Natzione (Sardinia Nation in Italy, Hepburn 2010), and the
Corsican National Liberation Front in France (Hepburn and Elias 2011). These regional-
ist parties feared the exacerbation of economic inequalities and their lack of control over
 Cohesion policy and regional mobilisation  ­205

economic integration. In particular, there were concerns about how traditional regional
economies would be adversely affected by the requirements of the Common Agricultural
Policy (CAP) and Common Fisheries Policy (CFP) (see Elias 2009; Hepburn 2010). To
that end, European integration was seen as exacerbating regional economic development
problems and isolating regional actors from decision-­making.

STRUCTURAL FUND REFORM AND THE REGIONS

These negative views of Europe changed with the 1988 reform of the EU Structural
Funds, which marked a critical juncture in regional attitudes to Europe. The period from
the late 1980s to the mid-­1990s, which can be described as the immediate ‘post-­structural
reform’ phase, saw regions embrace new opportunities for engagement in European
structures.
As other chapters in this volume have explored in greater depth (such as those of
Brunazzo, Chapter 1; Begg, Chapter 3; Leonardi and Holguin, Chapter 27), the EU has
instigated a range of regional policies aimed to rectify spatial inequalities resulting from
market integration since the mid-­1970s. EU regional policies were pursued in parallel
with state regional development policies, which since 1945 had been implemented on a
top-­down basis by European states in order to integrate poorer areas into the national
economy (Sharpe 1993; Keating 1996). At the EU level, regional problems were first
identified following the implementation of the CAP, which was seen to benefit some
regions and disadvantage others (Hooghe and Keating 1994). The European Regional
Development Fund (ERDF), which was established in 1975, entailed the distribution
of funds on the basis of member state quotas (see Brunazzo, Chapter 1, this volume).
However, this policy constituted little more than an interstate transfer mechanism
(Keating 1996) and it was criticised by regional actors for its failure to establish a
European-­wide distribution of resources or to create mechanisms to send monies to
target regions. As such, regional policy during this period was underdeveloped, under-
funded and almost entirely under the control of member states.
The 1988 reform of Community regional policy dramatically altered this situation
(Moravcsik 1991; Bache and Jones 2000). Uncoordinated regional development policies
were expanded and transformed into a more cohesive regional development programme,
primarily in response to the need to cope with increased economic disparities following
EEC enlargement to the Mediterranean and Ireland. Regional policy was thus reformu-
lated and concentrated territorially to improve the competitive potential of less-­developed
regions. Moreover, Cohesion policy was linked to European President Jacques Delors’s
aim of creating a stronger ‘social dimension’ to European integration, as a counterbal-
ance to the free-­market thrust of the single market. The social rationale behind regional
policy was part of the general concept of ‘cohesion’, which had been introduced into the
Single European Act of 1985 (Hooghe and Keating 1994).
As discussed by Brunazzo in Chapter 1 of this volume, the outcome of the 1988
reforms was to double the amount allocated to Structural Funds, making this the second-­
largest item on the EU budget (Hooghe and Keating 1994). The European Commission
also adopted a stronger leadership role in determining priorities and programmes,
giving regional policy a stronger pan-­European orientation and reducing the control
206  Handbook on Cohesion policy in the EU

of i­ndividual member states (ibid.). Furthermore, two important principles became the
bedrock of the new policy: subsidiarity, whereby decision-­making was to be exercised at
the lowest possible level (which often meant the regional level); and partnership, which
necessitated the involvement of the EU, state and regional authorities in coordinating
policies. The latter principle was especially important as it gave regions direct access to
European decision-­making, so that regional policy was not just for the regions but by
the regions (Nanetti 1996). As such, ‘the 1988 reforms created a range of openings for
regional mobilisation. The region was confirmed as the key organizing principle in EU
cohesion policy’ (Hooghe and Keating 1994: 376).

MULTILEVEL GOVERNANCE AND REGIONAL ENGAGEMENT

The inclusion of a regional ‘third’ level of government (Bullman 1997) in EU decision-­

making (on regional policy) – alongside states and the EU – was seen by many to hasten
the development of a system of multilevel governance (MLG). This term was first
introduced by Gary Marks (1992) in an analysis of how the reform of the EU Structural
Funds in 1988 had created opportunities for regions to engage in EU policy-­making and
implementation. Thus the initial treatment of the concept was to explain how regional
tiers of government had been brought into the ambit of European decision-­making
through ‘a system of continuous negotiation among nested governments at several ter-
ritorial tiers’ (Marks 1992: 392). Regional participation in European affairs presented
a third level of decision-­making alongside the national and supranational levels, and
thus decision-­making was diffused across multiple political levels, arenas and contexts
(Piattoni 2009).
Hooghe (1995: 9) argues that regional (or subnational) interest formation in the EU
has been an important indicator of the nature of the Euro-­polity. This perception is part
of Hooghe’s broader argument that ‘multi-­level governance is the only model where
regions would be a governmental level of importance next to the national, European and
local arenas. This Europe cannot be one of the national states, nor of the regions, but
only a Europe with the Regions’. Although it is debatable whether the Structural Funds
have truly empowered the regions, EU reform of regional policy was seen to encourage
the articulation of ‘political demands in regional terms and provided objects for political
mobilisation’ (Hooghe and Keating 1994: 370).
From the 1980s onwards, there was a proliferation of regional European-­wide organisa-
tions including pro-­regional lobbies, interregional associations and cross-­border associa-
tions (Keating 1998). EU regional intervention was seen to result in a surge of bottom-­up
regional mobilisation, whereby regions were pressing for a greater role in state and European
policy-­making (Weyand 1997). There were a number of ways in which regions sought access
to EU decision-­making bodies. The creation of the Committee of the Regions (CoR) in
1994 by the Maastricht Treaty provided a political arena for voicing regional demands.
The CoR, which is a consultative body, nevertheless created the first formal recognition of
regional governments in the EU (Jeffery 1997). In addition, more than 225 regional infor-
mation offices have been established in Brussels since 1985, in order to lobby European
institutions, monitor Europam Commission (EC) regulations and support regional propos-
als in European political processes (Tatham and Thau 2013). Finally, the Maastricht Treaty
 Cohesion policy and regional mobilisation  ­207

(1992) granted regional governments the constitutional ability to represent member state
interests within the EU Council of Ministers. Thus, scholars have argued that regionalisa-
tion was a direct outcome of Europeanisation (Sturm and Dieringer 2005).
However, Hooghe (1995) also found that regions – understood specifically as regional
executives – did not have uniform opportunities or capacities to access European decision-­
making. Instead, some regions have been able to mobilise their demands in Europe more
effectively than others. In particular, the larger, wealthier regions with significant legislative
powers have been more successful in influencing EU policy than smaller, poorer admin-
istrative regions (Hooghe 1995). Hooghe and Keating posited that regionalist mobilisa-
tion has been weakest in Objective 1 regions, especially on the periphery and in Southern
Europe. This is due to a number of factors, including their weaker ‘economic importance,
their political skills, their administrative infrastructure and their ability to mobilize civil
society behind the efforts of regional governments’ (Hooghe and Keating 1994: 375).
In addition, some research has found that regions that have greater control over
regional policy are able to access European decision-­making channels more effectively
than those with limited control in a centralised ‘gatekeeper’ state (Bache and Jones 2000).
To illustrate, scholarship has found that the Scottish Executive/Government, which has
enjoyed exclusive competence for regional policy, has been able to forge a much stronger
relationship with the European Commission than the Spanish regions, where the central
state has monopolised this relationship (Bache and Jones 2000; MacPhail 2008). Finally,
the ability to represent member states in the Council is restricted to a small handful of
regions in Belgium, Austria and Germany (all federal states); thus, it is certainly not a
uniform right (Skoutaris 2013).
However, this discussion is interested not only in the activities of regional executives,
which has been the focus of much of the literature on ‘regions in Europe’ described
above, but also the attitudes of regionalist actors – that is, parties with specific demands
for enhanced autonomy – towards the European project. Jeffery (2000: 8) argues that
subnational authorities (SNAs) ‘are typically portrayed [in MLG] as essentially incon-
sequential and passive players until either an incidental by-­product of central state–EU
interplay provides an opportunity for mobilisation, or a central government decision is
taken which passes decision-­making powers down to SNAs’. Put a different way, MLG
is seen to cast regions as inert objects of decision-­making, folded into institutional
structures, which are unable to change their position in the hierarchical structure. There
is little analysis of how regions themselves seek to change the dynamics that facilitate
European policy and structural change. To fill this gap, this discussion follows in the
footsteps of Keating et al. (2003) and Bukowski et al. (2003) by considering how regional
political parties (in both government and opposition at the regional level) have mobilised
on European issues, and linked the reform of Structural Funds and the new opportunity
structures to access EU decision-­making with a Europe of the Regions.

EUROPE OF THE REGIONS

While academics – and later the European Commission itself – began to talk about mul-
tilevel governance processes in the 1990s, regional political parties began to evoke the
imagery of a Europe of the Regions as an aspiration to meet their specific demands for
208  Handbook on Cohesion policy in the EU

self-­determination. Europe appeared to hold the possibility of new forms of autonomy

in an age of interdependence, as well as promises of material resources. In this sense, EU
regional policy – and the institutional opportunities for engagement that it presented –
was a significant element in the glue that adhered regional-­level parties to the European
project in the late 1980s.
In a 2008 special issue of Regional and Federal Studies entitled ‘Whatever happened
to a Europe of the Regions?’, scholars demonstrated how substate regionalist parties
became the most ‘vociferous advocates’ of a Europe of the Regions in the 1980s and early
1990s (Elias 2008b). Individual regionalist parties had very different motivations for sup-
porting a Europe of the Regions, which included functional goals (access to European
Structural Funds and other resources), constitutional goals (being linked to federalism,
devolution and independence), and discursive goals (such as being perceived as legitimate
pro-­European actors) (Hepburn 2010). However, on a general level, regionalist parties
viewed changes at the European level – such as the reform of the Structural Funds and
the creation of a Committee of the Regions – as positive. As Elias argues, such develop-
ments were ‘hailed by these actors as evidence that a very different kind of European
polity was being built, one which would see Europe’s small nations and regions assume
a central role in the process of governing Europe’ (Elias 2008b; see also Keating 2001;
Jolly 2007).
More specifically, EU Cohesion policy was of value to regionalist parties for both
symbolic and functional purposes. On a functional level, a primary goal of regionalist
parties is the economic empowerment of the region (Hepburn 2009). The European
Commission’s offer of greater economic assistance was lauded by regional actors. This
was especially true in poorer regions whereby, for example, regionalist parties in Sardinia
(Italy), Wales (United Kingdom) and Andalusia (Spain) perceived EU Cohesion policy
as a solution to problems of economic underdevelopment and infrastructural weakness.
For example, the reform of the Structural Funds in 1988 qualified Sardinia for Objective
1 status, making it a main priority of EU Cohesion policy as it had a gross domestic
product (GDP) of less than 75 per cent of the European average. Sardinian political
parties were enthused with the injection of new funds, though in some ways the funds
replaced the island’s economic dependency on the Italian state with a new dependency
on Europe (Hepburn 2009). Similarly, Andalusia was classified as Objective 1 after the
Structural Funds reform, becoming the top Spanish region in receipt of EU funding.
The Andalucian Socialist Party, which believed that Andalucia had been economically
discriminated against by the Spanish state, began to view EU Cohesion policy as a valu-
able source of funds (Montero 2001). In Wales, Plaid Cymru viewed the reform of the
Structural Funds as a positive development in the EU’s recognition of the economic
needs of the poorest regions in Europe, and lauded the significant amount of funds to
be invested in the country’s rural and deprived urban areas (Elias 2009: 64). These cases
appear to confirm the argument put forward by Hooghe and Keating (1994) that ‘EU
cohesion policy has become the niche for the demands of weaker and poorer regions’;
although at the same time, regionalist parties in wealthier regions – including Catalonia,
the Basque Country and Scotland – were also strongly positive about the receipt of EU
Structural Funds (Bache and Jones 2000; Hepburn 2006, 2010).
Clearly, then, Cohesion policy offered material gains to regions, but it also had an
important symbolic dimension. Regional parties and executives adopted a variety of
 Cohesion policy and regional mobilisation  ­209

demands for autonomy in Europe that amounted to something less than sovereign state
independence (Keating 1996; Elias 2009; Hepburn 2010). These demands were brought
under the umbrella term ‘Europe of the Regions’, which had both policy and consti-
tutional implications. On the one hand, it signified the possibility of realising policy
demands, such as economic resources, regional representation and increased control over
regional competences. On the other, it became the constitutional leitmotif of regional
parties, symbolising widespread frustration with the predominantly intergovernmental
workings of the EU which failed to recognise the rights and identities of regions and
stateless nations (Hepburn 2010).
To return to some of this chapter’s cases, in Scotland the EU became attractive to
parties seeking constitutional reform, and in particular, the imagery of a Europe of the
Regions was linked to the creation of a devolved Scottish Parliament. The SNP also
looked more favourably at the security and trading opportunities that Europe afforded,
adopting a policy of independence in Europe in 1988 (though it also briefly toyed
with the idea of a regionalised Europe in 1994) (see Hepburn, 2006, 2009). In Wales,
Plaid  Cymru became a strong advocate of a Europe of the Regions as it offered ‘a fea-
sible way forward for a small nation seeking to free itself from the centre–periphery con-
flict with the British state, but without having to become a fully independent sovereign
state’ (Elias 2009: 57). Elsewhere, in Sardinia, Catalonia, the Basque Country, Veneto,
Galicia, Andalucia, Bavaria and Brittany, regionalist parties of all political stripes began
supporting the goal of self-­determination in a Europe of the Regions (or Peoples)
(Jolly  2007; Elias 2009; Hepburn 2010). But it was not only regionalist parties that began
to link regional autonomy with Europe: regional branches of Christian Democratic and
centre-­left parties across Europe also became firm advocates of a Europe of the Regions
(Hepburn 2009, 2010).
The 1988 reform of the Structural Funds was therefore strongly linked with the pos-
sibilities for regional engagement in Europe, encapsulated in the imagery of a Europe of
the Regions. This phase in regional mobilisation in Europe lasted from 1988 until 1994,
the latter date marking the creation of the Committee of the Regions. Regionalist actors
saw Brussels as a new centre of resources to access, and an arena for advancing their
constitutional demands and policy interests. In particular, autonomy in Europe seemed
to offer a third way between independence and state-­centralism. I have argued elsewhere
that the imagery of a Europe of the Regions, which was flexible enough to mean different
things to different regional actors, led to a convergence of regionalist demands in Europe
(Hepburn 2008, 2010). However, this convergence was ultimately unsustainable.

THE CONVENTION, ENLARGEMENT AND REGIONS ‘LEFT

BEHIND’

While reformed Cohesion policy and possibilities for regional engagement in Europe
encouraged regionalist actors to become Euro-­enthusiasts in the early 1990s, from the
late 1990s onwards certain events and processes began to shatter this optimism. These
EU-­level developments included: (1) the objective limitation of opportunities for regional
engagement in Europe; and (2) European enlargement, which corresponded with a
decline in Cohesion policy funds and political representation for regions in Western
210  Handbook on Cohesion policy in the EU

Europe. Regionalist frustration with the Committee of the Regions (CoR) was probably
the first indicator that a Europe of the Regions was unlikely to become a reality. The
CoR was intended to give substate actors a formal role in European decision-­making
processes (Van der Knapp 1994). However, it had significant limitations. Firstly, the CoR
was an advisory body with little control over policy; this made the CoR a largely sym-
bolic institution with highly truncated reach and influence (Christiansen 1996; Loughlin
1996). Secondly, because the membership of the CoR was so diverse – including both
heavyweight legislative regions and small administrative regions with few powers – this
led to internal tensions and divisions, which served to fracture the body (Jeffery 2000;
McCarthy 1997). Finally, the CoR suffered from ‘functional overreach’, that is, having
to give too many opinions on too many issues, without any real influence over EU policy
(Christiansen 1996; Loughlin 1996). As a result of these weaknesses, some scholars have
argued that the CoR faced a ‘downward spiral of progressive obscurity and the frustra-
tion of its members’ aspirations’ (Christiansen 1996) (but see Schönlau, Chapter 10, this
volume for a very different take on the CoR).
Another disappointment to regional political actors was their failure to obtain guaran-
tees for regional recognition in the Convention on Europe, which formed the basis of the
draft European Constitution (see Elias 2009; Hepburn 2010). Regionalist parties – such
as the Scottish National Party, Plaid Cymru, Convergencia i Unio, the Galician National
Bloc, the Basque Nationalist Party and the Bavarian CSU (Christian Social Union) –
criticised the draft European Constitution for failing to recognise the multinational char-
acter of member states, or granting regions more rights in European decision-­making.
Instead, the intergovernmental nature of the European project was seen to be reinforced.
Moreover, the principle of subsidiarity – which was key to the 1988 structural reforms in
promising a redistribution of policy competences across different territorial levels – was
viewed as an empty shell (Elias 2006). As a result, some regionalist parties, such as the
SNP, threatened to oppose the Constitution (Hepburn 2010). In any case, the failure
of the Constitution appeared to signal the end of the need to discuss any deepening or
reform of European political integration.
Thirdly, regionalist parties became increasingly concerned that European integra-
tion was in fact disempowering them. This was most evident in Bavaria, where the
CSU sought to put a halt to the transfer of more and more Länder competences to
the European level (Jeffery 1997). Indeed, in Bavaria the idea of a ‘Europe of the
Regions’ was linked by the CSU to concerns about protecting the interests of the
German Länder (Hepburn 2008, 2010). The CSU proposed that European integra-
tion must go hand-­in-­hand with the protection of regional rights (Bauer 2006). But
when these rights failed to materialise, the CSU tried a different tack, by reforming
the German federal state to limit the effects of unwanted EU directives on regional
competences, or as Jeffery (2004) argues, to strengthen the ‘hard shell’ of the state to
protect the regions.
Together, these three issues – CoR weakness, lack of regional recognition in the trea-
ties, and perceived threats to regional competences – sounded the death knell of a Europe
of the Regions. But regionalist actors were not just concerned about the lack of political
rights and representation. They were also anxious about the reduction in material ben-
efits to regions. In 2004, during the same year that the draft European Constitution had
spelled out the dominance of states (and the correlative continuing weakness of regions)
 Cohesion policy and regional mobilisation  ­211

in the European project, enlargement to Central and Eastern Europe brought ten new
member states into the embrace of the European project.
At first, many regionalist parties were enthusiastic about welcoming new countries from
CEE into the European club. Parties such as the SNP and Plaid Cymru welcomed, in par-
ticular, the inclusion of small states – such as Malta, Cyprus, Estonia and Latvia (all with
less than 1.5 million inhabitants) – which undermined the arguments of anti-­regionalist
critics that places like Scotland or Catalonia were ‘too small’ to join the European club.
Furthermore, regionalist parties also welcomed the increased ethnic and linguistic diversity
that eastern enlargement would bring, which – it was hoped – would strengthen the legal
and political case to recognise such diversity everywhere, including amongst the regions
themselves (Elias 2009). Finally, the political grouping representing regionalist parties
in the European Parliament, the European Free Alliance (EFA), saw enlargement as an
opportunity to increase its membership amongst eastern parties and thus increase the
weight of regionalist demands in the European Parliament (Lynch and de Winter 2008).
However, as eastern enlargement became a reality, regionalist parties in the west
became aware of new challenges that this entailed. Firstly, enlargement resulted in a
reduction of MEPs in the ‘old’ member states to accommodate new Members of the
European Parliament (MEPs) from CEE. This meant that many regions where regional-
ist parties were highly active – such as Wales, Scotland, Catalonia, Flanders – lost elected
representatives and political clout in the European Parliament. Secondly, there was a slow
realisation that even though enlargement had brought several new member states into the
EU, ‘there was little prospect of a similar status being extended to other small nations
already in the EU as part of larger Member States’ (Elias 2007). The fact that there were
several small independent countries – smaller than Bavaria, Scotland or Catalonia, but
with more European representatives – underlined the inequality of territorial representa-
tion in Europe. Thirdly, the EFA extension into CEE had been problematic, due to the
lack of strong regionalist parties there (Lynch and de Winter 2008). Instead, most of the
new MEPs from CEE joined the ‘traditional’ class-­based Euro-­parties.
The final problem with eastern enlargement for (western) regionalist actors brings us
back to the issue of EU Cohesion policy. With the addition of ten new member states,
which generally had less-­developed economies than the ‘old’ members, the EU average
GDP fell. This had implications for the eligibility rules for Objective 1 status in the
Structural Funds. Under the 75 per cent rule for eligibility, several designated regions
in the ‘old’ member states dropped out, as the average fell with the inclusion of lower-­
income countries. This meant that poor regions such as Sardinia, Andalusia and Wales
were tipped over the 75 per cent threshold and denied Objective 1 status, despite their own
GDP not having risen in real terms. These regions received transitional, ­‘phasing-­out’
support during the 2007–2013 period (Begg 1998, 2008).
As many of the regions (where regionalist parties were active – such as Scotland, Wales,
Andalusia, Sardinia) lost their eligibility for priority EU Cohesion policy funding, this
had two effects. Firstly, the withdrawal of European funds removed an important ‘carrot’
with which regionalist parties were trying to ‘sell’ the European project to their members
and supporters. As discussed earlier, the economic benefits offered to regions by
Structural Funds had been an important element in the conversion of regionalist actors
to Europe in the 1990s. When funds were reduced, regionalist parties had less reason to
see the direct benefits of European integration.
212  Handbook on Cohesion policy in the EU

Secondly, regionalist parties had accepted some of the negative effects of the Common
Agricultural and Fisheries Policies because they were being compensated through the
Structural Funds. When the Structural Funds were removed, regionalist party criticisms
of these other policy areas became more pronounced. For instance, the SNP’s opposi-
tion to the European fisheries policy became more strident; Plaid Cymru and the Partito
Sardo d’Azione (Psd’Az) criticised the Common Agricultural Policy for undermining
their farming methods and dairy quotas, and the Bavarian CSU criticised EU compe-
tition policy for undermining its ability to support traditional sectors in its economy
(see Elias 2009; Hepburn 2010). So although few regionalist parties in Western Europe
directly criticised the phasing out of Structural Funds in order to address inequalities in
CEE, there was a subtle shift in regionalist party discourse that downplayed the benefits
of Cohesion policy and increased their criticism of other common policies that were
viewed as detrimental to their economies (for an excellent quantitative analysis correlat-
ing regionalist parties’ declining support for European integration with declining levels of
Structural Funds, see Massetti and Schakel, Chapter 14, this volume).

INDEPENDENCE DEMANDS AND EUROPEAN RESPONSES

As a result of the apparent closing of opportunities for regions to act in Europe, lack of
regional recognition in European treaties, threats to regional competences, and declining
levels of funds and representation (for western regions), most regionalist parties aban-
doned their dreams of a Europe of the Regions. It was clear to many that the suprana-
tional project remained very much a Europe of the States.
In addition, regionalist parties began to change their discourse on European integra-
tion. A new Eurocritical, or indeed even Eurosceptical, strain seeped into the discourse
of many regionalist parties, which became critical of certain aspects of European inte-
gration, including the lack of democratic accountability and the detrimental effects of
certain common policies (Hepburn 2008, 2010; Elias 2009). Furthermore, many region-
alist parties changed their constitutional goals (ibid.). In particular, many regionalist
parties that felt left behind in the onward march of European integration, changed their
aims to seek full member status. In the period 2008–2014, regionalist parties in several
EU countries submitted bills to regional executives to hold referenda on breaking up
the state so that their regions could finally take their place at the ‘top table’ of the EU
Council of Ministers.
To take a few brief examples, the Basque Nationalist Party (PNV) – a previous Europe
of the Regions advocate – put forward a bill to hold an independence referendum in 2008.
Although this was passed by the Basque regional assembly, the bill was struck down by
Madrid as unconstitutional (Humlebaek 2015). In 2012, the Psd’Az in Sardinia – also
a previous Europe of the Regions enthusiast – failed by one vote to pass an independ-
ence referendum bill in the Sardinian regional assembly, but with a pledge to repeat the
motion again (Hepburn 2015a). In March 2014, a number of Veneto regionalist actors
formed the umbrella group called ‘Plebiscito 2013’ to organise an unofficial referendum
on independence, with a majority of participants voting to leave Italy (Cento Bull 2014).
Although the results and turnout were strongly questioned by media and political com-
mentators, the Northern League-­run regional assembly, in response to the referendum,
 Cohesion policy and regional mobilisation  ­213

passed a bill to hold a formal referendum on independence in June 2014, though at the
time of writing no date has yet been set for this (Hepburn 2015a).
In September 2014 the SNP organised a referendum on independence in Scotland, in
which it lost by a margin of ten points (55 per cent against, 45 per cent in favour). The
SNP has since drastically increased its electoral support in Scotland and has pledged
to hold another referendum on independence if it obtains the democratic mandate to
do so (Hepburn 2015b). Finally, a number of Catalan nationalist parties including the
Convergence and Union (CiU) alliance – which had also been a previously strong advo-
cate of a Europe of the Regions – organised a non-­binding vote on independence in
November 2014. The Catalan authorities had previously planned to hold an official refer-
endum on Catalan’s future, but this was suspended by the Spanish Constitutional Court
for being illegal. The unofficial poll was a success for Catalan regionalists: 80 per  cent of
those who participated (about 2 million people) voted in favour of independence, with a
turnout of 37 per cent (Lineira and Cetra 2015).
These independence referenda have created a number of problems for the European
Commission. Although the EU’s official position was neutral, in the sense that it did not
want to intervene in the affairs of its member states, if these referenda are successful they
will have major implications for the European project. In particular, the EU will have
to develop a position on ‘internal’ enlargement, if the citizens of regions wish to gain
sovereign-­state status.

CONCLUSIONS

This chapter has explored how EU Cohesion policy, which was a vital component
in  the conversion of regionalist actors to the European project, also became associated with
the downfall of a Europe of the Regions. Certainly, the opportunities that the reform of
the Structural Funds created for regional engagement in EU decision-­making were unprec-
edented: for the first time, regions were recognised as actors and not merely objects in the
governance of Europe. However, a number of factors undermined regionalist aspirations.
The arguable weakness of the Committee of the Regions, the failure to extend the role of the
regions in the draft Constitution and subsequent Treaties, the threat that European integra-
tion was seen to pose to regional competences, and the decreasing levels of regional funding
and political representation to (western) regions after CEE enlargement, together signalled
to regionalist actors that a Europe of the Regions had been merely a pipedream.
Regional actors reacted to these developments in two ways. Firstly, many regions
strengthened their criticisms of certain EU policies, such as the Common Agricultural
and Fisheries Policies, as well as the lack of democratic accountability in EU structures.
Secondly, a number of regionalist parties began to radicalise their demands, moving
away from seeking soft forms of autonomy in an interdependent Europe of the Regions,
towards supporting outright secession. This resulted in new requests for the EU to inter-
vene in guaranteeing the transition of regions towards independence. However, even here,
the EU has been a cause of frustration to some regionalist actors. In its attempt to remain
neutral and stay out of the internal affairs of its member states, the EU has failed to make
any efforts to adjudicate claims for the internal enlargement of the EU.
The ironic aspect to the EU’s discomfort over the new wave of regional mobilisation
214  Handbook on Cohesion policy in the EU

on independence is that it may be partly to blame. In the 1990s, there was a possibility of
accommodating demands for self-­determination in a Europe of the Regions, whereby sub-
state regions could sit alongside the states in the governance of Europe. This goal won the
support of regionalist parties in Catalonia, the Basque Country, Veneto, Sardinia, South
Tyrol and elsewhere. However, when these hopes were dashed with the state-­reifying bias of
subsequent treaties, regionalist actors in all of these territories radicalised their demands in
favour of independence in a Europe of the States. As the possibilities of regional engage-
ment in Europe continue to dwindle away, being a sovereign member state now seems to
be the only way to have real influence over the EU decision-­making process. Indeed, in
the case of Scotland, now that the United Kingdom Government’s referendum on leaving
the EU has won majority support, the Scottish Government has indicated that it will hold
a second referendum on independence so it can actually rejoin the EU. However, if the
European Commission and Council continue to ignore such demands, and regional popu-
lations do vote for independence without the support of European institutions, the result
could rock the foundations – and legitimacy – of the supranational project.

NOTE

1. Not all regional-­level parties are ‘regionalist’ parties. The latter normally emphasise the (sociocultural) dis-
tinctiveness of the region and seek varying degrees of self-­rule – from greater devolution to secession – from
the centre.

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14. The impact of Cohesion policy on regionalist
parties’ positions on European integration
Emanuele Massetti and Arjan H. Schakel

INTRODUCTION

The literature has portrayed regionalisation and European integration as consistent

and mutually reinforcing processes (Keating 1995). The positive view of European
integration from a regionalist perspective was mainly justified by the increasing
­attention devoted to the regions by European institutions, which in some cases cru-
cially contributed to the very creation of a regional tier of government (McGarry
et  al. 2006: 8). After the establishment of the Directorate-­General for Regional Policy
in 1968 and of the European Regional Development Fund (ERDF) in 1975, EU
Cohesion policy took off with the landmark regulatory reform of 1988, followed by
the adoption of the subsidiarity principle and the creation of the Committee of the
Regions in 1993. As the most genuine political advocates of regional claims, regionalist
parties were definitely interested in these changes and were affected by them. Indeed,
these developments propelled the vision of a ‘Europe of the Regions’ (Keating 1998:
176; Hepburn 2008), generating hopes that EU institutions and policies would work
in favour of regionalist parties’ self-­government aims and, therefore, fostering positive
attitudes towards the process of European integration. Arguably, the funds distrib-
uted to the regions via Cohesion policy represent the most substantive and tangible
manifestation of the EU policy for the regions, possibly winning over the support of
regionalist parties.
However, the scholarship on regionalist parties is rather divided in its evaluation and
explanation of these political actors’ attitudes towards European integration. On the
one hand, quantitative studies have concluded that regionalist parties are consistent
and convinced supporters of European integration (Jolly 2007). On the other hand,
qualitative studies have highlighted both an instrumental approach to European inte-
gration, which leads regionalist parties to remarkable changes in their stances during
their lifespan (Lynch 1996; Nagel 2004; Elias 2009; Hepburn 2010), and the presence of
considerable variance amongst regionalist parties (De Winter and Gomez-­Reino 2002;
Massetti 2009).
Perhaps more importantly, some scholars have advanced the thesis that support for
European integration has been on the rise amongst regionalist parties in the 1980s and
1990s, while it considerably decreased in the 2000s (Elias 2008; Massetti 2009). Over the
same time span, EU regional policy has drastically changed, in particular with regard to
the eligibility of regions for receiving Structural Funds (see Brunazzo, Chapter 1, this
volume). In other words, the different allocation of Cohesion policy funds to the regions
could be one of the factors accounting for the variance of support for European integra-
tion that has been detected amongst regionalist parties. However, so far no systematic

217
218  Handbook on Cohesion policy in the EU

analysis has been conducted to investigate the link between the level of Cohesion policy
funds received by regions and the level of Europhilism (or Euroscepticism) of regionalist
parties. Our chapter aims to answer this unaddressed question and, in so doing, it repre-
sents an original contribution to both the regionalist party and EU politics scholarships.
We also use an original dataset of 31 regionalist parties’ positioning on European integra-
tion from 1989 to 2006. This timeframe is broken down in three periods corresponding to
the three waves of Cohesion policy funding, 1989–1993, 1994–1999 and 2000–2006, for
which we were able to find data (Dell’Erba and Le Gallo 2008; Dellmuth 2011).
The next section reviews the extant literature on regionalist parties’ positioning on
European integration, highlighting the analytical framework that we adopt and the
main underlying hypothesis. Then we present and discuss the data, concerning both the
funding of Cohesion policy and the scoring of regionalist parties’ positions on European
integration, on which our analysis is conducted. The following section presents the results
of the analysis, which will be further discussed and summarised in the concluding section.

REGIONALIST PARTIES’ POSITIONING ON EUROPEAN

INTEGRATION

European integration is a process of polity formation that, alongside the wider process of
globalisation and in combination with substate regional mobilisation, has contributed to
the ongoing trend of territorial restructuring (Keating, 1998). As political forces that orig-
inate from the centre–periphery cleavage, notably a legacy of processes that led to the for-
mation of so-­called ‘nation-­states’ (Lipset and Rokkan 1967; Rokkan and Urwin  1983),
regionalist parties have a natural interest in the process of European integration and in
the resulting system of multilevel governance (De Winter and Gomez-­Reino 2002). As
far as the self-­government ambitions of regionalist parties are concerned, two opposing
views of European integration can arise. On the one hand, some regionalist parties might
see the European integration process as the source of another and more remote centre of
power that further limits the possibilities for authentic regional self-­government (Lynch
1998). On the other hand, European integration is seen as undermining the powers of the
member states (Hix and Lord 1997), lowering the costs and risks of secession (Alesina
and Spolaore 2003; Meadwell and Martin 2004) and, with the adoption of a European
regional policy, pushing member states to create regional institutions that can manage
the regional funds and programmes (Jones and Keating 1995; McGarry et al. 2006). In
addition, European integration is seen as creating more opportunities for regionalist
mobilisation (Hooghe 1995; Jeffery 2000) and even for a direct regional engagement at
the supranational level bypassing their member state (Keating and Hooghe 2001; Tatham
2008).
According to the quantitative literature, the second (positive) view on European
integration appears to be predominant amongst regionalist parties. Comparative cross-­
party family studies have shown that the regionalist party family is strongly or moder-
ately supportive of the integration process (Hix and Lord 1997; Hix 1999; Marks and
Wilson   2000). Seth Jolly (2007) has concluded that regionalist parties are strongly,
consistently and coherently Europhile. Qualitative studies have overall confirmed the
predominance of Europhile attitudes within the regionalist party family (De Winter
 Regionalist parties’ positions on European integration  ­219

and Gomez-­Reino 2002; Lynch 1998). However, such studies have also pointed out that
several regionalist parties have adopted a rather instrumental approach on European
integration, considerably changing their stances over time (Elias 2009; Hepburn 2010;
Lynch 1996). In addition, others have highlighted considerable variance of positioning
on European integration amongst regionalist parties (Massetti 2009), and a general trend
towards less Europhile attitudes in the 2000s (Elias 2008; Massetti 2009).
On the basis of these findings, it makes sense to analyse the factors that can explain
variance in attitudes towards European integration within the regionalist party family. In
this respect, the main explanatory variables appear to concern linkages between different
ideological dimensions or issues. Drawing on the general literature on political parties and
European integration, scholars of regionalist parties have pointed out that the left–right
ideology of individual regionalist parties can affect their stance on European integration
(Elias 2009: 30; Massetti 2009: 521–522). Like for all other parties (Hooghe et al. 2002),
regionalist parties adopting a radical left or a radical right ideology can be expected to be
more Eurosceptic than regionalist parties adopting a centrist or mainstream (left–right)
ideology. In addition, it has also been proposed that regionalist parties advocating more
radical (secessionist) self-­government claims can adopt a more Eurosceptic position
compared to those regionalist parties that are satisfied with more moderate (autonomist/­
federalist) claims (Massetti 2009: 523–524). This trend has become particularly visible in
the 2000s, a period which has seen the EU engaged with a constitutionalisation process
which largely frustrated the expectations of the most assertive and ambitious regional-
ist parties. In particular, the proposal for a constitutionally recognised right of ‘internal
enlargement’ (that is, the possibility of a direct accession into the EU by regions of exist-
ing member states) did not find consideration in the Convention on the Future of Europe,
and the subsequent constitutional treaties confirmed the role of the member states as
gatekeepers of regions’ involvement in EU policy making (Keating and Bray 2006: 356).
In this chapter, however, we want to bring back at the centre of the analysis the impor-
tance of economic aid distributed by the EU to the regions via Cohesion policy. While
single case studies have incidentally mentioned the potential effect of the Structural
Funds on regionalist parties’ attitudes on European integration, the impact of this vari-
able has not been systematically studied. By including this factor into our analysis we aim
to investigate whether regionalist parties are more Europhile when the regions in which
they participate in elections receive more Structural Funds.

DATA

Before we start our quantitative analysis, some limits on the scope of the data need
to be discussed. Valid and reliable data on Structural Funds expenditure are notori-
ously difficult to obtain. We draw upon two authors who have invested a lot of their
resources in creating a systematic and reliable dataset on Structural Funds spending at
the regional level. Sandy Dall’Erba shared his data for 145 regions for the 1989–1993 and
1994–1999 funding periods (Dall’Erba and Le Gallo 2008). These data are derived from
official reports of the European Commission. Data for the 2000–2006 period for 160
regions are provided by Lisa Dellmuth who obtained the data from Commission deci-
sions from 2000 and 2001 (Dellmuth 2011). It is important to note that the data are not
220  Handbook on Cohesion policy in the EU

comparable because they conflate committed with actual spent funds. Delmuth’s data
concern regional transfers indicatively allocated for the programming period 2000–2006
which ‘reflects the outcome of the negotiation process between the Commission, central
government and regional governments at the outset of the programming period’ (2011:
1022–1023). Dall’Erba’s data concern total payments. However, for the 1994–1999
period they also include ‘the commitments taken during this period, but that have not
been paid yet’ (Dall’Erba and Le Gallo 2008: 228). In addition, the data collected by the
Commission were gathered using different methodologies for each funding period and
several obstacles were encountered during the data collection process (for an overview,
see Vienna Institute for International Economic Studies and Ismeri Europa 2015: 26–30).
Despite these caveats one can still make good use of the data. In the analyses below
we will not compare directly over time (that is, does an increase in ERDF spending
induce regionalist parties to adopt more Europhile positions?). We will rather compare
regionalist parties for each funding period separately. In addition, for each funding
period, we divide the funding data by the total population size of a region (data obtained
from Eurostat) and we calculate a ratio between regional ERDF funding per capita and
national ERDF funding per capita. Additionally, we take the logarithm of this relative
ratio since there are few outliers in terms of receiving much more ERDF funding relative
to the country average (the analyses presented below are not affected when the outliers
are excluded).
The coding schemes, the data on regionalist parties positioning on three dimensions
(European integration, left–right and centre–periphery) and also the control variables
introduced in the ordered logit regression model presented below come from Massetti
and Schakel (2015). As far as positions on European integration are concerned, regional-
ist parties are coded as Eurosceptic or integrationist or federalist. Eurosceptic regionalist
parties either want their region not to be part of the European Union or they resist any
further step towards integration. Integrationist regionalist parties are Europhile parties
which support the European integration project but are not in favour of the creation of
a federal European state. Federalists are the most Europhile parties, as they would like
to see the European Union to develop into a federation. The Europhile category, there-
fore, includes both integrationists and federalists. We have coded 31 parties (see Table
14A.1 in the Appendix) that have participated in national elections during three funding
periods (1989–1993, 1994–1999 and 2000–2006), yielding a total of 73 observations. In
order to link ERDF funding data to positions on Europe we need to define the region of
the regionalist party. This is not a trivial task when regionalist parties’ definition of their
core region encompasses multiple institutional regions and they participate in elections
in more than one (institutional) region (for example, the Lega Nord, LN and the Partei
des  Sozialismus, PDS). For these parties we took the region in which the party won the
most vote share in national elections.

ANALYSIS

First, we explore the relationship between Structural Funds and regionalist parties’ posi-
tions on European integration in a descriptive manner. In Table 14.1 we cross-­tabulate
positions on Europe across the three funding periods. Overall, regionalist parties emerge
 Regionalist parties’ positions on European integration  ­221

Table 14.1 Regionalist party positions on European integration according to funding

period

Position on 1989–1993 1994–1999 2000–2006 Total

Europe
N % N % N % N %
Eurosceptic 3 12.5 4 16.7 11 44.0 18 24.7
Integrationist 9 37.5 8 33.3 12 48.0 29 39.7
Federalist 12 50.0 12 50.0 2 8.0 26 35.6
Total 24 100 24 100 25 100 73 100

Note:  Cramer’s V 5 0.532; Kendall’s tau-­b 5 −0.35; ASE 5 0.09.

as a Europhile party family, with less than a quarter of observations being Eurosceptic
and more than a third being in favour of the creation of a European federal state (‘Total’
column). As mentioned in the introduction, EU Cohesion policy has changed over time
with regard to the eligibility of regions for receiving ERDF. This may have affected the
allocation of Structural Funds not only across countries but also across regions within
countries. We have calculated the ratio between regional and national per capita ERDF
whereby a ratio larger (smaller) than 1 indicates that a region receives more (less) per
capita ERDF than the country average. Indeed, in our dataset, the medians of the ratio
between regional and national per capita ERDF are 0.91, 0.67 and 0.41 for, respectively,
the funding periods 1989–1993, 1994–1999 and 2000–2006. The corresponding averages
for the three periods are respectively 1.63, 1.30 and 1.00. Clearly, regionalist parties can
be found in regions which over time have received less ERDF in relative terms.
From Table 14.1 we can clearly observe that in the 2000s many regionalist parties
reversed course and became Eurosceptic. Overall, a majority of 56 per cent of the posi-
tions is still Europhile but, during the 1990s, 50 per cent of the positions were federalist,
whereas this number reduced to 8 per cent during the 2000s. The percentage of integra-
tionist positions increased from 30 plus per cent to 48 per cent but the largest growth has
occurred for the Eurosceptic camp: from below 17 per cent during the 1990s to 44 per
cent in the 2000s. Despite a growing overall budget for European Structural Funds – also
for Western European Union member states – our data show a clear Eurosceptic turn
among regionalist parties.
Before we turn to a multivariate analysis in order to see whether ERDF funding
induces regionalist parties to be more Europhile we need to consider variables that may
also impact on the EU positioning of regionalist parties. One important factor to con-
sider is linkage between positions on the left–right dimension and positions on European
integration. In Table 14.2 we cross-­tabulate positions on the left–right and European
dimensions. In consideration of what we already know from the established literature
on political parties’ positioning on European integration (Hooghe et al. 2002), Table
14.2 clearly shows that regionalist parties do not behave differently from other party
families. Radical left and radical right parties are unequivocally Eurosceptic. The closer
to the centre on the left–right dimension the more Europhile a regionalist party tends to
be: Eurosceptic positions reduce from 100 to 21 and to 3 per cent when one moves from
222  Handbook on Cohesion policy in the EU

Table 14.2 Regionalist party positions on European integration according to Left–Right

position

Position on Radical left and Mainstream left and Centrist Total

Europe right right

N % N % N % N %
Eurosceptic 10 100.0 7 21.2 1 3.3 18 24.7
Integrationist 0 0.00 13 39.4 16 53.3 29 39.7
Federalist 0 0.00 13 39.4 13 43.3 26 35.6
Total 10 100 30 100 30 100 73 100

Note:  Cramer’s V 5 0.51; Kendall’s tau-­b 5 −0.41; ASE 5 0.10.

the radical ends to the center. Table 14.2 reveals strong ideological linkages and this is an
important observation because it shows that the Eurosceptic turn observed in Table 14.1
may have happened without any connection to Structural Funds spending in the region.
In Table 14.3 we present the results of an ordered logit model with EU positions as a
dependent variable (1 5 Eurosceptic; 2 5 integrationist; 3 5 federalist). Our main vari-
able is relative per capita ERDF funding which we log (natural). We introduce funding
period dummies in order to control for possible time-­dependent effects (1989–1993 is the
reference category), and we include interaction effects between ERDF spending and the
funding period dummies for possible differential effects of ERDF across time periods.
The most important control variable is left–right radicalism (see Table 14.2).
We present the results of three models. Model 1 is our preferred model whereas the
two other models are robustness checks. In model 2 we exclude regionalist parties which
take up radical left or radical right positions because the results of ordered logit models
tend to be less reliable when there are ‘empty cells’ between categorical variables (see
Table 14.2). In model 3 we include a number of control variables which could impact
on EU positions (Centre–periphery position: secessionists may be more Eurosceptic than
autonomist parties; Regional government: regionalist parties which have office respon-
sibility at regional level may be more Europhile; Vote share national elections: larger
parties may be more Europhile; Regional language index: when there is a linguistic
minority in the region, a regionalist party may be more Europhile because of the EU
minority language policies; Relative economic position: regionalist parties in affluent
regions may be more Europhile because they conceive the development of an internal
market not as a threat).
From Table 14.3 we can clearly observe that the Structural Funds variable is statisti-
cally significant and positive across the three models which warrants the conclusion that
Structural Fund spending is positively associated with Europhile regionalist parties. In
other words, there is a higher probability that one may find Europhile regionalist parties
in regions which receive more ERDF funding relative to the national averages.
In order to ease interpretation of the effects of Structural Fund spending on positions
on European integration we estimate change in probabilities of positions when ERDF
funding goes from one standard deviation below to one standard deviation above the
 Regionalist parties’ positions on European integration  ­223

Table 14.3  Structural funding and regionalist party positions on European integration

Model 1 Model 2 Model 3

Beta s.e. Beta s.e. Beta s.e.

Structural Funds (SF) 1.28** 0.47 0.92* 0.42 1.29* 0.51
1994–1999 dummy 0.08 0.32 0.14 0.31 0.09 0.34
2000–2006 dummy −2.10** 0.60 −2.16** 0.69 −2.30** 0.77
SF*1994–1999 dummy −0.57 0.54 −0.41 0.45 −0.75 0.52
SF*2000–2006 dummy −0.77 0.52 −0.31 0.54 −0.91 0.54
Left–right radicalism −2.10** 0.51 −1.01 0.64 −2.30** 0.58
Centre–periphery position −0.04 0.37
Regional government 0.14 0.51
Vote share national election −0.03 0.03
Regional language index −0.05 0.31
Relative economic position −0.01 0.04
Cut 1 −6.25** 1.23 −5.00* 1.27 −8.15* 4.14
Cut 2 −3.45** 0.96 −1.80 1.02 −5.24 3.81
Log pseudolikelihood −55 −50 −54
Wald chi 31** 17* 35**
Pseudo R2 0.30 0.20 0.31

Notes:
* p , 0.05; ** p , 0.01.
Shown are the results of an ordered logit model with European positions of regionalist parties as a dependent
variable: 1 5 Eurosceptic; 2 5 integrationist; 3 5 federalist.
The total number of observations is 73 and standard errors are clustered for 30 parties.
Model 2 excludes radical left and radical right parties and ten observations and five parties are dropped (see
Table 14.2).

mean (that is, −0.33 ± 1.09 ratio ERDF natural log). This change reflects an increase
from 0.24 to 2.14 in the ratio between regional and national per capita ERDF. The
estimates are based on the results of model 1 in Table 14.3 and we calculate changes in
probabilities for the three categories on left–right radicalism separately given the strong
linkage between left–right and European integration positions. The changes in probabili-
ties are displayed in Table 14.4.
Table 14.4 reveals funding period effects of ERDF spending. For 1994–1999 we find
no effect of Structural Funds spending but for the other two periods there is an effect.
The effect is largest for 1989–1993 and it appears to provide a push for strong support for
European integration, in the form of massive increases of probabilities for a manifesta-
tion of federalist positions. Regionalist parties which are centrist on the left–right dimen-
sion have an increased probability of 52 per cent of being federalist when Structural Fund
spending goes from one standard deviation below the mean (0.24, that is, receiving 4.2
times less ERDF than the country average) to one standard deviation above the mean
(2.14, that is, receiving 2.14 times more ERDF than the country average). Parties on the
mainstream left and right go from Eurosceptic (−39 per cent) to federalist (148 per cent)
while radical left and radical right parties move from Eurosceptic (−58 per cent) to
­integrationist (146 per cent) and federalist (112 per cent).
224  Handbook on Cohesion policy in the EU

Table 14.4 Structural funding and regionalist party positions on European integration for
three funding periods

L–R EU 1989–1993 1994–1999 2000–2006

position Position
Low High Change Low High Change Low High Change
Centre Eurosceptic 0.09 0.01 −0.08** 0.04 0.01 −0.03 0.21 0.08 −0.13*
Integrationist 0.53 0.08 −0.44** 0.36 0.11 −0.24 0.60 0.51 −0.09
Federalists 0.39 0.91 0.52** 0.61 0.88 0.27 0.19 0.41 0.22*

Mainstream Eurosceptic 0.44 0.05 −0.39** 0.24 0.06 −0.18 0.68 0.41 −0.27*
left and right Integrationist 0.49 0.40 −0.09 0.60 0.47 −0.13 0.29 0.51 0.22*
Federalists 0.07 0.56 0.48** 0.16 0.47 0.31 0.03 0.08 0.05*

Radical Eurosceptic 0.86 0.28 −0.58** 0.72 0.36 −0.36 0.95 0.85 −0.09*
left and right Integrationist 0.13 0.58 0.46* 0.26 0.54 0.29 0.05 0.14 0.09*
Federalists 0.01 0.13 0.12** 0.02 0.10 0.07 0.00 0.01 0.01*

Notes:
* p , 0.10; ** p , 0.05 (confidence intervals are derived by a bootstrap method with 1000 replications).
Shown are the results of predicted probabilities when the relative ERDF funding per capita (natural log) goes
from one standard deviation below the mean to one standard deviation above the mean.
The estimates are based on model 1 in Table 14.3.

ERDF spending appears to have no effect during 1994–1999. Arguably, this period
represented the golden age of the ‘Europe of the Regions’ vision, during which ideologi-
cal and/or instrumental convergence between regionalism and Europeanism reached its
peak. Therefore, support for European integration within the regionalist party family was
widespread and stable, independently of the relative share of ERDF for their particular
region. In contrast, the other two periods can be seen as phases of transition – from
relatively high intra-­party family variance to cohesive and strong support for European
integration (1989–1993) and vice versa (2000–2006) (see Table 14.1) – in which the relative
share of ERDF did make a difference.
Structural Funds have also an effect in 2000–2006 but the impact tends to be smaller
and it appears to mainly limit the probabilities for a manifestation of Eurosceptic posi-
tions. Radical left and radical right regionalist parties tend to have a 9 and 1 per  cent
higher probability of being respectively integrationist and federalist when relative
ERDF funding per capita goes from one standard deviation below the mean to one
standard deviation above the mean. Mainstream left and right parties move from being
Eurosceptic (−27 per cent) to integrationist (122 per cent) whereas centrist parties go
from being Eurosceptic (−13 per cent) to becoming federalists (122 per cent).
How do these results relate to the Eurosceptic turn observed in Table 14.1? From
the probabilities displayed in Table 14.4 one may observe that the chance of being a
Eurosceptic party is highest for 2000–2006 than for the other two funding periods no
matter the position on the left–right dimension. Hence, this means that the Eurosceptic
turn affected most regionalist parties but those regionalist parties that participate in elec-
tions in regions which obtain more Structural Funds tend to be less affected.
 Regionalist parties’ positions on European integration  ­225

CONCLUSIONS

The scholarship on regionalist parties has increasingly paid attention to how these
political actors perceive the European integration process and how they respond to it.
The source of regionalist parties’ sympathy for European integration, it was argued,
was not only the implicit weakening of the state that supranational integration entailed
but also the attention devoted by European institutions to the regions and to regionally
concentrated minorities. In particular, the launch of a regional policy with its Structural
and Cohesion Funds, the importance attributed to the principle of subsidiarity and the
establishment of the Committee of the Regions (see Schönlau, Chapter 10, this volume)
contributed to the rise of a vision of a Europe of the Regions (see also Hepburn, Chapter
13, this volume). While some case studies have investigated the interaction between the
development of regionalist parties’ projects and the unfolding of the integration process,
a systematic analysis of the impact of Cohesion policy funding on regionalist parties’
attitudes towards European integration has, to our knowledge, never been conducted.
This chapter represents the first attempt to fill this lacuna.
Our results show that Cohesion policy funds have a significant effect on regionalist
party positions on European integration. Regionalist parties acting in regions which
obtain relatively more Structural Funds per capita than the national average have a
higher probability to be Europhile. In addition, the analysis of three different periods
­(1989–1993, 1994–1999 and 2000–2006) led us to confirm a substantive increase in
the presence of Eurosceptic positions amongst regionalist parties. The causes of this
Eurosceptic turn are beyond the remit of this chapter and, arguably, might be attributed
to the frustration of some independentist regionalist parties with EU’s constitutionalisa-
tion process and, perhaps even more, with the disappointment of several leftist regional-
ist parties with the neoliberal ethos increasingly emanating from EU institutions (see
Hepburn, Chapter 13, this volume). The interesting finding of our analysis is that the
positive effect of the Structural Funds becomes more important in periods of regional-
ist parties’ changing attitudes towards the European integration process. In the context
of the Eurosceptic turn since the early 2000s, the Structural Funds exert an even more
significant effect. Indeed, Eurosceptic positions are much rarer in regions which obtain
relatively more ERDF funding per capita.
What are the policy implications of our research? First of all, the end of overwhelm-
ing Europhilia amongst regionalist parties is not linked to the relative share (and even
less to the absolute amount) of ERDF received by the individual regions. Assertive
regionalist parties, especially once they have already achieved a certain level of regional
self-­government, tend to evaluate the process of European integration in a rather instru-
mental way, that is, they support further integration only insofar as it helps them to
achieve more self-­government. Buying their support with ERDF will become more and
more difficult. Similarly, regionalist parties that strongly oppose the neoliberal character
of EU policies will hardly change their position on European integration because of the
relative amount of ERDF their region receives. However, there is still a relevant group
of regionalist parties which are ideologically centrist on the left–right dimension and not
particularly assertive in terms of self-­government claims, whose support for European
integration can be maintained also thanks to the distribution of ERDF. Therefore,
the drastic reduction of Structural Funds for Western European regions due to the
226  Handbook on Cohesion policy in the EU

eastern enlargements of 2004 and 2007 might jeopardise the residual support that the EU
has been able to ‘buy’ from some regionalist parties in the EU15 members states through
this funding programme.

ACKNOWLEDGEMENTS

Massetti and Schakel are grateful for the valuable comments made by the editors of
this Handbook. Schakel would like to thank the Hansewissenschaftskolleg Institute for
Advanced Studies, Delmenhorst, Germany, where he was a Fellow during the 2014–2015
academic year, for its generous support during the writing of this chapter.

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Jolly, S. (2007), ‘The Europhile fringe? Regionalist party support for European integration’, European Union
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European Union and the Regions, Oxford: Clarendon Press, pp. 1–22.
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Ibarretxe Plan’, Ethnopolitics, 5 (4), 347–364.
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process’, in Jeremy Richardson (ed.), European Union: Power and Policy-­Making, London: Routledge, pp.
216–229.
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London: Routledge, pp. 86–102.
 Regionalist parties’ positions on European integration  ­227

McGarry, John and Michael Keating (eds) (2006), European Integration and the Nationalities Question,
London: Routledge.
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Marks, G. and C. Wilson (2000), ‘The past in the present: a cleavage theory of party positions on European
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Massetti, E. (2009), ‘Explaining regionalist party positioning in a multi-­dimensional ideological space: a frame-
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Meadwell, H. and P. Martin (2004), ‘Economic integration and the politics of independence’, Nations and
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228  Handbook on Cohesion policy in the EU

APPENDIX
Table 14A.1  Regionalist parties*

Regionalist party Funding Period

1989–1993 1994–1999 2000–2006

EU L–R ERDF EU L–R ERDF EU L–R ERDF

ADA 1 3 0 1 3 0
BNG 1 2 1 1 2 1 1 2 1
CC 2 1 1 2 1 1 2 1 1
CHA 3 2 1 3 2 0 1 2 0
CiU 3 1 0 3 1 0 2 1 0
DF 1 3 0
EA 3 2 0 3 2 0 1 2 0
ERC 3 1 0 3 2 0 1 2 0
FDF 3 1 1
HB-­BA 1 3 0 1 3 0
LN 2 1 0 2 1 0 1 3 0
NVA 2 2 0
PA 3 2 1 3 2 1 2 2 1
PAR 2 2 1 2 2 0 2 1 0
PC 3 2 1 3 2 1 2 1 1
PDS 1 3 1 1 3 1 1 3 1
PNV 2 1 0 2 1 0 2 1 0
PR 2 1 0 2 1 1 2 1 0
PRC 3 1 0
PSd9Az 3 1 1 3 1 1 3 1 1
RW 2 2 1
SNP 2 2 1 2 2 1 1 1 0
SVP 3 1 1 3 1 0 2 1 0
UDB 3 2 0 3 2 1 3 2 1
UM 2 1 0 2 1 0 2 1 0
UPC 3 1 1 3 1 1
UV 2 2 0 2 2 0 2 2 0
UVA 3 1 1 3 1 1 2 2 0
UfS 2 2 0 1 2 0
VB 1 3 0 1 3 0 1 3 0
VU 2 2 0 3 2 0

Notes:
*More detail on regionalist parties and the coding of their ideological positions is provided in Massetti and
Schakel (2015).
EU 5 position of a regionalist party on the issue of European integration (1 5 Eurosceptic; 2 5
integrationist; 3 5 federalist).
L–R 5 radicalism on the left–right dimension (1 5 centre; 2 5 mainstream left and right; 3 5 radical left and
right).
ERDF 5 dummy indicating whether the regionalist party participates in elections in a region which receives
relative ERDF per capita funding above (5 1) or below (5 0) the country average.
 PART III

COHESION POLICY AND THE

MEMBER STATES
15.  Cohesion policy in the southern periphery
Laura Polverari

INTRODUCTION

This chapter discusses the implementation of Cohesion policy in the southern member
states (MSs) of the European Union: Cyprus, Greece, Italy, Malta, Portugal and Spain.
Together these countries account for more than a quarter of the European population
(25.63 per cent) and almost 22 per cent of the EU28 aggregate gross domestic product
(GDP) (2014 data).1 They are rather diverse in terms of the territorial development chal-
lenges faced, regional policy traditions and institutional set-­up.
Malta and Cyprus, which joined the European Union (EU) in 2004, are small island
economies with marginal regional disparities. The main goal of Cohesion policy in
these countries has been to assist national growth. Greece and Portugal, with their
circa 10 million inhabitants each, face challenges of territorial balance, related pre-
dominantly to the polarisation of development in the capital regions and along the
Attika–Thessaloniki (in Greece) and coastland–inland (in Portugal) axes. However,
rather than overcoming regional disparities, the primary concern of economic and
regional policies in these countries has also been the desire to enhance national growth.
Italy and Spain, on the other hand, are large states with historically rooted regional
imbalances. The main focus of Cohesion policy here has been the development of
lagging regions.
Italy is the only country in the group with a long-­established regional policy tradition
(the well-­known Special Intervention); Greece and Spain have had smaller-­scale domestic
regional policies since the 1970s and late 1980s; whilst the other countries in the group
have not had national regional policies.
The countries differ also in terms of their institutional set-­up. Italy and Spain are
regionalised unitary countries (Loughlin 2000) with elected regional authorities endowed
with legislative powers and significant economic development competences. Greece and
Portugal, on the other hand, are centralised unitary countries, in which administrative
regions – 13 in Greece and seven in Portugal – have no elected representation, legislative
or fiscal competence and limited budgetary powers (mostly in the hands of deconcen-
trated bodies of central government and local authorities).
What unites these countries is the importance represented by EU Cohesion policy as a
major source of public spending and as an overarching framework for regional develop-
ment. The focus of this chapter lies predominantly on the four largest countries of the
group and longest-­standing members of the EU: Greece, Italy, Portugal and Spain. These
countries have all historically comprised regions with levels of GDP per capita signifi-
cantly lower than EU averages and as such have been major recipients of EU Cohesion
policy across all or most programming periods. As observed elsewhere in this volume (see
Tömmel, Chapter 7), it was the accession of Greece (in 1981) and Portugal and Spain
(in 1986) that gave rise to the fundamental reorganisation and financial strengthening

231
232  Handbook on Cohesion policy in the EU

of Cohesion policy with the landmark reform of 1988. The four countries have had and,
except for Spain, continue to have significant portions of their territories eligible for the
highest intensity of support. Greece, Portugal and, until recently, Spain have also been
eligible for the Cohesion Fund (Table 15.1).
In these countries Cohesion policy has been delivered through a complex architec-
ture, comprising a mix of multiregional and regional operational programmes, mostly
grouped under macro-­strategies: Community Support Frameworks (CSFs) in the first
three programming periods; and whole-­country strategic frameworks since 2007: the so-­
called National Strategic Reference Frameworks (NSRFs) in 2007–2013, and Partnership
Agreements (PAs) in the current period. Depending on the country’s institutional setting,
programmes have generally been managed by central government ministries, central gov-
ernment departments in the regions or regional authorities. These three, non-­mutually
exclusive, implementation approaches are labelled in Table 15.1 as ‘centralised’, ‘decon-
centrated’ and ‘devolved’, assigning each country to a category based on the way in which
the majority of funding has been administered (which, as can be seen from the table, has
in some cases changed over time, generally in the direction of increased decentralisation).
The purpose of this chapter is twofold. First, to provide a summary, long-­term
overview and assessment of the overall significance of Cohesion policy for the group
of countries discussed. Evaluations of Cohesion policy and the associated academic
research tend to provide only partial views. For practical and methodological reasons,
evaluations and academic assessments of impacts have tended to focus on single
­programming periods and single programmes, and the absence of comparative data
makes it difficult to draw long-­term conclusions about the policy. Yet it is only by
adopting a long-­term view that the achievements and strengths and weaknesses of
the policy can be fully understood. This chapter thus aims to provide a longitudinal
overview of the main features of Cohesion policy from the 1988 reform to the current
2014–2020 cycle.
A second aim is to bridge different types of knowledge, bringing together evidence and
perspectives from academic research and policy sources. Academic research has tended
to focus (as would be expected) on selected dimensions of Cohesion policy, analysed
through the lens of many distinct disciplinary foci. The different scopes of inquiry and
methodological approaches have to some extent prevented the accumulation of knowl-
edge. Policy documents, on the other hand – from the rich body of evaluations, to the
many implementation, strategic and audit reports, and to the political documents pro-
duced by a variety of actors at the juncture of each policy review – remain underutilised
and often confined to the sphere of ‘policy insiders’. This chapter thus aims to bring
together insights from this rich but also fragmented evidence, bridging, in particular,
academic and evaluative research.
Following this introduction, the next two sections review the policy inputs, that is, the
resources deployed and strategies implemented. After a review of impacts and outcomes,
attention is given to the implementation challenges. The added value of Cohesion policy
is then examined, alongside conclusions on the latest policy developments and challenges
ahead.
 Table 15.1 Number of Cohesion policy programmes, eligibility and implementation approaches across programming periods

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Cyprus Year of accession: 2004
Population (1 January 2014): 858 000 (0.17% of EU28)
GDP p.c. 94.23 (% of EU28 average, EU28 5 100, 2011)
GDP Total €17 506.3 (2014, current prices, € mill), 0.13% of EU28
Programmes – – 2 SPDs 2 OPs 2 OPs
Cohesion Fund – – Yes Yes Yes
Less-­developed regions – – 0 0 (Phasing-­in) 0
(Cyprus 5 1 region)
Implementation approach* – – centralised centralised centralised

Greece Year of accession: 1981

Population (1 January 2014): 10 903 704 (2.15% of EU28)
GDP p.c. 79.88 (% of EU28 average, EU28 5 100, 2011)

233
GDP Total €179 080.6 (2014, current prices, € mill), 1.29% of EU28
Programmes CSF I (13 ROPs, CSF II (13 ROPs, CSF III (13 ROPs, 9 NOPs, 5 ROPs 5 NOPs, 13 ROPs
  30 MOPs)   18 MOPs)   12 NOPs)
Cohesion Fund Yes Yes Yes Yes Yes
Less-­developed regions 13 13 13 9 1 3 Phasing-­out 5 1 6 transition
(of 13 total)  (12 Phasing-­in)
Implementation approach* centralised centralised centralised centralised centralised

Italy Year of accession: 1958

Population (1 January 2014): 60 782 668 (12.09% of EU28)
GDP p.c. 101.63 (% of EU28 average, EU28 5 100, 2011)
GDP Total €1 616 047.6 (2014, current prices, € mill), 11.61% of EU28
Programmes CSF I (7 MOPs, CSF II (15 NOPs, CSF III (7 ROPs and 9 NOPs, 43 ROPs 12 NOPs,
 8 ROPs), 9 Obj. 2   8 ROPs), 22  7 MOPs), 14 Obj. 2   39 ROPs
SPDs, 10 Obj. 5b Obj. 2 SPDs SPDs
SPDs (11111),
  13 Obj. 5b SPD
 Table 15.1  (continued)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Cohesion Fund No No No No No
Less-­developed regions 8 7 8 (of which 2 5 (of which 1 5 1 3 transition
(of 20 total)   Phasing-­out)   Phasing-­out)
Implementation approach* centralised (South)/ centralised (South)/ devolved devolved devolved
 devolved (Centre/  devolved (Centre/
North) North)

Malta Year of accession: 2004

Population (1 January 2014): 425 384 (0.08% of EU28)
GDP p.c. 85.61 (% of EU28 average, EU28 5 100, 2011)
GDP Total €7961.5 (2014, current prices, € mill), 0.06% of EU28
Programmes – – 1 SPD 2 NOPs 3 NOPs

234
Cohesion Fund – – Yes Yes Yes
Less-­developed regions – – 100% of territory 100% of territory None: 100%
(Malta 5 1 region)  transition
Implementation approach* – – centralised centralised centralised

Portugal Year of accession: 1986

Population (1 January 2014): 10 427 301 (2.06% of EU28)
GDP p.c. 77.03 (% of EU28 average, EU28 5 100, 2011)
GDP Total €173 053.3 (2014, current prices, € mill), 1.24% of EU28
Programmes CSF I (42 OPs) CSF II (17 OPs) CSF III (7 ROPs, NSRF, 5 NOPs, 5 NOPs,
  11 MOPs)   9 ROPs   7 ROPs
Cohesion Fund Yes Yes Yes Yes Yes
Less-­developed regions 7 7 7 (of which 1 5 (of which 1 4 1 1 transition
(of 7 total)   Phasing-­out)   Phasing-­out)
Implementation approach* centralised centralised centralised deconcentrated deconcentrated
 Spain Year of accession: 1986
Population (1 January 2014): 46 512 199 (9.18% of EU28)
GDP p.c. 96.49 (% of EU28 average, EU28 5 100, 2011)
GDP Total 1 058 469.0 (2014, current prices, € mill) 7.60% of EU28
Programmes CSF I (10 OPs); 7 Obj. CSF II (26 OPs); CSF II (12 ROPs, 8 NOPs, 38 ROPs 7 NOPs, 38
 2 SPDs, 12 Obj. 5b  14 Obj. 2 SPDs  11 NOPs); 7 Obj. 2 ROPs
SPDs (1994–96 and SPDs
1997–99); 7 Obj.
5b SPDs
Cohesion Fund Yes Yes Yes Yes (Transitional No
 Support)

235
Less developed regions 9 1 Ceuta and 9 1 Ceuta and 13 (of which 1 8 (of which 4 1 1 5 transition
(of 17 total)   Melilla (2 cities)   Melilla (2 cities)   Phasing-­out)   Phasing-­out)
Implementation approach* centralised centralised centralised centralised centralised

Notes:
*  Implementation approach categorises countries based on the way in which the majority of funding is administered and which type of authority – that is,
national ministery, representation of the State in the regions, regional authority – plays the role of Managing Authority (or equivalent).
Community Initiative Programmes, Global Grants and European territorial cooperation programmes not included.
Obj. 5 Objective. OP 5 Operational Programme. ROP 5 Regional Operational Programme. MOP 5 Multiregional Operational Programme. NOP 5 National
Operational Programme. SPD 5 Single Programming Document.

Sources:  Author’s elaboration based on various sources.

236  Handbook on Cohesion policy in the EU

Table 15.2 Commitment appropriations for Cohesion policy 1989–2020 (€ million,

constant 2010 prices)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020 Total

Cyprus n/a n/a 58.68 613.86 693.63 1366.17
% of GDP – – 0.12 0.48 – –
Greece 9853.33 15 154.54 24 932.09 20 088.30 14 628.40 84 656.67
% of GDP 1.66 2.01 1.79 1.34 – –
Italy 14 221.78 20 660.07 34 434.17 27 722.38 30 933.38 127 971.78
% of GDP 0.22 0.26 0.32 0.25 – –
Malta n/a n/a 68.22 833.80 683.26 1585.29
% of GDP – – 0.42 1.82 – –
Portugal 11 176.22 20 996.03 22 725.94 21 258.12 20 229.26 96 385.57
% of GDP 2.19 2.80 2.03 1.75 – –
Spain 19 518.32 44 821.13 52 168.60 34 495.42 26 914.86 177 918.34
% of GDP 0.63 1.16 0.85 0.46 – –
Total 54 769.65 101 631.78 134 387.70 104 968.87 94 082.79 489 840.79

Notes:
I would like to thank Ugo Fratesi and Rocco Bubbico for methodological advice with regards to the
calculation of deflated values.
European territorial cooperation programmes not included. European Agricultural Guidance and Guarantee
Fund (EAGGF) and Financial Instrument for Fisheries Guidance (FIFG) included for 1989–1993 and 1994–
1999. Data for 2014–2020 relate to Structural and Cohesion Funds only and refer to non-­finalised figures
available at the time of elaboration, and do not correspond with finalised Partnership Agreement financial
allocations. GDP percentage values refer to averages of annual percentages.

Sources:  Own calculations from Directorate-­General for Regional and Urban Policy (DG REGIO) data, for
commitment appropriations; and the European Commission’s Annual Macroeconomic Database (AMECO),
for deflators and GDP.

FINANCIAL RESOURCES

A summary of the total commitment appropriations relating to each country by pro-

gramming period is presented in Table 15.2. In total, from 1989 to 2020, Cohesion policy
will have spent c. €490 billion in the six Southern European countries (2010 prices). For
Greece, Portugal and Spain, these resources have historically represented sizeable por-
tions of the domestic GDPs, although increasingly less so since 2007.
With regard to the current programming period, 2014–2020 (current prices), c. 28
per  cent of the total Cohesion policy budget has been earmarked for the six countries,
which exceeds their relative population quota of 25.6 per cent. Italy and Spain remain
the two main recipients in absolute terms after Poland (with c. 9.3 and 8.1 per cent of
the total allocations, respectively), followed (for the group of countries covered in this
chapter) by Portugal and Greece (with c. 6.1 and 4.4 of the total EU Cohesion policy
budget for the period). There are, nevertheless, significant differences within the group
in per capita allocations: Portugal, Malta and Greece, all beneficiaries of the Cohesion
Fund, receive relatively high levels of per capita support for the period (€2058 in
Portugal, €1704 in Malta and €1423 in Greece); Italy and Spain, on account of their
high population and eligibility (many ‘more-­developed regions’ and no Cohesion Fund),
 237
Cohesion policy in the southern periphery  ­

receive much more modest amounts, €540 and €614 per capita, respectively, both below
the EU average of €694.

STRATEGIES

To gain a sense of the evolution of the strategies implemented across the five program-
ming periods to date, it is useful to consider the content of the umbrella strategies
for each period, namely the 1989–1993, 1994–1999 and 2000–2006 CSFs, 2007–2013
NSRFs and the current Partnership Agreements.2 More than embodying strategies
in the strict sense, early programmes (1989–1993 and 1994–1999) contained a col-
lection of objectives, priorities and even projects that were not always strategically
conceived or prioritised. Programme structures tended to replicate the sectoral ori-
entation of the bodies in charge of administering them, whether nationally or in the
regions. Objectives were not generally declined in operational terms or linked with
quantified expected outcomes, and were ‘confused, unclear, not well articulated’ (Price
Waterhouse 1995: 49, on the Greek 1989–1993 Regional Operational Programmes,
ROPs). Poor strategic synergy between the Multiregional Operational Programmes
(MOPs) and ROPs (for example, in Greece or Italy) and top-­down definition of strat-
egies by the centre, with little recognition of the infra-­national differences (such as
in Portugal), were weaknesses a ­ t this time. On the whole, the policy rationale was to
support fixed capital ­formation, development of human resources and wider access to
essential services. The main areas of intervention in the first two policy cycles were:
basic and environmental infrastructure development (energy and water supply, sewer-
age networks, water purification plants), transport infrastructure (motorways, roads,
bridges, rails, airports and ports, urban public transport), social infrastructure (for
example, education and hospital buildings), telecommunications infrastructure (tel-
ephone cables at this stage), entrepreneurial development (business aids for material
investments and industrial infrastructure), together with, especially in Portugal, human
resources development.
From 2000 onwards, the strategies became more rounded and shifted in emphasis
towards entrepreneurial support, understood as a more comprehensive effort, and
research, technological development and innovation (RTDI). Emphasis on RDTI
strengthened particularly after the mid-­term revision of 2000–2006 programmes that
sought to align programmes with the new Lisbon Strategy. It has been estimated that
the 2000–2006 European Regional Development Fund (ERDF) programmes made a
contribution to the research and development (R&D) expenditure in Objective 1 regions
of Portugal, Greece and Spain of c. 12, 7 and 6 per cent, respectively (Ward and Wolleb
2010). The theme of environmental sustainability also gained prominence, especially from
2007, paving the way for the strong emphasis on the green economy during the current
period. There continued to be country differences. For instance, whereas the adoption
of an endogenous growth model in Italy from 2000 led to the pursuit of bottom-­up
integrated local development strategies, in Portugal at this same time the theme of struc-
tural adjustment gained importance, pursued through human resource qualifications
combined with economic reorientation towards new sectors. Long-­term trends across the
four countries relate to a strong focus on infrastructure in early periods; a gradual move
238  Handbook on Cohesion policy in the EU

Table 15.3 Relative distribution of resources to Thematic Objectives in the national

Partnership Agreements (% values of TO allocations over total PA value)

Cyprus Greece Italy Malta Portugal Spain

TO1 – RTDI 8.40 6.52 9.02 8.56 9.09 12.77
TO2 – ICT 8.60 4.15 5.00 37.1 1.15 5.62
TO3 – Competitiveness 13.54 13.29 18.77 10.75 23.45 16.43
TO4 – Low-­carbon economy 11.05 8.21 9.38 6.59 7.77 11.64
TO5 – Climate-­change 2.69 3.94 5.60 1.81 4.64 5.01
 adaptation
TO6 – Environment and 21.46 19.47 10.58 30.32 11.93 12.07
  resource efficiency
TO7 – Sustainable transport 11.56 16.24 5.88 12.64 3.30 6.76
TO8 – Quality employment 9.44 10.00 10.38 2.91 7.43 11.51
  and labour mobility
TO9 – Social inclusion, 6.47 6.61 9.72 10.15 10.02 8.98
  poverty and discrimination
TO10 – Education and skills 3.06 6.61 9.97 8.56 16.88 6.43
TO11 – Institutional capacity 0.59 1.43 2.39 1.06 0.97 1.33
Technical Assistance 3.15 3.54 3.32 2.95 2.91 1.45
ERDF/ESF/CF share of 34/15/31 41/19/16 49/25 46/13/26 42/29/11 53/21
  total PA
ESF share of ERDF1 30.70 31.13 34.02 21.60 41.19 28.11
  ESF total

Note: RTDI 5 research, technological development and innovation. ICT 5 information and

communication technology. ERDF 5 European Regional Development Fund. ESF 5 European Social Fund.
CF 5 Cohesion Fund.

Source:  Own calculations from European Commission Partnership Agreement English language summaries.
Youth Employment Initiative not included. All European Structural and Investment Funds (ESIF) included.

towards business support, RTDI and local development from 2000; and a progressive
shift towards competitiveness and productivity enhancement (Bachtler et al. 2013).
Continuing the trend of alignment of Cohesion policy with the overarching EU growth
strategies, the 2014–2020 programmes are explicitly geared towards the objectives of
smart, sustainable and inclusive growth of Europe 2020 (European Commission 2010).
Again, there are differences between countries, which can be gauged from the relative
distribution of resources amongst the 11 Thematic Objectives (TOs) of the 2014–2020
Common Strategic Framework. As shown in Table 15.3, although all MSs reviewed in
this chapter utilise their Cohesion policy allocations for investments in all TOs, the degree
of concentration varies.
Choices in relation to prioritisation also vary: Portugal, Italy and Spain appear to
favour investments in competitiveness and RTDI, with these two thematic objectives
representing close to or above one-­third of overall resources (complemented, especially
in Portugal, by a strong emphasis on human resources qualifications); whereas Malta,
Cyprus and Greece focus especially on the environmental objectives of low-­carbon
economy, climate-­change adaptation and resource efficiency (which represent almost
 239
Cohesion policy in the southern periphery  ­

40 per cent of investments in Malta and 35 per cent in Cyprus). Looking for outliers,
what can be noted are the continued focus on transport infrastructure (almost one-­sixth
of resources) and, surprisingly perhaps, the relatively low emphasis on combating poverty
in Greece; Portugal’s allocation of more than one-­sixth of resources to education and
skills; and Italy’s strong emphasis on institutional capacity-­building. In all three cases,
these choices appear in continuity with past preferences, showing path-­dependence in
allocative decisions. The relative share of European Social Fund (ESF) also varies across
countries, with the highest value, coherently with the thematic prioritisation of TO10, in
Portugal (above 41 per cent).
National figures are likely to hide variations between types of eligible regions – less-­
developed, transition and more-­developed – and programmes. The Italian PA provides
the indication of amounts of expenditure earmarked to the TOs by groups of regions: if
transport infrastructure only applies to the less-­developed regions, one can also observe
a strong concentration on TOs 1 to 4 in the transition regions, above the relative share
set aside for these themes in the more-­developed regions (cumulatively representing 47
per   cent of total allocations, against c. 39 per cent in both more-­and less-­developed
regions), and strong emphasis on employment and labour mobility (TO8) in the more-­
developed regions, where this objective accounts for more than one-­quarter of resources,
against just under 10 and 15 per cent in the less-­developed and transitional regions. Thus,
strategic concentration varies not just in compliance with EU rules, but also according to
perceived development needs.
It is important to bear in mind that the OPs were reprogrammed in all periods.
Resources were moved from underperforming measures to measures with higher
demand, sometimes altering the initial strategic orientation of programmes and under-
mining the objectives set. For instance, in the 1989–1993 Spanish CSF, by the end of
the programming period, basic infrastructure investments had ended up absorbing c. 13
per cent more resources than initially planned (an already high initial share of 42.7 per
cent), mostly at the expense of human resource development and economic infrastruc-
ture (Price Waterhouse 1995). Reprogramming is not a peculiarity of the earlier periods.
The 2007–2013 Greek, Italian and Portuguese programmes were also reshaped, some-
times radically, not least in response to the economic crisis (Bachtler et al. 2013).

ACHIEVEMENTS AND IMPACTS

One of the main objectives of Cohesion policy has been to support employment. Ex post
evaluations have generally sought to provide overall estimates of gross jobs created
through Cohesion policy support. These data are presented in very cautious terms and
are often characterised by significant limitations and caveats (data quality, double-­
counting). Consequently, they are only relatively meaningful. As an example: the ex post
evaluation of 1989–1993 Objective 1 CSFs estimated that the Greek CSF ‘might’ have
generated between 42 900 and 71 600 new jobs when calculated bottom-­up, and c. 40 000
new jobs when estimated through a macroeconomic approach; whilst the ex post for the
same country relating to the 1994–1999 CSF provides a figure of 60 000–70 000 new/
maintained jobs per year (Price Waterhouse 1995; European Enterprise Organisation
2003).
240  Handbook on Cohesion policy in the EU

The ex post evaluation of the 2000–2006 ERDF programmes does not provide
summary employment figures by country, whereas job-­creation figures are available for
2007–2013 (for expenditure up to the end of 2012). They include the creation of c. 57 705
new jobs through ERDF support in Spain (of which were 46 436 in the Convergence
regions), 47 029 in Italy (34 021 in the Convergence regions), 21 044 in Greece, and 2640
in Portugal (1237 in the Convergence regions). Job creation induced by Cohesion policy
in the four countries was estimated to represent cumulatively almost 22 per cent of the
overall reported employment creation over the period across the EU27 (Cifolilli et al.
2013). These are bottom-­up figures related mainly to entrepreneurial support measures,
which thus ignore possible displacement effects and indirect employment creation.
Nevertheless, they provide an indication of ‘the scale of the contribution made by the
ERDF to offsetting the effects of the depressed economic situation on employment’
(Cifolilli et al. 2013: 67), which have been particularly severe in the four countries consid-
ered here (European Commission 2014: 60).
Further insights on policy outcomes can be gained by focusing on the achievements
obtained in the various fields of intervention. Abundant evidence of reported achieve-
ments on a country-­by-­country basis, albeit not fully comprehensive or comparable
across countries and periods, can be found in the ‘synthesis’ (comparative) reports and
national reports of the ex post evaluations (e.g. Price Waterhouse 1995; ECOTEC 2003;
Ward and Wolleb 2010; Ward et al. 2013; Cifolilli et al. 2013). Examples include the con-
struction or upgrading of more than 9200 km of motorways in Spain over 1989–2006,
or the connection of 9.4 and 8.5 million people to main drainage pipelines and waste-
water facilities in Spain and Italy, respectively, over 2000–2013 (Price Waterhouse 1995;
ECOTEC 2003; Ward and Wolleb 2010; Cifolilli et al. 2013).
The most comprehensive (if selective), longitudinal review of reported achievements
at the regional level can be found in the case study reports of a recent ex post evaluation,
which appraised a sample of 15 EU15 regions across the past four programming cycles,
including seven from the group of countries reviewed in this chapter (Bachtler et al. 2013
and related case study reports). For the Southern European countries, an overarching
conclusion drawn by this study is that Cohesion policy has made a significant contribu-
tion to regional development, economic diversification and improving quality of life
through the range of investments funded, in some cases determining a transformation
of the regional economy (for instance in the Spanish regions of Andalucia and Galicia,
and in the Algarve in Portugal) or, at a minimum, tangible improvements of regional
performance in selected fields (for example, public transport, urban quality, social infra-
structure endowment, tourism and access to essential services). However, the long-­term
resilience of the regions was not improved, due to the failure to realise a comprehensive
shift of the economic base towards high-­added-­value sectors (Bachtler et al. 2013).
This conclusion is supported by the low resilience to the crisis demonstrated by
Southern European countries and their weakest regions, as shown by the sharp declines
in GDP per capita and increases in unemployment, at rates among the worst in the EU
(European Commission 2014), casting a shadow even over the performance of Cohesion
policy in Spain, a country that until recently had been considered a paradigmatic example
of Cohesion policy success (Morata and Popatan 2008).
A key question is of course what would have happened in the Southern European MSs
without this policy intervention. This is a question that macroeconomic models have
 241
Cohesion policy in the southern periphery  ­

sought to answer by establishing the policy’s impact on growth and regional catching-
­up. The measure of the impact on growth varies from study to study. For example, the
HERMIN model estimates the cumulative impact on GDP of 2000–2006 programmes
at the end of the period (2009) at around 16–17 per cent in Greece, Spain and Portugal,
and a more modest 10 per cent in Southern Italy; longer-­term cumulative impacts (at
2020) were estimated at above 20 per cent in Greece, Spain and Portugal, and just under
14 per   cent in the Italian Mezzogiorno3 (Bradley and Untiedt 2009). The alternative
QUEST III provides lower shorter-­term impact estimates (2009), significantly higher
longer-­term impacts and more diversification across countries (Varga and in 't Veld
2009). Based on its most recent assessment of the impact of Cohesion policy through
the application of the QUEST III model, the European Commission concluded that
there is ‘an unambiguously positive impact of Cohesion Policy on GDP in the Member
States considered’ (which included Greece, Portugal, Spain and the Italian Mezzogiorno)
(European Commission 2014: 231).
This contribution to growth has not necessarily translated into regional catching-­up,
however. In similar vein as in many EU10 countries, in Greece and Portugal the growth
induced by Cohesion policy translated into national convergence towards EU standards,
which however went hand-­in-­hand with an exacerbation of internal disparities. In Italy
the slow south–north convergence that occurred during 2001–2009 happened in the
context of growth rates below the EU average in both macro-­aggregates, suggesting that
convergence might have occurred thanks to a slowing-­down of the centre-­north and
resumption of south-­to-­north migration flows, rather than faster growth in the south
(Ward and Wolleb 2010; SVIMEZ 2013). The extent to which regional catching-­up
with EU averages has occurred is reflected in the evolution of regional eligibility to the
less-­developed category, already shown in Table 15.1. Over the longer term, this demon-
strates considerable improvements in Spain (but mitigated by the recent crisis), marginal
improvements in Greece and Portugal, and an overall unchanged situation in Italy,
characterised in the latter by initial progress subsequently reversed. Nevertheless, the
conclusion that ‘without the Cohesion Funds, Portugal would be on [sic] a much worse
economic position than it is at present’ (Medeiros 2014: 1983) arguably also holds true for
Greece, Spain and the Italian Mezzogiorno.

IMPLEMENTATION CHALLENGES

Factors both internal to the policy (strategic and implementation-­related) and exogenous
to it (for example, changing or adverse external context or leadership; other policies
pulling in different directions) have played a role in determining the policy’s performance.

Absorption, Delivery and Institutional Capacity

Regarding the first set of issues, the studies quoted above support the view that strate-
gies in Southern European countries were on the whole adequate (Bachtler et al. 2013
and related case study reports). Implementation, on the other hand, was not optimal.
One of the main problems in the first two policy cycles in all four Southern European
countries was the slow progression of expenditure in the early periods of each cycle, fol-
242  Handbook on Cohesion policy in the EU

lowed by the consequent spending rush towards the end of the period (Rainoldi 2010);
special agreements had to be signed in Greece and Italy between national authorities and
the European Commission to prevent loss of resources by extending the deadline for
programme closure. More recently, aggregate Commission data on financial execution
of 2007–2013 programmes place Portugal and Greece amongst the top performers (with
payment rates above 90 per cent) and indicate a below-­average performance for Spain
(c. 77.5 per cent) and Italy (just under 68 per cent), with Italy fourth from bottom across
all EU28 MSs (Ferry 2015: 22).
Implementation problems, for instance linked to public tendering procedures or
to financial management, have been quite common, causing relatively high levels of
errors, particularly in Italy and Spain (Harlow and Rawlings 2014: 240). Historically,
the management and delivery of Cohesion policy has not been straightforward for the
Southern European countries. It has required considerable institutional adaptation and
administrative capacity-­building efforts (Gualini 2004; Leonardi 2005; Andreou 2006,
2010; Milio 2007). The very principles underpinning Cohesion policy (for example,
multiannual programming, evaluation and partnership), the procedures required by EU
regulations (for example, transparent financial circuits encompassing different levels of
controls, financial and physical monitoring, evaluation-­based decision-­making), and the
sheer administrative workload necessary to comply with the EU regulations have not
tallied with domestic approaches to economic development and pre-­existing administra-
tive systems and cultures. Nor have they always matched the volume and qualifications
of human resources available.
The gap between needed and actual capacities was particularly pronounced in the
early periods, and it is still a challenge today, particularly in Greece and Italy (see
Charron, Chapter 6, this volume). In the quality of government (QoG) rankings by
Charron et  al. (2014), Italy and Greece feature 25th and 22nd, respectively, across the
EU27, and the southern Italian regions feature in the bottom positions of the regional
ranking (Campania 197th, Calabria 196th, Sicilia 190th and Puglia 189th). The ‘techni-
cal assistance’ resources earmarked in the programmes to support programme manage-
ment and delivery were often utilised to buy in external expertise and did not necessarily
contribute to an improvement of delivery capacities within the public administrations
(Leonardi  2014; Andreou 2006). Furthermore, their effectiveness was sometimes ham-
pered by the resistance of mainstream administrations (Andreou 2006). The low levels
of capacity available within the public sector have been a reason for ‘outsourcing’ man-
agement or oversight responsibilities in Greece, Portugal and, more recently, in Italy,
with the creation of special bodies and/or agencies tasked with coordination, delivery
and technical assistance functions (Andreou 2006; Bachtler et al. 2009; Medeiros 2014).
In Greece and Italy, special task forces had to be set up to support the delivery of
2007–2013 programmes, comprising national, regional and EU representatives. In the
Italian Mezzogiorno, where significant improvements had been realised since 2000, these
advancements have been largely lost in a retrenchment which is sorely evidenced not
just by the disappointing 2007–2013 spending performance, but also by the necessity to
reinstate procedures for the acceleration of expenditure similar to those introduced, but
thereafter discontinued, in the 1994–1999 period.
 243
Cohesion policy in the southern periphery  ­

Unfavourable Domestic Contexts

With regard to the factors external to the policy, Cohesion policy has delivered more
in the context of expansionary cycles (as in Greece and Spain during 2000–2006).
Funds have not always been additional, however. In Italy, Cohesion policy receipts have
funded investments in the Mezzogiorno that elsewhere across the country were real-
ised with domestic resources, and they have operated in fields not necessarily linked to
­development (e.g. Viesti 2009; Barca 2006). This latter factor has also been a problem in
Portugal, where ‘[i]n CSF III . . . the SF [Structural Funds] were used for almost all poli-
cies (transport, environment, energy, education, agriculture), even if there were no long-­
term concerns’ (Salvador et al. 2013b: 7).
More recently, the precarious state of public finances has taken a toll on the ability of
programme authorities to appoint domestic co-­financing. Fiscal consolidation efforts
have meant that Greece, Italy, Portugal and Spain – alongside eight further MSs – had
to agree with the European Commission on a reduction of domestic co-­financing rates
for 2007–2013 programmes, resulting in a decrease of national government contributions
of 45 per cent in Italy, 43 per cent in Portugal and approximately 30 per cent in Spain
and Greece; and a cut in the overall Cohesion policy budgets for 2007–2013 of about 23
per cent in Italy (c. €9.7 billion), 17 per cent in Portugal (c. €4 billion), 10 per cent in Spain
(c. €4 billion) and 7 per cent in Greece (Cifolilli et al. 2013). These reductions, coupled
with reallocations between expenditure headings – of around 40 per cent in Portugal and
Greece, and close to one-­quarter in Italy (Cifolilli et al. 2013) – will dampen the level of
impacts to be expected.4
Other domestic factors that are considered to have hampered the performance of
Cohesion policy include: the persistence of clientelistic logics in strategic and allocative
decisions; ‘pernicious relations between policymakers and the financial and business
sectors’ in Portugal (Medeiros 2014: 1978); the dominance of centrist and technocratic
approaches ‘not immune to political control’ in Greece (Andreou 2006, 2010); failure
to tackle factors that are beyond the reach of the policy but which affect its chances of
success, such as organised crime in Italy (Polverari and Tagle 2013); and unresolved ten-
sions between central state and regional autonomies, for example in Spain (Morata and
Popartan 2008).

ADDED VALUE AND SPILLOVERS

Leaving aside implementation difficulties and contested effectiveness, there is consen-

sus that the policy has been instrumental to the generation of both material and softer
aspects of added value.

New Policy Paradigms and Public Policy Approaches

As noted, Portugal and, to a lesser extent, also Greece and Spain, do not have an estab-
lished regional policy tradition. In these countries, the introduction of a socio-­economic
development policy with explicit territorial vocation was largely a response to EU acces-
sion. Even in Italy, where regional policy had been a major component of the post-­war
244  Handbook on Cohesion policy in the EU

public policy diet, the adjustment to Cohesion policy – particularly after the 1988 reform
and the disappointing performance of the 1989–1993 cycle – was a ‘crucial factor’ in
facilitating a ‘shift of attitude’ leading to a full reframing of the policy in the mid-­1990s
(Gualini 2004: 135–142). Cohesion policy, with its evolving strategic paradigms, has con-
tributed to shaping the domestic regional policy agendas and to the integration of new
policy themes in domestic policy discourses, acting as a stimulus for the adoption of EU
environmental directives and as a catalyst for more emphasis on gender equality.
It has also had positive influences on the modernisation of the administrative cultures
and on the ‘policy empowerment’ (Piattoni 2010) of both national and subnational insti-
tutions, introducing new practices in terms of adoption of multiannual, cross-­sectoral
programming approaches and evidence-­based and inclusive policymaking (e.g. Andreou
2010; Bachtler et al. 2009). Positive spillovers on domestic systems also occurred, for
example in relation to financial management and control in Greece (Davies and Polverari
2011) or multiannual territorial programming in Italy (Mairate 2006). In some cases,
new practices and procedures have consolidated; in others, improvements made were
subsequently lost or have remained confined to the Cohesion policy sphere, such as the
establishment of an evaluation culture in Spain (Viñas 2009). As mentioned, levels of
administrative capacity in some countries remain amongst the lowest in Europe. Yet,
on the whole, the levels of capabilities, efficiency and transparency of public adminis-
trations, at least as far as the implementation of Cohesion policy is concerned, in the
Southern European countries are not comparable with those of 25 years ago.

Multilevel Governance

The progressive reinforcement of Cohesion policy – financially, procedurally and

­geographically – has led to a multiplication of efforts to study its effects on systems and
polities in the MSs. This is shown by the abundant literatures on regionalism (e.g. Hooghe
and Keating 1994; Keating 2008), Europeanisation (Dąbrowski and Graziano, Chapter
5, this volume) and multilevel governance (for a review, see Stephenson 2013), all of
which have extensively adopted Cohesion policy as their focus of analysis.
These literatures initially suggested that there may be an emergence of ‘structural
(polity) transformations: through cohesion policy, regions should be empowered v­ is-­à-­vis
their central governments’ (Piattoni 2010: 102). And indeed, to assist with the implemen-
tation of Cohesion policy, and largely under the stimulus of what was then DG XVI, new
regional administrative units were created in the mid-­1980s in Greece (Hlepas and Getimis
2010), whilst in Portugal the 1994–1999 Regional Development National Operational
Programme (NOP) included, largely under the stimulus of the Commission, the institu-
tion of regional development agencies (Salvador et al. 2013a, 2013b). The implementa-
tion of Cohesion policy was also one of the contributing factors that indirectly led to
the strengthening of regional authorities in Italy (Piattoni and Brunazzo 2010) and to a
modernisation of autonomous communities in Spain (Morata and Popartan 2008).
Subsequently, the attention in the literature shifted to the critical appraisal of the
actual roles and operation of the new devolved bodies, for:

it is one thing to expect cohesion policy to empower the regions of Europe, in the sense of
making them more capable of contributing to the policy-­making process (policy empowerment),
 245
Cohesion policy in the southern periphery  ­

while it is an entirely different issue to expect cohesion policy to bring about a redefinition of
the institutional or even constitutional setup of the member states (institutional empowerment).
(Piattoni 2010: 128)

This turn in the literature led to the revelation that the actual degree of innovation
entailed by the new frameworks has been more limited than initially anticipated. In
Greece, the new (non-­elective) regional authorities effectively became instruments for
the maximisation of the national government’s political presence in the regions. Their
operation showed continuity with the local corporatist tradition of previous years and
‘favoured the diffusion of clientelistic and illicit practices and the increase of corruption
at the local and regional level’ (Chlepas 2000, quoted in Andreou 2006: 250). Eventually,
this resulted in the abandonment of regionalisation ambitions and the embracement of
a technocratic (and centralistic) agenda (Andreou 2006), to the extent that the role of
regional bodies has ‘weakened in the new programming period starting in 2007’ (Bache
et al. 2011: 129; Chardas 2014). In Portugal, the regional development agencies never
really took off, partly due to resistance from the deconcentrated administrations of the
central government (Salvador et al. 2013a, 2013b). In Italy, the reallocation of powers
between central state and regions, anticipated in the constitutional reforms of the late
1990s and early 2000s, remains unresolved to the extent that a recentralisation trend
has been observed (Bolgherini 2014). This recentralisation has been very tangible in the
specific field of Cohesion policy in the south of the country. Over time, the relative share
of resources managed by the regional authorities has increased, but the failure to accom-
pany this process with lasting institutional strengthening has led to the introduction of
tighter national oversight, task forces in three regions and an increased management
role by central-­level actors in 2014–2020. Pre-­existing political cultures, policy-­making
approaches and administrative traditions have constrained the potential for regional
empowerment in the most centralised countries in our group, notably Greece and
Portugal (Baun and Marek 2014), but also in Italy.
Where Cohesion policy has had a more lasting institutional effect, it has been in
terms of: creating more coordinated and collaborative approaches amongst the regional
authorities in Italy (Piattoni 2010); reinforcement of vertical and horizontal cooperation
in Spain (Colino and del Pino 2010); and strengthening type II multilevel governance in
Greece (Andreou 2010; Bache et al. 2011; Chardas 2014).

Shielding Investments and Providing Relief from the Crisis

Cohesion policy has ‘protected’ public investment budgets from cuts that would have been
deeper in its absence and shielded public investments from the contractions of austerity
programmes, particularly so in Greece and Portugal. Against investment rates falling by
as much as 66 per cent in Greece and more than 35 per cent in Portugal and Spain in 2013
compared to 2007, Cohesion policy allocations have supported regions in dealing with
their declining fiscal capacity and reductions in central transfers (Bubbico and Catalina
Rubianes 2015). This support to investment has been particularly crucial in the short
term for Greece, Italy and Portugal which, due to their scarce fiscal margins, were not in
a position to implement substantial fiscal stimulus programmes, like other EU MSs, in
the years immediately after 2008 (Bubbico and Catalina Rubianes 2015). According to
246  Handbook on Cohesion policy in the EU

the European Commission, during 2011–2013 Cohesion policy expenditure represented

a staggering 62.4 per cent of total public investments in Portugal and about 23 per cent
of total public investments in Greece. The more modest 11.2 and 8.6 per cent values of
Spain and Italy, respectively, are also significant (European Commission 2014). This
funding has arguably prevented the reversal of positive processes of regional convergence
or the further aggravation of regional disparities (Bubbico and Catalina Rubianes 2015).
EU Cohesion policy resources were also used to provide short-­term relief from the crisis,
as 2007–2013 programmes were revised to increase provision of labour market measures
and support to vulnerable groups (Metis and wiiw 2012). As the Southern   European
countries were amongst the most affected in terms of rising unemployment, poverty and
social exclusion, this support was particularly welcome (McGregor et al. 2014). A nega-
tive feature has been that, by so doing, spending has shifted towards shorter-­term goals,
in contrast to the policy’s long-­term vocation.

CONCLUSIONS

Cohesion policy in Southern European MSs has been characterised by successes and
failures. The framework for the 2014–2020 period has brought in new ambitions and, in
parallel, new rules intended to support them. A new range of obligations has been intro-
duced to strengthen the policy’s effectiveness and ability to deliver the Europe 2020 goals,
including: new ex ante conditionalities, a ‘performance framework’, strengthened evalua-
tion and partnership obligations, and a focus on selected thematic objectives (Brunazzo,
Chapter 1, this volume).
If the ambition to strengthen the results orientation of the policy is laudable, the way
these ambitions are being pursued may be undermined by the persistence of old problems
(which the new rules, or the new rules alone, are unlikely to overcome) and the constraints
that they will meet on the ground. The journey of Southern European countries through
previous programming cycles, which this chapter has reviewed, was characterised by a tire-
some process of change and adaptation that was mediated by the strong resilience of the
status quo (Gualini 2004). The factors that have limited the efficacy of the policy so far  –
both endogenous and exogenous – remain partly unresolved, and it is unclear whether
the new framework will be able to resolve them. There is a risk that the new, ever more
ambitious regulatory framework will result in formal rather than substantial compliance.
Cohesion policy has been affected by the wider problems of goal overload, opaqueness
and contradiction (Begg 2010; De Rynck and McAleavey 2001) as a result of the struggle,
which is increasingly visible, between two competing models of capitalism (Hooghe 1998).
The benefits credited to Cohesion policy include the generation of an increased ‘awareness
of Europe’ and a sense of European identity (Schmidt 2006). As an expression of solidarity
between European countries and regions, it has contributed to providing legitimacy to the
European project. Battered by the effects of the economic crisis and the ensuing austerity
programmes, the Southern European countries and their rapidly evolving political systems
(specifically in Greece, Italy and Spain) are showing signs of disaffection with Europe.
In this context, the stakes associated with the performance of Cohesion policy in these
countries might be much broader than the continuation of the policy in future EU budget
negotiations, amounting to a legitimacy test for the survival of the European project.
 247
Cohesion policy in the southern periphery  ­

NOTES

1. Eurostat data relative to 2014 extracted on 1 May 2015 from http://ec.europa.eu/eurostat/tgm/table.do?tab

5table&plugin51&language5en&pcode5tec00001 and http://ec.europa.eu/eurostat/tgm/table.do?tab5ta
ble&init51&language5en&pcode5tps00001&plugin51).
2. This section focuses on Greece, Italy, Portugal and Spain; for Italy, the focus is on the Mezzogiorno regions.
Unless otherwise stated the review draws from the summaries of CSFs and NSRFs provided in Faiña et al.
(2013a, 2013b), Lianos and Chorafa (2013), Polverari and Tagle (2013) and Salvador et al. (2013a, 2013b).
3. The southern Italian regions are commonly referred to as Mezzogiorno.
4. This issue is much broader in Italy where the NSRF originally envisaged a domestic side which soon
­collapsed. See Polverari (2013).

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Bache, I., G. Andreou, G. Atanasova and D. Tomsic (2011), ‘Europeanization and multi-­level governance in
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Bachtler, J., I. Begg, L. Polverari and D. Charles (2013), Evaluation of the Main Achievements of Cohesion Policy
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Barca, Fabrizio (2006), Italia Frenata. Paradossi e lezioni della politica per lo sviluppo, Roma: Donzelli.
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 249
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16. Cohesion policy in the service economies of the
north
David Charles

INTRODUCTION

The United Kingdom (UK) and Ireland present contrasting experiences of Cohesion
policy in the years since 1989, although there are common threads in the approach to
governance and thematic orientation. Ireland is often presented as the great success story
of Cohesion policy, lifted out of the group of the poorest European Union (EU) member
states with the help of EU funds and, at least before the crash of 2008, becoming one of
the richest countries in Europe. Whilst the role of Cohesion policy may be overstated,
the investment in the supporting economic and physical infrastructure could be said to
have positively supported a national development strategy which was highly successful
(Fitzpatrick et al. 2013). In the UK, by contrast, the challenge has been mainly focused
on the regeneration of old industrial regions, and the impacts have been less dramatic,
although with some successes (Charles and Michie 2013). Both countries have experi-
mented with changes in the governance of regions and hence of Structural Funds, but
with contrasting experiences, both between the two countries and between regions within
the UK. Yet despite different starting points and different processes of regionalisation
and centralisation, both countries have followed a shift from infrastructure support
towards enterprise, following the new European strategies, such as in the Lisbon Agenda
and Europe 2020, and exhortations of the European Commission keenly, if with a par-
ticular British Isles perspective.
Although Ireland has been a separate nation since 1922, the two countries share
much in terms of the historical development of institutions and the two economies
remain closely integrated. The UK is by far the bigger with a population of around
64.5 million and steadily growing, third in population size in Europe behind France and
Germany, whilst Ireland has a population of 4.6 million, also growing strongly in recent
years (Table 16.1). Ireland is thus of a similar population size as the UK Nomenclature
of Territorial Units 1 (NUTS 1) regions, which range in size from less than 2 million
(Northern Ireland) to more than 8 million (South East), although Ireland has a much
lower population density.
The UK and Ireland both joined the European Communities in 1973, and both played
an important role in the original development of what became EU regional policy. The
UK pushed hard for the development of the European Regional Development Fund
(ERDF) as a condition for accession, as it was anticipated that the UK would not benefit
greatly from the Common Agricultural Policy (CAP), and it wanted a mechanism for
compensation for its above average level of contribution to the Community budget
(Dardanelli 1999). Ireland also saw benefits from the establishment of the ERDF and,
together with Italy, threatened to sabotage the Paris Summit of 1974 unless firm com-

250
 Table 16.1 Number of Cohesion policy programmes, eligibility and implementation approaches across programming periods

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

UK Year of accession: 1973
Population on 1 January 2014: 64.5 million (12.7% of EU28)
GDP per c. €29 600 (108% of EU28 average, EU28 5 100, 2014)
GDP Total €2222.36 billion (2014, current prices), 17.5% of EU28)
Programmes Not known 27 SPDs* 25 + 17 CI programmes 22 12 ROPs
(regional OPs only)
Cohesion Fund No No No No No
Less-­developed regions Northern Ireland Northern Ireland, South Yorkshire, West Wales and Cornwall West Wales
 Highlands and Islands  West Wales,  were Convergence.  and Cornwall
and Merseyside Cornwall, Merseyside Highlands and Islands
were all Objective 1. Phasing out. Merseyside
Northern Ireland and and South Yorkshire
Highlands and Islands Phasing in.
transitional support

251
Implementation Centralised/ deconcentrated devolved devolved Centralised/
 approach  deconcentrated  devolved

Ireland Year of accession: 1973

Population on 1 January 2014: 4.6 million (0.9% of EU28)
GDP per c. €361 00 (132% of EU28 average, EU28 5 100, 2014)
GDP Total €185.4 billion (2014, current prices), 1.33% EU28
Programmes 8 NOPs 10 NOPs 6 + 3 CI programmes 1 NOP, 2 ROPs 1 NOP, 2 ROPs
Cohesion Fund Yes Yes Yes Yes Yes
Less-­developed regions All Ireland All Ireland BMW region None None
Implementation centralised centralised centralised deconcentrated deconcentrated
 approach

Notes:
* 12 of the UK SPDs were implemented in two parts, 1994–1996 and 1997–1999, with changes to the programme giving a total of 38 programmes.
SPD 5 Single Programming Document. NOP 5 National Operational Programme. ROP 5 Regional Operational Programme.

Sources:  Author’s elaboration based on various sources.

252  Handbook on Cohesion policy in the EU

mitments were made as to the size of the ERDF budget (Bache 1999). Both countries,
though, were reluctant converts to the idea of bottom-­up regional programming and
took a national perspective from the outset (see also Brunazzo, Chapter 1, this volume).
The nature of the regional problem in the UK and Ireland is longstanding. In the UK,
it reflects a strong core–periphery model based on London as a global financial capital
with an intermediate area of economically strong regions around it, based on overspill
effects and manufacturing, then with an outer ring of older industrial regions and more
rural areas. Ireland was very much part of this system historically with a relatively rural
economy apart from Dublin which itself was a second tier city in European terms with
strong financial and labour market links with London. Whilst London has been a pre-­
eminent centre for global capital, the rest of the UK and Ireland has struggled to take
advantage of that, although Dublin in recent years has built up a financial and infor-
mation technology (IT) sector with strong trading links with London and benefiting
from lower costs and taxes (Sokol 2007). Ireland has very much been in competition
with UK regions for international investment, although both increasingly losing out to
Eastern Europe (van Egeraat and Jacobson 2004).
The difference in scale in the two countries has been reflected in part in the differ-
ent institutional systems, although in both countries there has been evolution in the
degree of subnational governance over the past 20 years, especially in terms of the
­management structures for the Structural Funds. Ireland as a small country has tradi-
tionally been centrally managed with weak local government structures and a regional
tier of governance introduced in the 2000s only in response to the need to optimise
income from the Structural Funds (as discussed below). The UK in contrast has devel-
oped a much more complex regional structure, with three distinct ‘nation-­regions’
which have gained considerable powers over the past 20 years – Scotland, Wales and
Northern Ireland – whilst England has vacillated between regionalism and localism.
There remains a long tradition of centralisation in the Westminster Government
though, with significant consequences for the governance of the English regions (Lee
2000).
This chapter compares the development of the Structural Funds in the UK and Ireland
since 1989, particularly drawing out the shifts from centralisation to some degree of
regionalisation in the two countries, as well as a shift in policy paradigms from a focus
on infrastructure and the attraction of foreign direct investment (FDI) to a more endog-
enous development strategy rooted in enterprise and innovation.

OVERVIEW OF THE PROGRAMMES OVER TIME

The two countries have seen quite contrasting Structural Funds experiences over the last
25 years, although in some ways the Irish experience has resembled that of some of the
more peripheral of the UK’s regions. Ireland started the period in 1989 as an Objective
1 region grouped alongside the Southern and Mediterranean countries as requiring the
highest level of support and intervention, but steady spectacular growth through the
1990s and early 2000s saw it move out of least-­favoured status and ending up in 2007–2013
in the ‘Regional Competitiveness and Employment’ category as one of Europe’s richer
countries, even allowing for the traumatic effects of the financial crisis (Fitzpatrick et al.
 253
Cohesion policy in the service economies of the north  ­

2013). The UK by contrast began with a considerable number of regions in the Objective
2 category, but with various regions cycling in and out of Objective 1/Convergence status
over time, although with only two NUTS 2 regions remaining in the less-­developed cat-
egory for 2014–2020. These trends represent a key difference between the two countries
as Ireland saw a general and steady improvement and modernisation across the whole
country up to 2008, followed by recession and stagnation, albeit at a much higher relative
level of gross domestic product (GDP). The UK by comparison has experienced much
greater variety of regional experience, also with a long boom through the late 1990s
to   2008: London and the South East have seen dramatic growth and have reinforced
their position among the richest regions of Europe, whilst some of the old industrial
areas and the periphery have struggled and slipped back relative to EU averages.
In 1989, Ireland was a single Objective 1 region with a national programme featuring
a strong emphasis on capital investment and infrastructure coupled with support for
industry (foreign direct investment and indigenous) and tourism. So the emphasis could
be said to lie on export-­based growth, especially through a strong FDI dynamic and its
need for high-­quality transport infrastructure. This initial emphasis was continued for the
1994–1999 period, again prioritising export-­based growth and with additional support
for infrastructure from the Cohesion fund (Fitzpatrick et al. 2013). Throughout, the
ERDF investment has been embedded in a National Development Plan which brought
together EU and national funds behind a coherent national strategy for development
(Government of Ireland 1989).
The year 2000 saw a hugely changed situation as Ireland benefited from the
‘Celtic   Tiger’ boom through the late 1990s, which together with the effects of EU
enlargement meant the loss of Objective 1 status for Ireland as a whole as GDP per capita
was above the EU 75 per cent threshold. Hence the Irish Government moved quickly to
split the country into two NUTS2 regions through the amalgamation of the subregions:
the Southern and Eastern region, containing Dublin being the more economically suc-
cessful was deemed to be Objective 1 in transition with reduced levels of intervention,
whilst the weaker Border, Midlands and West (BMW) region retained Objective 1 status
(Fitzpatrick et al. 2009). The sudden conversion to a regional approach was clearly driven
by the need to retain Objective 1 funding, as explained by the Minister of Finance in a
parliamentary statement explaining that the primary aim was to secure an ‘optimum level
of funding’ (reported in Adshead 2014: 422). Nevertheless, levels of ERDF support fell
in absolute terms, although the National Development Plan (NDP) saw much-­increased
expenditure as national investment increased and the breadth of coverage of the plan
also increased. Investment continued to be focused on industry and infrastructure, and
Cohesion Fund support continued through until 2003, but there was also some increase
in spending on social and community objectives, through the two regional programmes.
The 2007–2013 programme was developed against a very different context to earlier
programmes with a rapidly growing and increasingly rich economy and the entire
country being designated as ‘Regional Competitiveness and Employment’ alongside
the richer regions of Europe. Levels of ERDF investment fell dramatically – now just
0.2 per cent of projected NDP investment – and with the aims of the Structural Funds
being to support niche areas complementary to national investment. The financial crisis
changed the context hugely in 2008, with growth halted and reversed to some extent,
and investment cut back dramatically (Fitzpatrick et al. 2013), although Ireland retained
254  Handbook on Cohesion policy in the EU

its position as above the EU average in GDP per capita. The 2014–2020 programme is
less of a dramatic shift than previous transitions: a similar structure of two regional
programmes and just over €400 million of ERDF contribution. As in 2007–2013, the
Operational Programme (OPs) are focused on innovation, small and medium-­sized enter-
prises (SMEs), and the environment, and make up a relatively small total investment in
economic development.
The UK experience of the ERDF has been very much more complex, with varying
levels of support across a regional map that has changed with each period. In 1989
the UK had a single Objective 1 region in Northern Ireland, whilst pockets of the rest
of the country were supported with Objective 2 funding mainly concentrated in the
urban areas of Northern England, Wales and Scotland. Additionally the Highlands and
Islands of Scotland, South West Scotland, parts of rural Wales and parts of Cornwall
were designated as Objective 5b. So apart from Northern Ireland, ERDF coverage was
in patches that did not map directly onto administrative areas even at NUTS3 level.
Community Support Framework (CSF) programmes were established at NUTS2 level
for these areas, but with the recognition of only partial eligibility. New partnerships were
established to develop the English programmes coordinated by the regional offices of the
Department of Trade and Industry. In Scotland, Wales and Northern Ireland, though,
programmes were developed by the respective territorial ministries: the Scottish, Welsh
and Northern Ireland Offices.
Coverage was increased in 1994, although still on a selective basis. Additional
Objective 1 coverage was given to the Highlands and Islands of Scotland and Merseyside
in England. The Objective 2 regions were broadly the same, although reduced in scale
slightly in some cases; whilst Objective 5b was expanded to cover much of the rest of
Scotland, Wales and Northern England, with new areas reaching into the East Midlands
and East Anglia. This time the new Single Programming Documents (SPDs) were
designed at a NUTS1 level in England for the Objective 2 areas, with broad partnerships
brought together by the new Government Regional Offices. Objective 1 areas had their
own programmes, as did Objective 5b, with some of the latter being designated on a
cross-­regional basis, especially as these rural areas often lay along the borders of regions,
whereas the urban Objective 2 areas were more central to their regions.
The 2000 programmes saw further consolidation and a stronger emphasis on NUTS1
regions in England to fit in with the new regional development agency regions. So each
of the English regions with some ERDF eligibility had their own programme, with
additional Objective 1 programmes where appropriate. Scotland and Wales had more
than one programme as they had a mixture of levels of eligibility with some Objective
1. Wales in particular was newly split into East and West subregions, with the poorer
and more peripheral West Wales being given Objective 1 status, whilst Scotland still
had ‘phasing-­out’ status for the Highlands and Islands. With devolution in Wales and
Northern Ireland the programmes were developed at the regional scale as the former
national government offices were gradually transferred to the new devolved authorities.
In Scotland programmes were developed at the level of subregional partnerships such
as the East Scotland Economic Partnership, but with some coordination by the Scottish
Executive.
The much simplified system in 2007–2013 saw a much clearer and simplified map in the
UK. Each English region had its own programme, mostly just at a Competitiveness and
 255
Cohesion policy in the service economies of the north  ­

Employment level, with just two Convergence areas in West Wales and Cornwall, both
peripheral rural areas. South Yorkshire and Merseyside which had been Objective 1 in the
past were now ‘phasing-­in’ regions and the Scottish Highlands were phasing-­out (with
the remainder of Scotland in a single Competitiveness and Employment programme).
Northern Ireland, which had originally been the only Objective 1 region, was now a
Competitiveness and Employment region along with most of the rest of the country. In
England the Regional Development Agencies (RDAs) had by 2007 taken over control
of regional programmes, both designing the programmes in association with local part-
ners and administering them. However, during the life of the programme the incoming
Conservative–Liberal Democrat Coalition Government decided to abolish RDAs and
renationalise the administration of the programmes, bringing management teams back
into the UK Department of Communities and Local Government.
Thus in 2014 there was further change in England with a single national programme
which was then to be locally managed through a network of 39 Local Enterprise
Partnerships (Hildreth and Bailey 2013) which bear little resemblance to the NUTS
regions, or indeed the designated pattern of more-­developed and transition regions. The
UK still retains less-­developed status for West Wales and Cornwall, and a number of tran-
sition regions; Northern Ireland had moved back into transition, Highlands and Islands
were still in this group, and in England the transition regions were a mixture of former
Objective 1/Convergence urban areas such as South Yorkshire and Merseyside, but
also more rural areas such as Cumbria, Shropshire and Staffordshire, and Lincolnshire
which had largely not been assisted in 1989–1993 and in some parts not even assisted in
2000–2006.
So both countries have been characterised by much change in the geographic coverage
and nature of Structural Funds coverage. Ireland has seen a steady reduction in intensity
of support to the point where the funds are extremely marginal compared with national
funding, alongside a shift from a national programme to regional programmes. The UK
by contrast has seen a waxing and waning of intensity of support with areas moving
in and out of Objective 1/Convergence status, whilst a broader trend towards complete
coverage of the country has been paralleled by constant shifts in the governance of the
programmes in England, at least. England may be unique in Europe in that every pro-
gramme since 1989 has been designed with a different institutional framework than the
previous one.

FINANCIAL RESOURCES

As already noted, the Irish ERDF budget has changed dramatically over the period.
The 1989 CSF programme was generous, with commitment appropriations from the EU
budget in the range of €6 billion (2010 prices, own calculations); altogether the level of
Community assistance to Ireland reached c 2.5 per cent of GDP in 1992 and 2.8 per cent
in 1993, and about 2.13 per cent across the period (own calculation based on commitment
appropriation data). Community assistance increased dramatically in absolute terms
with the 1994–1999 CSF where the EU contribution reached c. €8.5 billion, though a
lower value in terms of GDP ratio (see Table 16.2). The 2000–2006 CSF saw the start of
the decline in funding, although considerable funding levels continued through the early
256  Handbook on Cohesion policy in the EU

Table 16.2 Commitment appropriations for Cohesion policy 1989–2020

(€ million, constant 2010 prices)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020 Total

Ireland 6063.06 8455.76 3603.79 751 79 1141.28 20 015.68
% of GDP 2.13 1.72 0.34 0.06 – –
UK 9073.73 12 287.72 19 311.04 9831.19 11 162.14 61 665.81
% of GDP 0.15 0.14 0.14 0.07 – –

Note:  European territorial cooperation programmes not included. European Agricultural Guidance and
Guarantee Fund (EAGGF) and Financial Instrument for Fisheries Guidance (FIFG) included for 1989–1993,
1994–1999 and 2000–2006. Data for 2014–2020 relate to Structural and Cohesion Funds only and refer to
non-­finalised figures available at the time of elaboration, and do not correspond with finalised Partnership
Agreement financial allocations. GDP percentage values refer to averages of annual percentages.

Sources:  Own calculations from Directorate-­General for Regional and Urban Policy (DG REGIO) data, for
commitment appropriations; and the European Commission’s Annual Macroeconomic Database (AMECO),
for deflators and GDP.

2000s before a dramatic reduction from 2007. As illustrated in Table 16.2, in constant
2010 prices, Cohesion policy accounted for €3.6 billion in 2000–2006 and a much lower
figure of €0.7 billion in 2007–2013 (own calculations).
The heavy emphasis on infrastructure spending in the form of transport and environ-
mental projects especially in the early periods meant the allocations were closely matched
by expenditures. The integration of programmes with national government projects and
agencies led to certainty over the projects being delivered. However, as later programmes
increased allocations to enterprise and innovation projects there were greater problems
of absorption of funds, countered by an overspending on infrastructure against plans. By
the 2007–2013 programme, though, with a more limited budget innovation expenditure
ran ahead of targets and it was infrastructure projects that were behind budget due to
project delays (Fitzpatrick et al. 2013). Innovation became the largest area of expendi-
ture in this latest period in line with a trend in other Competitiveness and Employment
regions, confirming the transformation of the strategy away from a focus primarily on
infrastructure as was common in the Convergence regions.
In the UK, the 1994–1999 allocation of Structural Funds in the form of 38 SPDs was
a total of €13 652 million ECU/euro at 1998 prices covering the ERDF, European Social
Fund (ESF) and European Agricultural Guidance and Guarantee Fund (EAGGF)
(Hough and Presland 2000), and including €0.53 billion in ERDF in the form of
35 Community Initiatives. A key characteristic of the 1994–1999 programming period
was the sheer number of programmes, with Objective 2 areas receiving two programmes,
one for 1994–1996 and another for 1997–1999, plus a plethora of often very small com-
munity initiative programmes. The Urban Community Initiative (CI) for example con-
sisted of 13 separate programmes with an ERDF contribution of less than €5 million in
many cases. So whilst the largest programme was the Northern Ireland Objective 1 pro-
gramme with an EU contribution of €1.23 billion, the smallest CI programme was only
€2.3 million. In parallel with the fragmentation of programmes, there was also extreme
fragmentation of projects within programmes with regional SPDs often ­ including
 257
Cohesion policy in the service economies of the north  ­

­ undreds or even thousands of small projects, especially ESF-­funded. This placed huge
h
demands on financial management systems.
In 2000–2006 the allocation of ERDF to the UK was €3.97 billion to Objective 1 areas
and €4.52 billion to Objective 2 areas, a total of €8.49 billion (nominal values as reported
in the programming documents at the time). All regions received some funding but the
biggest beneficiaries were the North West with 21 per cent, Yorkshire and Humberside
with 15 per cent, and Wales also with 15 per cent (APPLICA et al. 2009).
The 2007–2013 allocation of funding to the UK was, as in Ireland, significantly lower,
although not such a large reduction as Ireland had experienced. €3.3 billion ERDF was
allocated to England of which only €395 million was Convergence funding for Cornwall.
Scotland received an ERDF allocation of €498 million, Wales €1.32 billion due to the
extensive Convergence area in West Wales, and Northern Ireland €307 million. So the
total ERDF allocation was down to only €5.4 billion (c.a €9.9 billion with the ESF)
(again, figures as reported in the programming documents’ financial tables).
My calculations of deflated commitment appropriation values for the UK range from
a total Cohesion policy support of around €9 billion in 1989–1993 and €12.3 billion in
1994–1999, to 19.3 billion in 2000–2006 and much reduced €9.8 billion in 2007–2013
(Table 16.2).
Table 16.2 provides a summative overview of the evolution of commitment appropria-
tions for Cohesion policy in the EU budget in each programming period, expressed in
constant 2010 values, and the average percentage contribution of EU funds as a percent-
age of national GDP. Commitment appropriations during the four programming periods
from 1989 to 2013 represented in Ireland an average of 2.13 per cent of GDP in the
period 1989–1993, 1.72 per cent of GDP in the period 1994–1999, 0.34 per cent in 2000–
2006 and a much reduced 0.06 per cent in the period 2007–2013. In the UK, commitment
appropriations represented 0.15 per cent of the national GDP in the first programming
period (1989–1993), 0.14 per cent in the second and third and 0.07 per cent in 2007–2013.
Additionality was a concern in the UK in the early period. The ERDF contribution
was supposed to be matched by an additional 50 per cent from national sources, which
was supposed to be additional to normal domestic expenditure. So governments were not
supposed to reduce their regional expenditure by the value of the EU contribution, or
even maintain existing spending levels, but were intended to increase expenditure in line
with the ERDF contribution. Prior to the 1988 reform the UK had treated the ERDF as
a form of reimbursement and concealed this by a lack of transparency. The 1988 reform
strengthened the principle of additionality though, leading to a stand-­off between the
UK Government and the Commission. The UK inserted a clause into the regulation
stating that the increase in appropriations should be additional, but then argued that it
was not bound by this as it did not benefit from an increase in funds (Bache 1999).
The dispute came to a head through the introduction of the RECHAR Community
Initiative for coalfield closure areas. The Commission announced the programme after
the UK had set out its funding plans, requiring the UK to demonstrate additionality
by announcing extra funding. The UK made no changes to its budget, claiming to have
anticipated the programme. So the Regional Policy Commissioner Bruce Millan, a Scot,
held up the UK programme until the UK was able to demonstrate additionality. In the
end the UK relented after a one year stand-­off, although the response was more about
appearances than genuine additionality. New spending consents, Supplementary Credit
258  Handbook on Cohesion policy in the EU

Approvals, were issued to local authorities in a transparent way to demonstrate addi-

tional spending on RECHAR, but existing domestic expenditure in the form of Basic
Credit Approvals was reduced as a Government policy. So no additional expenditure was
made, but a mechanism was introduced that made it seem as if additional funding was
allocated to match the RECHAR funding (McAleavy 1993; Bache 1999; Piattoni 2014).
This was to have a significant impact on the 1994–1999 period as local authorities
struggled to raise match funding due to the cuts in their budgets, and from dominating
spending in 1989–1993 had to take a more enabling role in 1994–1999 as a wider set of
partners were brought in to develop projects, including universities and various non-­
profit organisations. By 2000 things changed again as then the English regional develop-
ment agencies had been established and with large new budgets were able to provide the
match funding for local authorities and other partners as well as for their own projects.
The struggles over match funding and additionality however facilitated the shift away
from local authority capital projects to revenue projects involving a range of non-­profit
business support organisations, and hence to a shift towards enterprise type measures.
Additionality was less of a problem in the English regions during the RDA period
as this new set of organisations with very substantial new budgets were able to provide
the match funding for a substantial proportion of the programme, or at least that not
provided by the beneficiaries themselves. By the start of the 2007–2013 programme, in
the weaker English regions, the RDA budget was so large that the ERDF was seen as a
relatively small component and hence focused on specific themes. So the funds used to
match the ERDF were a result of an increase in the UK budget for regional develop-
ment. With the closure of the RDAs however, and the reallocation of a much reduced
budget to a new Regional Growth Fund that was used to directly assist firms there was
no longer an obvious source of matched funds, and RGF was almost impossible to use
as matched funding. So additionality has again become a problem in England. In the
devolved nations, ERDF continued to be matched by funding from government budgets.

STRATEGIES

The Irish programmes always tended to be more strategic than the programmes in the
UK, given the way they were embedded in a National Development Plan, whilst in the
UK programmes were developed at varying regional and subregional scales, in the main
without an existing formal overarching strategic framework. Overall, though, in both
countries the development of multi-­annual planning frameworks for regional develop-
ment as introduced by the Structural Funds had an effect on regional development strate-
gies, with a greater emphasis on strategic thinking over time.
In the 1989–1993 period regional programmes in the UK showed little strategic think-
ing and mainly consisted of sets of projects developed by local authorities, national
government agencies and public utilities. Whilst the CSFs were expected to include some
analysis of regional problems and strategic objectives, the connections between such
documents and the projects to be implemented were tenuous, and CSFs were typically
seen as devices to draw down the funds, following on previous funding which was allo-
cated on a quota basis to support national programmes (Michie and Fitzgerald 1997).
The CSFs were drawn up by the Department of Trade and Industry through its regional
 259
Cohesion policy in the service economies of the north  ­

offices and were developed in conjunction with ‘wish lists’ of projects submitted by local
authorities. As a consequence the emphasis tended to remain on infrastructure, with a
focus on transport, industrial property and environmental improvements. Some small ele-
ments were devoted to support for entrepreneurship and innovation but these were very
much emerging themes.
The 1994 programmes were a distinct step forward in that regional partnerships were
formed to develop the programmes under the aegis of the new regional government
offices but with the negotiation of strategies among a wide set of regional partners. These
strategies were much more focused on business development, often with a cluster focus
and with emerging themes such as community development and innovation.
By the 2000–2006 programme period the context had changed dramatically in England
with the creation of the new Regional Development Agencies, although these were still in
a start-­up phase when the programmes were being designed. Consequently, the strategies
were being designed in the expectation that they would align with the emerging priorities
of the RDAs. Otherwise there was significant continuity from the previous programmes,
albeit recognising the Commission’s concern for the Lisbon Agenda.
However, 2007–2013 was a turning point in England. The RDAs were in complete
control of the design of programmes which were typically aimed at delivering only a part
of the RDA strategies, usually focused on two or three themes such as enterprise and
innovation. With declining budgets in many areas as they shifted from Objective 2 to
Competitiveness and Employment status, ERDF budgets were considerably smaller than
the expected RDA budgets, and hence there was a desire to focus programmes on a few
objectives in order to ensure an impact from the concentration of funds. These plans were
to be undone on two scores, though: the global financial crisis undermined plans that had
been made on the expectation of continued growth, and the abolition of the RDAs in
2012 removed a key source of matched funding for some partners. As a consequence the
2014–2020 programmes would be designed in a totally different context with a new set of
subregional organisations.
As already noted, the Irish ERDF programmes, at the outset, were national pro-
grammes. Ireland was treated by the ERDF as a single region, and was required by the
Delors I Package on the Community Budget to prepare a multiannual development
plan (Quinn 2014). The 1989 CSF programme was therefore embedded in the National
Development Plan (NDP), developed by the national government with regional inputs
being seen as largely cosmetic (Adshead 2014). Although eight subregions had been
established as part of the NDP, there was no focus on regional development, although
there were rural development measures. These would provide some basis for the later
development of a more spatial strategy, and during the life of the programme other meas-
ures emerged that would promote place-­based development such as area programmes
for integrated rural development and the LEADER initiative for rural development
(Adshead 2014). Nonetheless the strategy in 1989 was focused on an integrated national
approach to export-­led growth based on FDI, an approach which continued with little
modification through the 1994–1999 period.
Post-­2000 the Structural Funds would account for only a small proportion of the
National Development Plan and with a contribution of only 3.1 per cent to the total
NDP from the ERDF, the actual distribution seems almost irrelevant. Contributions of
a few per cent to transport infrastructure environmental infrastructure or sustainable
260  Handbook on Cohesion policy in the EU

energy were no more than contributions, and overall development strategy was drawing
on the Structural Funds rather than being driven by them. The two new regional OPs
complemented the national programmes with more local projects around local enterprise,
social inclusion and childcare, but again the EU contribution was marginal to national
funds at 6–7 per cent. With the 2007 programme the huge reduction in ERDF and con-
tinued national investment meant the ERDF contribution would be only 0.2 per cent and
essentially almost invisible. The two regional OPs were focused on innovation and enter-
prise, rural development projects and strengthening the gateways and hubs at the core
of the National Spatial Strategy. Overall an increasingly targeted approach emerged as a
consequence of the decreasing scale of resources (Fitzpatrick et al. 2013). The new pro-
grammes for 2014–2020 essentially continue the approach, with an increased emphasis on
innovation, information and communication technology (ICT) and SME development
and a further reduced emphasis on physical infrastructure.

GOVERNANCE AND IMPLEMENTATION ARRANGEMENTS

Key principles in the design and implementation of the Structural Funds since the
1988 Reform have been partnership and the development of multilevel governance
(Bache and Jones 2000). National governments had (and have) to seek approval of their
regional programmes from the European Commission, but also to involve regional and
local stakeholders in the design and implementation of those programmes, so European
Commission (EC) regional policy was a policy, ‘not just for the regions but by the
regions’ (Nanetti 1996: 64, quoted in Bache and Jones 2000). These expectations of
partnership have increased over time, with debates about appropriate levels of subsidi-
arity (Dardanelli 1999) and the effectiveness of locally developed programmes, although
there has also been critique of partnership and a questioning of the benefits of local
institution-­building (Hooghe 1998). As a consequence of an ongoing debate between the
Commission and member states, the governance arrangements in both countries have
changed considerably over the various Structural Fund programmes since 1989, perhaps
more so in the English regions, but also in the UK devolved areas and in Ireland. One
common theme, though, has been the desire of UK and Irish governments (and later
Scottish, Welsh and Northern Irish governments also) to maintain or regain control,
albeit with a trend towards more regional involvement over time.
The Irish programmes for 1989 through to 1999 were the most strongly nationally con-
trolled, with the National Development Plan being highly centralised and driven by the
investment priorities of selected ministries. These ministries steered the strategy of the
Structural Funds through a set of Operational Programmes that were tied in to specific
ministerial strategies, albeit that OP management committees had some involvement of
social partners. As much of the funding was taken by national ministries and agencies
then there was little need for partnership. Irish local government was relatively weak
and fragmented and there was no real regional structure (Laffan 1996). Seven regional
review committees were established but these had no central role in the design of the pro-
grammes or selection of projects. However, the demands of the Structural Funds (SFs)
led to an introduction of eight regional authorities in 1993, essentially as advisory bodies
for SF programming and consisting of members appointed from the local authorities.
 261
Cohesion policy in the service economies of the north  ­

These provided the necessary partnership forum for reviewing local needs and promoting
collaboration across levels of government (Adshead and Finn 2014). These bodies were
still rather weak, though, and did not represent a wider mix of local stakeholders.
The split of the country into two NUTS2 regions in 1998 and hence the develop-
ment of two regional programmes from 2000 was mainly instrumental, as has already
been noted. It was widely recognised that this was a somewhat cynical device to retain
funding, and the Irish Government made no attempt to disguise this, but it was allowed
by the Commission (Boyle 2000). The new regional assemblies were not given any powers
or responsibilities beyond the Structural Funds and they took their membership from
the existing subregions (Boyle 2000), themselves populated with representatives of the
smaller local authorities. National government thus retained its gatekeeper role in man-
aging the influence of the Commission on regional policy in Ireland (Adshead and Finn
2014).
The regional assemblies were given responsibility for managing the two regional OPs
under the 2000–2006 CSF, although the continuing weakness of the regional governance
and the scale-­dependency of regional actors (Boyle 2000) meant that the new regional
actors were unable to effect significant difference in the programmes to meet regional
needs (Quinn 2014). It may be thought that despite a widening of regional disparities in
this period the absence of any regionalised policy might have seen even greater disparities
emerging. Over time, and with the move to a more regionalised approach, a more com-
petitive process for some measures has been introduced, such as for example for tourism
in 2000–2006. Although assessing projects strategically rather than on a first come, first
served basis led to delays in approvals it did allow the regional assemblies to assert more
influence on the choice of projects and make local decisions as to the best projects,
rather than relying on national government handing out the money on a first come basis
(Fitzpatrick et al. 2013).
Overall the domination of Irish programmes by the national administration has been
seen as a source of inflexibility and has limited the potential for innovation. National
ministries have used the funds as a core element of their budgets and hence have been
relatively slow to respond to new needs (Fitzpatrick et al. 2013).
Governance arrangements for the Structural Funds varied within the UK between
England and the devolved territories as well as over time. In England there was a gradual
movement from a central government-­controlled process in 1989 with modest inputs
from local partners, to a regionally devolved system in 2007 where the programmes
were designed and administered by the RDAs. This has then been reversed in 2014, with
national government back in control. In the devolved administrations, there has been less
change as the initial administration was by the territorial ministries which then migrated
to become the administration for the devolved administrations after 1998. Scotland,
though, was divided up into several subregions for administration and a variety of forms
of governance have been used over time; and Wales in more recent years has been split
into two regions, although both are managed by the Welsh Government through an inte-
grated funding office.
During the 1990s the English programmes were managed by central government
departments based in the regions. Initially the departments lacked staff to properly
administer the programmes and hence tended to rely on seconded staff from the local
authorities to form teams for each of the programmes, in some cases more than one
262  Handbook on Cohesion policy in the EU

programme in each region. However, national government was able to play an effective
gatekeeper role (Bache and Jones 2000) to control the key regional committees, select
committee members and apply financial controls to local authorities (Bache et al. 1996).
These 1989 programmes were centrally designed and brought together lists of projects
assembled from the local authorities. This contrasted with the programmes in 1994–1999
in which more permanent secretariats were established in the Government Regional
Offices and which developed programmes in conjunction with regional partners in which
the specific projects were unknown at the outset. Broad measures were identified against
a set of perceived regional needs which brought forward proposals from a wider set of
partners. In some regions, subregional packages were also developed in which partner-
ships at a local level oversaw the project selection process. Yet this shift to a more region-
alised approach was against a background of resistance by the UK government to the
Commission’s desire for greater partnership, and a desire in the 1993 reform process on
the part of the UK to renationalise regional policy (Dardanelli 1999). So, whilst the UK
was able to gain greater control over the designation of areas and eligibility of territory,
economic and social partners were given a stronger role in the discussions on programme
content. However, this remained a flawed model of subsidiarity as a compromise between
complete devolution to the member state and its own internal arrangements, and a cen-
tralisation of all regional policy at an EU level.
The experience of the UK regions in the 1990s was highly differentiated despite a
general approach of central (UK) government control. Some regions experienced con-
siderable levels of distrust and conflict between central government and local partners,
especially local authorities, with Yorkshire and Humberside acknowledged to be the
worst case. The situation improved over the period though as the new Government Office
pulled back from control to a more facilitative role (Bache and Jones 2000). Some regions
had local associations and proto-­development agencies which were able to help in the
development of strategies. In North East England, the Northern Development Company
(NDC) worked with local authorities and other partners to develop various strategies
which were at least partially absorbed into the region’s SPDs, and there was a mutu-
ally supportive relationship between the Government Office of the North East Region
(GO-­NE) and the NDC. The NDC would go on to form the core of the new Regional
Development Agency for the region. Scotland, with its own existing development agency
since the 1970s, had developed a culture of local partnership arrangements and was able
to build on these in developing subregional partnerships. This included the establishment
of independent secretariats to manage the programmes (Roberts 2003). Wales in contrast
had more limited devolution of powers and no culture of partnership. In the mid-­1990s
an independent secretariat was established in Wales which helped to improve relations
(Bache and Jones 2000).
With the formation of Regional Development Agencies in England in 1999 and the
devolution to new governments in Scotland and Wales from 1998, partnership and
regional control of the Structural Funds was strengthened greatly, and questions of
additionality were swept away by large increases in the regional policy budget through the
new RDAs. The English Government Offices still managed the 2000–2006 programmes,
but with the RDAs driving the strategy and working in partnership with local interests.
The RDAs were tasked to develop new Regional Economic Strategies and in most cases
there was no pre-­existing regional strategy other than those developed for the SPDs in
 263
Cohesion policy in the service economies of the north  ­

1997–1999 (Ferry et al. 2009). The new Structural Funds programmes therefore drew
on some of the thinking of the new RDA strategies, but also reflected the existing SPDs
from the previous period. However, once these new programmes commenced the avail-
ability of match funding from the RDAs would ensure greater convergence between the
two strategies in terms of funded projects.
The 2007 programmes were fully developed by the RDAs, as by this time the programme
management teams had been moved into the RDAs from the Government Offices and
an updating of the Regional Economic Strategies (RESs) took place in advance of the
writing of the 2007 strategies (Radzyner et al. 2014). This led to greater selectivity in
most regions as the RDAs took the view that greater impact could be achieved by con-
centrating the funds on a limited set of themes, and these decisions were shaped by the
funding commitments made through their own programmes; for instance, the North
East England region decided to devote limited funds to physical regeneration projects as
these were well supported through the RDA’s existing programme (Charles and Michie
2013). Whilst such decisions were made at a regional level, the role of the RDA in making
these decisions did create some tension with some local authority partners.
Despite this trend towards devolution the Coalition government from 2010 sought to
abolish the RDAs and recentralise Structural Funds programmes, moving programme
management staff back into the Department of Communities and Local Government,
and nationalising the development of the 2014 programme which meant a single England
programme. Scotland, Wales and Northern Ireland on the other hand retained their
existing, post-­devolution, arrangements. The arrangement for England was that a single
programme was agreed with the Commission with a standard framework designed after
consultation with the 39 new Local Enterprise Partnerships. Each LEP has a nominal
allocation from the programme and will call for proposals against a standard national
programme template. Each LEP was required to develop its own Smart Specialisation
proposals to meet the Commission’s conditionality requirements, but the move marks
a distinct retreat from regionally distinct programmes, and indeed from EU-­recognised
regions as the LEPs are all self-­designated territories (Radzyner et al. 2014). This marks
a distinct step back from partnership and a move back towards the renationalisation of
regional policy.

ACHIEVEMENTS AND IMPACT

The impact of Cohesion policy on a macroeconomic level has been much stronger in
Ireland than in the UK over the period, and especially in the 1990s when expenditure was
significant relative to Ireland’s GDP. In the UK the level of investment has been small rel-
ative to GDP even at a regional level, and macroeconomic effects have been very limited.
Ireland’s dramatic improvement in performance in the 1990s is undoubtedly partially
attributable to the effects of Cohesion policy, with an increase in GDP in 1989–1993 from
62 per cent to 73 per cent of the EU average. Whilst there remained many problems, the
programme achieved its aims in gross employment creation, with growing manufacturing
employment and dramatically growing exports. Foreign tourism revenues grew steadily,
adding 20 000 jobs, partly attributable to SCF investment in marketing, new facilities and
new attractions as well as the investment in transport infrastructure (Fitzpatrick et al.
264  Handbook on Cohesion policy in the EU

2013). Growth accelerated in 1994–1999, exceeding targets, with a review of the achieve-
ments assessing GDP growth to be more than 8 per cent of which about 3 per cent was
attributed to the CSF.
Analysis of the impact on GDP of the 2000–2006 programme using the HERMIN
model found a cumulative impact on Irish GDP of 7.47 per cent by 2009 and an expected
11.13 per cent by 2020 (Bradley and Untiedt 2009), although this latter figure may be
affected by the turmoil of the financial crisis. This is smaller than some of the other
Objective 1 countries at that time but comes on the back of greater macroeconomic
impacts in the 1990s. But still, comparing impact with Structural and Cohesion Funds
receipts over the same period, Ireland’s ratio of 2.84 is the highest in Europe. Inevitably
the effects were to drop away post-­2007 as levels of investment fell, combined with the
effects of the financial crisis which put Ireland into recession for several years, but the
investment of earlier years achieved its aims of raising Ireland from one of the poorer
countries in Europe to one of the richer ones.
In the UK the level of impact was inevitably much smaller as the scale of invest-
ment relative to GDP was so much smaller. Northern Ireland moved out of Objective
1 status, but other regions moved into Objective 1, and the case of Northern Ireland is
complicated by heavy domestic investment, the effects of the cessation of terrorism, and
various cross-­border initiatives with Ireland. Certainly it is difficult to point to any part
of the UK which has achieved the kind of improvement seen in Ireland, and the inter-
nal regional disparities in the UK have endured with remarkable stability in the relative
ranking of regions.
Although infrastructure investment was important in the UK in the early programmes,
as in other countries, the effects were often quite marginal. Whilst Objective 1 regions in
Southern Europe used the ERDF to construct major motorways and new railways, in the
UK Objective 2 regions typical projects were focused on local links to business parks, and
the big national infrastructure projects were mainly nationally funded. Indeed, UK infra-
structure policy over the past few decades has largely had a centripetal effect with higher
levels of funding in London and the South East, and the regions lagging behind despite
Structural Funds support. ERDF projects typically mitigated the effects of national
transport policy rather than providing transformative improvements.
The late 1990s saw a huge shift to business support and with a more direct aim to
increase job creation through business formation and growth. Monitoring reports iden-
tify considerable numbers of firms assisted and jobs created through such measures,
but much scepticism exists as to the real impact. Many of the larger numbers quoted
are subject to considerable double-­counting as firms may be assisted by more than one
project and no mechanism is available to reconcile outputs between projects; in some
cases more than 100 per cent of firms in a region were supposed to have been assisted,
and the jobs created often included jobs safeguarded from loss. Whilst some examples
of transformational projects have been identified which supported increased innovation,
there were many others with little long-­term effect on regional performance (Charles and
Michie 2013).
During the 2000s a number of the RDAs and devolved authorities in the UK tar-
geted support for research and development (R&D) and innovation; this accounted for
45 per cent of the 2007–2013 ERDF programme in North East England, for example.
The RDAs pursued the development of a number of centres of excellence in research
 265
Cohesion policy in the service economies of the north  ­

and knowledge exchange as part of regional science and innovation strategies, a major
shift in regional policy, partly encouraged by the Commission and the Lisbon Agenda,
but also facilitated by the creation of the new RDAs with a more independent perspective
of regional needs, and a view that their region was not well served by national policies
which had concentrated R&D in the South East of England (Charles 2008). Whilst some
of these did not survive the demise of the RDAs, others have been able to continue to use
ERDF alongside EU research funds and national funds to continue.
One of the most interesting aspects of the impacts of the ERDF in the UK has been the
way in which it has been used to support urban regeneration and cultural projects which
have had an iconic effect in changing perceptions of old industrial cities. Cities such as
Newcastle, Liverpool and Belfast have all pursued cultural urban regeneration strategies
using ERDF to part fund major new facilities which will have a long-­term benefit on the
life of the city. Whilst such projects have a direct economic benefit through visitors and
tourism, it is often the indirect effect on the attraction and retention of talented people
that is the more important impact in the long term (Charles and Michie 2013).

CONCLUSIONS

Whilst the fortunes of Ireland have been very positively affected by the availability of
Structural Funds support, alongside domestic policies for growth, the UK experiences
of Structural Funds have been more mixed as the relatively small scale of funds in many
regions have led to only modest impact, whilst some areas with higher levels of interven-
tion remain problematic. In part the UK has seen the funds less as a tool for transfor-
mation but rather as a mechanism for compensation for high contributions to the EU,
and hence has taken a less strategic view. The UK has also seen greater flux in the areas
of eligibility and in the governance and management of the programmes, especially in
England. However both countries have been influenced in the direction of regional policy
by the EU emphasis on enterprise and innovation, and national policy has shifted stead-
ily towards the Lisbon Agenda and away from a previous focus on infrastructure and
foreign direct investment.
Overall, Irish regional policy has been significantly shaped by the effects of the
Structural Funds as the tendency of the Irish state to focus on a national economic devel-
opment policy has been offset by the requirements of the Structural Funds for greater
territorial focus. Whilst the development of the whole territory of Ireland has always
been an aim, supported by a strategy for transport infrastructure, successive programmes
have sought to involve regional actors to a greater extent in strategy, especially since the
splitting of the country into two NUTS2 regions. Bottom-­up development has gradually
taken hold under the influence of the ERDF and institutional changes have largely been
in response to the requirements of the funds and the need to optimise funding.
The UK relationship with the Structural Funds has been more complex. So whilst
regions have sought to build an alliance with the Commission over development para-
digms, the National Government in Westminster in its changing political complexion has
shifted position, often antagonistic to regional strategies and most recently centralising
the programme for England and allowing the new Local Enterprise Partnerships only
a very limited degree of discretion in allocating funds to regionally specific actions.
266  Handbook on Cohesion policy in the EU

However, devolution in Scotland, Wales and Northern Ireland has produced a greater
differentiation in governance of programmes, with each devolved administration adopt-
ing different solutions.
Success, in terms of the impact of Cohesion Policy across the UK and Ireland, may
be linked with consistency of strategy and governance over time. Ireland has developed
a succession of National Development Plans underpinned by the Structural Funds,
and has benefited from steady and at times spectacular growth, although the Structural
Funds contributed only in part to that growth. In the UK the experience has been highly
varied. Northern Ireland has seen a similar consistency to Ireland and has arguably
benefited. Scotland also has seen positive developments in some areas, although the
challenges of the Glasgow region remain considerable. The English regions, though,
have suffered from the constant changes in eligibility, governance and strategy and the
scale of the programmes has been inadequate to the tasks. For some regions, such as
the North East, the 2000s brought some convergence with the national economy, only
for yet another revolution in governance, strategy and funding to occur. The question
in England is not so much whether any one form of governance of Cohesion Policy is
more effective than another, but whether the lack of a long-­term consistent strategy and
governance has wasted the opportunities presented by the programmes over the past 25
years. As this book was going to press, the UK voted to leave the EU in a referendum in
which the regional policy issues were barely mentioned and seem to have played little role
in the decisions of people living in the English and Welsh regions which have benefited
most from the Structural Funds. Faced with austerity politics, a general disillusionment
with politicians, and a torrent of negative messages about immigration, the population of
the disadvantaged regions did not seem to be convinced or aware of the benefits of EU
funding in their regions.

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Adshead, M. (2014), ‘EU cohesion policy and multi-­level governance outcomes in Ireland: how sustainable is
Europeanization?’, European Urban and Regional Studies, 21 (4), 416–431.
Adshead, M. and C. Finn (2014), AER Study on the State of Regionalism in Europe: Country Report on Ireland,
Limerick: University of Limerick.
APPLICA, ISMERI EUROPA and wiiw (2009), Ex Post Evaluation of Cohesion Policy Programmes 2000–2006
Co-­financed by the ERDF (Objective 1 and 2). Workpackage 1: Coordination, Analysis and Synthesis, Task
4 Development and Achievements in Member States, United Kingdom, Report to the European Commission
(DG REGIO), Brussels.
Bache, I. (1999), ‘The extended gatekeeper: central government and the implementation of EC regional policy
in the UK’, Journal of European Public Policy, 6 (1), 28–45.
Bache, I., S. George and R.A.W. Rhodes (1996), ‘Cohesion Policy and subnational authorities in the UK’, in
Liesbeth Hooghe (ed.), Cohesion Policy and European Integration: Building Multi-­level Governance, London:
Routledge, pp. 294–319.
Bache, I. and R. Jones (2000), ‘Has EU regional policy empowered the regions? A study of Spain and the
United Kingdom’, Regional and Federal Studies, 10 (3), 1–20.
Boyle, M. (2000), ‘Euro-­regionalism and struggles over scales of governance: the politics of Ireland’s regionali-
sation approach to Structural Fund allocations 2000–2006’, Political Geography, 19 (6), 737–769.
Bradley, J. and G. Untiedt (2009), Analysis of EU Cohesion Policy 2000–2006 using the CSHM: Aggregate
Impacts and Inter-­country Comparisons, Report to the European Commission (DG REGIO), Brussels.
Charles, David (2008), ‘From regional innovation strategies to the multi-­level governance of science, technol-
ogy and innovation: the case of the North East of England’, in Elias G. Carayannis, D. Assimakopoulos
and M. Kondo (eds), Innovation Networks and Knowledge Clusters, Basingstoke: Palgrave Press, pp. 166–185.
 267
Cohesion policy in the service economies of the north  ­

Charles, D. and R. Michie (2013), Evaluation of the Main Achievements of Cohesion Policy Programmes
and Projects over the Longer Term in 15 Selected Regions: Case Study North East England, Report to the
European Commission (DG REGIO), Brussels.
Dardanelli, P. (1999), ‘Implementing subsidiarity: regional policy from a British perspective’, Regional and
Federal Studies, 9 (2), 69–88.
Ferry, M., R. Michie and L. Polverari (2009), Ex Post Evaluation of Cohesion Policy Programmes 2000–2006
Co-­financed by the ERDF (Objective 1 and 2). Workpackage 11: Management and Implementation Systems for
Cohesion Policy, Task 3 Case Study Report United Kingdom (England), Report to the European Commission
(DG REGIO), Brussels.
Fitzpatrick, J., N. Crosbie and B. Shiels (2013), Evaluation of the Main Achievements of Cohesion Policy
Programmes and Projects over the Longer Term in 15 Selected Regions: Case Study Ireland, Report to the
European Commission (DG REGIO), Brussels.
Fitzpatrick, J., L. Polverari and J. Bachtler (2009), Ex Post evaluation of Cohesion Policy Programmes 2000–2006
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Government of Ireland (1989), National Development Plan 1989–93, Dublin: Stationery Office.
Hildreth, P and D. Bailey (2013), ‘The economics behind the move to “localism” in England’, Cambridge
Journal of Regions, Economy and Society, 6 (2), 233–249.
Hooghe, L. (1998), ‘EU cohesion policy and competing models of European capitalism’, Journal of Common
Market Studies, 36, 457–477.
Hough, J. and A. Presland (2000), ‘European Structural Funds’, House of Commons Library Research Paper
00/72, London: House of Commons Library.
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Policy and European Integration: Building Multi-­level Governance, London: Routledge, pp. 320–341.
Lee, S. (2000), ‘New Labour, new centralism: the centralisation of policy and the devolution of administration
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17.  Cohesion policy in the rich central regions
Jörg Balsiger

INTRODUCTION

The goal of this chapter is to provide an overview and analysis of the role of
Cohesion Policy (CP) in seven of the wealthiest member states (MS) of the European
Union (EU): Austria, Belgium, Denmark, France, Germany, Luxembourg and the
Netherlands. With 191.3 million inhabitants, these countries accounted for more than
one-­third of the EU’s population (37.5 per cent) and close to half of the EU’s gross
domestic product (GDP) (48.4 per cent or €6.7 trillion) in 2014.1 Although CP funding
is negligible relative to national GDPs, this chapter shows that CP has nonetheless
influenced regional and national trajectories during the past 25 years. The trajecto-
ries confirm what cross-­national and country studies have long suggested, namely
that uniform CP procedures have never been achieved and that CP implementation
varies considerably throughout the EU (Marks 1996; Hooghe and Marks 2001; Bache
2008).
The countries examined in this chapter are among the EU’s richest. In 2014, using
100 as a baseline for the EU average, GDP per capita was 266 in Luxembourg, 131
in the Netherlands, 129 in Austria, 126 in Germany, 125 in Denmark, 118 in Belgium,
and 107 in France. Not only are they among the EU’s wealthiest countries, but the
gap between them and less-­wealthy MSs in terms of GDP per capita has grown.
Aggregate   figures evidently mask large differences between the seven countries.
Germany and France together have contributed just over one-­third of the EU’s entire
GDP during the last 15 years, whereas Germany’s economy (the largest of the seven)
was 90 times the size of Luxembourg’s (the smallest) in 2000 and 60 times in 2014.
These differences are reflected in the varying roles that CP has played in the seven
countries, due in part to the domestic diversity of regional endowments (see Table 17.1
for an overview).
In Austria (Burgenland), Belgium (Hainaut), Germany (eastern Länder) and France
(Corsica, French Hainaut, Overseas Territories and Departments), CP funding to reduce
regional disparities was significant up to and including the 2007–2013 programming
period (in 2014–2020, only France retains a significant share, 21.5 per cent, of funding
for less-­developed regions). Indeed, Germany’s East–West gradient has been a determin-
ing factor in the country’s CP design, even if the dividing line is increasingly blurred
(Schwab 2010). Similarly, Belgium’s Hainaut region, with historic but declining indus-
tries such as textiles and steel, has at times been singled out in budget negotiations at the
highest EU levels (Bachtler et al. 2013b).
By contrast, Denmark and Luxembourg never had any Convergence funding and the
Netherlands reserved small appropriations only between 1994 and 2006. This does not
mean that these countries are internally homogenous. To take the smallest country as an
example, Luxembourg is a single NUTS 2 region but with important internal disparities,

268
 Table 17.1 Number of Cohesion policy programmes, eligibility and implementation approaches across programming periods

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Austria Year of accession: 1995
Population on 1 January 2014: 8 506 889 (1.68% of EU28)
GDP per c. 129% of EU28 average, EU28 5 100, 2014
GDP Total €328 996.30 million (2014, current prices), 2.36% of EU28
Programmes* – 1 Obj. 1; 4 Obj. 2; 1 Obj. 1; 8 Obj. 2 9 ERDF, 2 ESF 1 ERDF 1 1 ESF
  7 Obj. 5b
Cohesion Fund – no no no no
Less-­developed regions – 1 Burgenland 1 Burgenland 1 Burgenland none
Implementation – devolved devolved devolved centralised
approach**

Belgium Year of accession: 1958

Population on 1 January 2014: 11 203 992 (2.21% of EU28)
GDP per c. 118% of EU28 average, EU28 5 100, 2014
GDP Total €402 027.00 million (2014, current prices), 2.88% of EU28

269
Programmes* 5 Obj. 2; 4 Obj. 5b 1 Obj. 1; 414 Obj. 1 Obj. 1; 7 Obj. 5b 10 between ERDF 3 ERDF 1 4 ESF
  2; 3 Obj. 5b   and ESF
Cohesion Fund no no no no no
Less-­developed regions NA 1 Hainaut province 1 Hainaut province, 1 Hainaut province none
  transitional support
Implementation NA devolved devolved devolved devolved
approach**

Denmark Year of accession: 1973

Population on 1 January 2014: 5 617 345.00 (1.10% of EU28)
GDP per c. 125% of EU28, average EU28 5 100, 2014
GDP Total €257 443.80 million (2014, current prices), 1.85% of EU28
Programmes* 2 Obj. 2; 1 Obj. 5b 212 Obj. 2; 1 Obj. 5b 1 1 ERDF 1 1 ESF 1 ERDF 1 1 ESF
Cohesion Fund no no no no no
Less-­developed regions none none none none none
Implementation NA centralised centralised centralised centralised
approach**
 Table 17.1  (continued)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

France Year of accession: 1958

Population, 1 January 2014: 65 835 579 (12.99% of EU28)
GDP per c. 107% of EU28 average, EU28 5 100, 2014
GDP Total €2 142 022 million (2014, current prices), 15.39% of EU28
Programmes* 5 Obj. 1; 17 Obj. 2; 32 5 Obj. 1; 19120 Obj. 8 Obj. 1; 24 31 ERDF; 5 ESF 7 ERDF, 4 ESF, 33
  Obj. 5b   2; 20 Obj. 5b   Obj. 5b  ERDF-ESF
Cohesion Fund no no no no no
Less-­developed regions 6 5 6 4 5
Implementation deconcentrated deconcentrated deconcentrated deconcentrated devolved
approach**
Germany Year of accession: 1958
Population, 1 January 2014: 80 767 463.00 (15.93% of EU28)
GDP per c. 126% of EU28 average, EU28 5 100, 2014
GDP Total €2 903 790.00 (2014, current prices), 20.86% of EU28

270
Programmes* 7 Obj. 2; 8 Obj. 5b 6 Obj. 1; 919 Obj. 9 Obj. 1; 11 Obj. 2 36 (between ERDF 15 ERDF, 16 ESF, 1
  2; 8 Obj. 5b   and ESF)  ERDF-ESF
Cohesion Fund no no no no no
Less-­developed regions All Eastern Germany 9 9 9 none
  (from 1990)
Implementation devolved devolved devolved devolved devolved
approach**

Luxembourg Year of accession: 1958

Population on 1 January 2014: 549 680 (0.11% of EU28)
GDP per c. 266% of EU28 average, EU28 5 100, 2014
GDP Total €45 288.1 million (2013 current prices), 0.34% of EU28
Programmes* 1 Obj. 2; 1 Obj. 5b 111 Obj. 2; 1 Obj. 5b 1 1 ERDF 1 1 ESF 1 ERDF 1 1 ESF
Cohesion Fund no no no no no
Less-­developed regions none none none none none
Implementation centralised centralised centralised centralised centralised
approach**
 Netherlands Year of accession: 1958
Population, 1 January 2014: 16 829,5 289 (3.32% of EU28)
GDP per c. 131% of EU28 average, EU28 5 100, 2014
GDP Total €655 375.00 million (2014, current prices), 4.70% of EU28
Programmes* 4 1 Obj. 1; 515 Obj. 2; 5 4 ERDF; 1 ESF 4 ERDF 11 ESF
  5 Obj. 5b
Cohesion Fund no no no no no
Less-­developed regions NA 1 (Flevoland) 1 (transitional support) none none
Implementation NA devolved to provinces centralised centralised centralised
approach**

271
Notes:
* 1994–1999 period Objective 2 programmes were split in two (1994–1996 and 1997–1999), that is, reapproved midway into the programming period.
** Implementation approach categorises countries based on the way in which the majority of funding is administered and which type of authority – that is,
national ministry, representation of the State in the regions, regional authority – plays the role of Managing Authority (or equivalent).
NA 5 full information not available.
Obj. 5 Objective. ERDF 5 European Regional Development Fund. ESF 5 European Social Fund. OP 5 Operational Programme.

Sources:  Eurostat, Inforegio, European Social Fund site (for 2014–2020 programmes), National Reports of the 2000–2006 Ex post Evaluation of ERDF
Programmes, Working Package 11 Implementation Systems of Cohesion Policy in 2000–06 (EPRC and Metis 2008, http://ec.europa.eu/regional_policy/sources/
docgener/evaluation/expost2006/wp11_en.htm).
272  Handbook on Cohesion policy in the EU

especially between the central part that hosts the financial services sector and public insti-
tutions and the southern de-­industrialising steel and mining region. Three generations of
European Regional Development Fund (ERDF) interventions have thus mainly served
to rebalance the economy in favour of the southern part of the country (Lacave 2010b).
Despite these differences, the seven countries under consideration share several char-
acteristics. First, they have used more Regional Competitiveness and Employment (RCE;
formerly Objective 2 and currently denominated ‘more-­developed regions’) funding than
Convergence (Objective 1) funding. The predominance of RCE funding translates into
more decentralised actor constellations (employers’ associations and workers’ associa-
tions, and cities and localities) and greater difficulties in ensuring and measuring coher-
ence across thousands of projects, and in assessing aggregate impacts. Second, the seven
countries are highly industrialised. Even a relatively rural country like Denmark has a
very productive and industrialised agricultural sector. While some of them have used
funds to address limited de-­industrialisation issues, all of them have focused on competi-
tiveness and innovation, especially since 2007–2013.
Third, five of the seven countries are what Hall and Soskice (2001) call ‘coordinated
market economies’ (France being in an ambiguous position), where peak associations are
key players at the state–society interface. At the same time, some are explicitly federal
states (Germany, Belgium, Austria), where regional authorities have their own constitu-
tions and extensive legal and administrative competences (Hübner 2006). According to
Hooghe and Marks (2001), German Länder exert strong political influence at all stages
of the CP policy-­making process, whereas Belgian provincial influence is moderate to
strong (compared to weak central governmental influence at all policy stages). The other
four countries (France, the Netherlands, Denmark, Luxembourg) are fairly unitary, even
though the Netherlands and Denmark have powerful provincial or communal authori-
ties, and France has been strengthening its regional dimension (Hooghe and Marks 2001;
Hübner 2006). Accordingly, concertation at some territorial level takes place in all these
countries.
Finally, each of the seven countries is a net contributor to the Community budget,
ranging between 0.22 per cent (Luxembourg) and 0.49 per cent (Germany and Denmark)
of gross national income in 2013 (but Germany, France and Belgium are also among
the top seven recipients). As a consequence, they have a strong interest in efficient and
­effective CP spending, even if they often take different positions during the negotiation
of the financial perspectives (Bachtler et al. 2013b). During the budget talks for the
2007–2013 period, for example, Germany, the Netherlands, Austria and Denmark were
strongly in favour of rationalising CP, some wanting to limit CP to traditional con-
vergence regions, whereas France and Belgium pushed for continued support outside
lagging regions (Bachtler et al. 2013b).
The remainder of the chapter is structured as follows. It first provides an overview
of CP in the seven countries since 1989, with a focus on levels of expenditure, types of
instruments and thematic priorities. Then it examines evidence of CP impacts, before
identifying a number of common problems. The final section concludes with thoughts on
the larger context and the challenges that may lie ahead.
 Cohesion policy in the rich central regions  ­273

FUNDING LEVELS, INSTRUMENTS AND THEMATIC

PRIORITIES

The overarching goal of CP has been to support European integration by helping less
well-­off regions catch up with more prosperous ones (European Union 2014). At least
since the 2005–2006 EU budget negotiations, however, the principle of solidarity has
been questioned and concerns about the added value of CP have been vocalised (Bachtler
et al. 2013b; Avdikos and Chardas 2015). By then, the focus on growth, employment
and competitiveness enshrined in the Lisbon Strategy had already become the leitmotiv
of many EU policies and triggered a shift in CP towards greater emphasis on fostering
endogenous growth through innovation. This section offers an overview of CP funding
levels since 1989; the nature of funding types, instruments, and institutional arrange-
ments; and the evolution of thematic priorities, with a focus on the current programming
period.

Cohesion Policy Funding Levels 1989–2020

Cohesion policy funding has become a core component of the European Union’s
budget. For 2014–2020, the total CP budget amounts to €349.7 billion (34 per cent of
the EU’s total budget). The combined share of the seven countries under consideration
is 11.5 per cent, a figure that is relatively small because none of the countries receive any
Cohesion funding, only France receives some funding for less-­developed regions, and
the CP share for more-­developed regions is only 15.5 per cent. Of the total CP alloca-
tion for the period, the country allocations range from 0.02 per cent of the EU total for
Luxembourg to 4.5 per cent for France and 5.5 per cent for Germany. When considering
only CP funding for the more-­developed regions, however, the combined share of the
seven MS increases to 33.1 per cent.
The figures for the 2014–2020 period demonstrate the variation among the seven
­countries, both in terms of absolute CP funding and CP funding as share of GDP
(Table 17.2). Three trends stand out: the dominant position of Germany and France as
CP funding recipients; variation between countries in the direction of change from one
period to another; and the very small share of GDP that CP funding generally represents.
First, the CP allocations to Germany and France consistently accounted for more
than 80 per cent of the total for the seven countries, increasing from 82.6 per cent for
1989–1993 to 87.6 per cent for 2007–2013 before declining slightly to 86.4 per cent during
2014–2020. This is not surprising since the two countries have the largest economies and
populations. However, their CP funding as a percentage of GDP was also the highest
during three of the four periods for which it was assessed, due in large part to the cost of
German reunification and the continued importance of Convergence funding in France.
Second, not all countries have shared the same evolution of CP funding – in 2010
prices and as a share of GDP – since 1989. They generally experienced upswings from
the 1989–1993 programming period to the 1994–1999 one, but absolute CP allocations
further increased from 1994–1999 to 2000–2006 for France (by 19.4 per cent), Germany
(by 49.1 per cent), and the Netherlands (by 44.6 per cent). They then decreased for every-
body to 2007–2013. Despite the landmark decrease of CP funding by 5 per cent in real
prices to 2014–2020, CP funding increased for Belgium (by 4.8 per cent), Denmark (by
274  Handbook on Cohesion policy in the EU

Table 17.2  Cohesion policy funding, 1989–2020 (€ million, constant 2010 prices)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020 Total

Austria – 1770.7 1945.9 1196.0 1164.8 4912.5
% of GDP – 0.15 0.11 0.06 –
Belgium 1154.9 2488.1 2249.1 2053.6 2152.5 7945.7
% of GDP 0.10 0.15 0.10 0.08 –
Denmark 593.0 1001.8 884.1 505.7 521.2 2984.7
% of GDP 0.07 0.09 0.06 0.03 –
France 8928.2 15 056.2 17 971.3 13 348.0 14 940.3 55 303.7
% of GDP 0.12 0.16 0.14 0.10 –
Germany 4873.1 22 879.0 34 120.5 25 308.5 18 127.6 87 181.1
% of GDP 0.07 0.16 0.20 0.14 –
Luxembourg 99.3 156.5 89.2 49.3 56.5 394.2
% of GDP 0.12 0.12 0.04 0.02 –
Netherlands 1050.7 2127.1 3074.9 1647.5 1323.2 7900.3
% of GDP 0.06 0.08 0.08 0.04 –
Total 16 699.2 45 479.3 60 335.1 44 108.5 38 286.2 166 622.1

Sources:  Own calculations2 based on Directorate-­General for Regional and Urban Policy (DG REGIO)
data, for commitment appropriations; and the European Commission’s Annual Macroeconomic Database
(AMECO), for deflators and GDP. Data for 2014–2020 relate to Structural and Cohesion Funds only and
refer to non-­finalised figures available at the time of elaboration, and do not correspond with finalised
Partnership Agreement financial allocations. GDP percentage values refer to averages of annual percentages.

3.1 per cent), France (by 11.9 per cent) and Luxembourg (by 14.6 per cent). By contrast,
Germany’s CP allocation decreased by 28.4 per cent. In terms of CP funding as a percent-
age of GDP, increases were registered across the board from 1989–1993 to 1994–1999,
decreases from 1994–1999 to 2000–2006 (except for Germany), and decreases again for
everybody from 2000–2006 to 2007–2013.
Third, CP funding as a percentage of GDP has been very small (and generally decreas-
ing), especially when compared with MS in the EU’s southern periphery (see Polverari,
Chapter 15, this volume). The highest share recorded over the four programming periods
from 1989–2013 was 0.2 per cent for Germany during the 2000–2006 period. Other
countries with Objective 1 regions (Austria, Belgium, France) have experienced similar
shares, whereas they have been as low as 0.02 per cent in Luxembourg and 0.03 per cent
in Denmark during 2007–2013.
An additional, important feature of CP funding in the seven countries concerns
the relative share of funding that has targeted poorer regions. Table 17.3 shows that
Germany, France, Belgium and, to a lesser degree, Austria have historically targeted
significant shares of CP funding to specific regions. In Germany, this has been as high
as 63.1 per cent during the recent 2007–2013 period, with 33.6 per cent in France during
2000–2006, and 34.8 per cent in Belgium during 1994–1999. Conversely, the majority of
funding – all or virtually all funding in Luxembourg, the Netherlands and Denmark – has
targeted Competitiveness and Employment (Objective 2) regions. The crucial difference
is that whereas Objective 1 funding has focused on regions at the NUTS 2 level (for
example, Régions in France, Provinces in Belgium, Regierungsbezirke in Germany), RCE
 Cohesion policy in the rich central regions  ­275

Table 17.3 Share of national Cohesion policy funding allocated to the poorest regions,
1989–2020 (% of total funding)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Austria – 11.0 15.9 14.7 0.0
Belgium 0.0 34.8 10.1 30.9 0.0
Denmark 0.0 0.0 0.0 0.0 0.0
France 14.8 14.7 33.6 23.7 21.5
Germany 45.9 62.8 17.4 63.1 0.0
Luxembourg 0.0 0.0 0.0 0.0 0.0
Netherlands 0.0 5.7 2.9 0.0 0.0

Note:  ‘Development and structural adjustment of regions where development is lagging behind’ for
1989– 1993, 1994–1999 and 2000–2006, ‘Convergence’ for 2007–2013 and ‘Less developed’ for 2014–2020.

Sources:  Own calculations based on European Commission (1996) for 1989–1993 and 1994–1999, DG
REGIO for 2000–2006, 2007–2013 and 2014–2020.

funding has targeted, until 2006 at least, the NUTS 3 level and in almost all cases even
below NUTS 3 (Ward and Wolleb 2010).
Finally, all countries have been involved in cross-­border and transnational European
Territorial Cooperation programmes (ETC) since 2007, Community Initiatives (CIs)
before then, in some cases quite significantly, though at different times. On average,
the percentage of ETC/CI allocations in the seven countries has almost doubled,
from 12.6 per cent during 1989–1993 to 13.0 per cent during 1994–1999, 21.9 per cent
during   2000–2006, and 20.9 per cent during 2014–2020. In the current period, the
total CP allocation to ETC is 40.1 per cent in Denmark, followed by 33.8 per cent in
Luxembourg, 27.7 per cent in the Netherlands, and 20.8 per cent in Austria. Germany, by
contrast, where CIs made up 42 per cent of the total CP allocation for 2000–2006, now
only attributes 5.1 per cent to ETC.

Funding Types and Instruments

CP implementation arrangements in the seven MS also vary considerably, but differences

are not uniformly a reflection of whether the country has a federal or unitary system.
During 2007–2013, for example, fairly unitary Denmark and Luxembourg each had
national programmes, but so did Germany (for transport infrastructure); federal Austria,
Belgium and Germany had regional Operational Programmes (OPs), but so did France.
For 2014–2020 all countries list national programmes, but in reality most of these are
regional OPs managed by regional authorities. In France, a trend towards greater regional
autonomy is reflected in a change of managing authorities (MAs) of regional and even
multinational programmes from regional prefectures (that is, central government rep-
resentation in the region) during 2007–2013 to elected regional councils, which were
previously ‘constrained partners’ in OPs (Lacave 2010a), in 2014–2020. Multinational
programmes are typically managed by regional authorities, or even cities (as in the case of
Vienna or Rotterdam). Almost all MAs are established public authorities; rare exceptions
276  Handbook on Cohesion policy in the EU

Table 17.4   RDF and ESF contributions, 2000–2020 (% of total Cohesion

E
policy funding)

2000–2006 2007–2013 2014–2020

ERDF ESF ERDF ESF ERDF ESF

Austria 50.2 42.7 56.5 43.5 54.8 45.2
Belgium 42.1 54.1 48.0 52.0 47.0 50.9
Denmark 18.2 50.3 50.0 50.0 50.0 50.0
France 50.3 42.3 59.9 40.1 57.1 40.8
Germany 49.9 37.8 63.2 36.8 59.0 41.0
Luxembourg 53.7 43.6 50.0 50.0 49.3 50.7
Netherlands 34.4 61.0 50.0 50.0 50.0 50.0

Note:  Where totals do not add up to 100% the remainder is made up by European Agricultural Guidance
and Guarantee Fund (EAGGF) and Financial Instrument for Fisheries Guidance (FIFG) allocations for
2000–2006, and by the Youth Employment Initiative (YEI) allocations for 2014–2020.

Sources:  Own calculations based on DG REGIO.

include regional management agencies with a private character (Austria) or investment

banks (Germany). Due to the strong emphasis on enterprise support, MAs are often
lodged within ministries of economy, where CP initiatives are integrated into overall eco-
nomic policy (Schwab 2010, for Germany; Kah 2013, for Austria).
The seven countries also differ with regard to the source of CP programmes, as shown
in Table 17.4. During the last two and the current programming period, only Austria
and France have consistently drawn the majority of their allocations from the ERDF;
Germany has emphasised ERDF funding during 2000–2006 and 2014–2020. By contrast,
Belgium has always relied more on the European Social Fund (ESF), whereas Denmark,
Luxembourg, and the Netherlands have started to evenly split their allocation between the
ERDF and ESF. All countries have also made use of other funds, including the European
Agricultural Guidance and Guarantee Fund (EAGGF) and Financial Instrument for
Fisheries Guidance (FIFG) allocations during 2000–2006, and Youth Employment
Initiative allocations during 2014–2020. During 2000–2006, FIFG allocations were sig-
nificant in Denmark (22.6 per cent), and EAGGF in Germany (11.8 per cent).

Thematic Priorities

Under the current programming period (2014–2020), the Structural Funds (ERDF and
ESF) have a set of thematic priorities directly derived from the Europe 2020 agenda
(European Commission 2010). Although they form a new version of the ‘Lisbon
­earmarking’ mechanism of 2007–2013, investment priorities are now minimised (11
instead of 62) and more binding.
Table 17.5 shows 2014–2020 funding priorities for the countries under consideration.
It shows, first, that each of the seven countries diverges from the pattern of allocations
at the EU level. Research and innovation, information and communication technol-
ogy (ICT), and education and training, the sectors most clearly targeted for developing
 Cohesion policy in the rich central regions  ­277

Table 17.5  Thematic Objectives, 2014–2020 (% of national allocation)

AT BE DK FR DE LU NL EU
Research and innovation 21.9 20.0 22.2 11.1 21.7 24.6 34.1 12.3
Information and 0.0 0.0 0.0 7.4 0.0 0.0 0.0 4.1
 communication
technologies
SME competitiveness 17.5 18.4 17.3 11.5 13.4 0.0 0.0 10.0
Low carbon economy 12.6 14.9 10.5 12.3 14.0 24.6 12.5 11.5
Climate change and risk 0.0 0.4 0.0 2.4 2.6 0.0 0.0 2.2
 prevention
Environment and resource 0.5 12.9 0.0 7.2 3.9 0.0 0.0 10.1
 efficiency
Transport and energy 0.0 0.0 0.0 3.0 0.0 0.0 0.0 18.0
 networks
Employment and labour 9.2 6.1 19.7 15.0 13.6 29.1 14.1 10.4
 market
Social inclusion 15.8 11.1 10.5 16.0 16.9 10.8 39.3 10.0
Education and training 22.5 16.1 19.7 14.0 13.8 10.8 0.0 9.8
Efficient public 0.0 0.0 0.0 0.1 0.0 0.0 0.0 1.5
 administration

Source:  DG REGIO (2015).

a knowledge-­based economy, together will receive about one-­quarter of the total EU

budget, while the same three areas combined attract on average more than one-­third
of the seven countries’ allocations. This above-­average focus on building a knowledge
economy is a reflection of national priorities (Kah 2013, for Austria; Lacave 2010a, for
France; Broersma and Edzes 2010, for the Netherlands).
The seven rich countries also vary considerably in how much they concentrate their
funding. At one end of the spectrum are the Netherlands and Luxembourg, which focus
their allocations on four and five themes, respectively; at the other end is France, where
the mandate to prioritise themes is ignored and none are left without an allocation. The
comparison with 2007–2013 shows the increasing pressure for countries to focus on a few
themes. During the last period, the seven countries on average allocated funding to more
than 12 of 15 themes.

ACHIEVEMENTS AND IMPACTS

A wide range of factors have been identified to account for variation in Cohesion policy
governance processes and impacts: formal and informal intergovernmental relations; pre-­
existence of territorial communities or networks for regional development; institutional
and administrative capacity; learning capacity; policy entrepreneurship by local elites;
clientelism; and domestic policy paradigms (Bachtler et al. 2013a). Generally there has
been more emphasis on softer intervening variables such as institutional thickness, social
capital and policy learning (Mendez 2011).
278  Handbook on Cohesion policy in the EU

Due to this wealth of factors that influence CP impacts, and the difficulty of separat-
ing them from the larger environment in which CP is implemented, concretely assess-
ing CP impact has been an enormous challenge. Even clearly attributing reductions
in inter-­and intraregional economic disparities to Cohesion policy has required the
strongest of caveats. In Austria, a major review covering Structural Funds support
between 1995–2007 was cautiously optimistic, citing progress in the country’s poorest
region, Burgenland (ÖROK 2009); however, a more recent report cites economic difficul-
ties in Carinthia as evidence of increasing regional disparity (Resch and Naylon 2013).
In the Netherlands, a study of the Netherlands Bureau of Economic Policy Analysis
was critical of the effects of Cohesion policy in reducing regional disparities during
2000–2006 (Ederveen and Gorter 2002), which contributed to the abandonment of the
corresponding regional development policy goal. An evaluation of the Danish Objective
2 Programme 2000–2006, which sought to strengthen growth and development in the
peripheral areas of Denmark and to reverse adverse structural trends in these areas, con-
cluded that the programme’s positive effects were not large enough to counteract growth
trends and widening regional disparities (Nordentoft Andersen and Plougmann 2010).
Evaluation practices themselves have evolved, but are very unevenly applied. Of the
seven countries examined in this chapter, only the eastern part of Germany has so far
been included in a model-­based assessment of the potential impact of CP (Varga and in
't Veld 2011). There, it is estimated that GDP is 1.5 per cent higher than it would have
been without the intervention, and employment is 1.2 per cent to 1.4 precent higher in
the years 2009–2015, as result of the combined effects of EU financial support during the
last two periods (Schwab 2010: 4).
Other comprehensive studies are rare. One longitudinal analysis (1989–2012) of 15 EU15
regions (Bachtler et al. 2013a) included five regions of the countries examined here. Overall,
the study revealed continued problems despite slow improvement in many aspects of ERDF
programmes. In Sachsen-­Anhalt, for instance, long-­term unemployment, social exclusion,
poverty and weak private research and development (R&D) persisted or worsened during
the study period, while Nordrhein-­Westphalen barely escaped the ‘vicious cycle’ of below-­
par job and output growth, while productivity in Nord-­Pas de Calais and Burgenland was
under par. On the other hand, Aquitaine outperformed EU averages of productivity and
growth, and programmes contributed to avoiding a worsening of territorial disparities, yet
it failed to modernise and diversify the productive base inherited from the past.
More specific evaluations show a number of positive effects. In Germany, ­‘significant
effects might already have been achieved’ in enterprise support, human resources devel-
opment, transport and telecommunication, environment and energy, and territorial
development (Schwab 2010: 4). In France, positive experiences have been made in the
areas of knowledge economy, innovation and competitiveness, where emphasis since
the 2007–2013 period has been placed from the beginning on support to clusters and
the significant involvement of universities and research centres in transnational and
cross-­border networks (Lacave 2010a). In Austria, Cohesion policy generally plays an
important role because the country has no major national regional policy instruments. In
the areas of research, technological development and innovation (RTDI) and enterprise
support, findings show that support provided tends to have more effect in expanding
output and employment than in increasing productivity, and more effect on small and
medium-­sized enterprises (SMEs) than on larger firms (European Union 2014).
 Cohesion policy in the rich central regions  ­279

Numerous evaluation studies have focused on the ability of CP to mitigate the nega-
tive consequences of recent financial and economic crises. Assessments in Austria and
France indicate that CP programmes strengthened their focus on young people after the
crisis hit and that, from 2009 on, more resources were used to support self-­employment
and business start-­ups and to develop intermediate labour markets, which provide the
long-­term economically inactive with work placements, training and qualifications. At
the same time, evaluations of Austria showed that shrinking investment activity resulted
in longer and smaller projects, payment delays and a shift to lower-­risk investments
(ÖROK 2012). The French government took measures to accelerate the implementation
of the OPs, in particular as regards sustainable development, digital infrastructure and
energy efficiency for housing (Lacave 2010a). By contrast, most MAs in Germany saw
no need to change structural policy as a result of business cycles, but considered ERDF
programmes ‘as stable strategic policies addressing long-­term structural development
problems’ (Schwab 2010: 3). Similarly, as of 2010, all regions of the Netherlands had
suffered from the crisis, yet no substantial adjustments were made to regional policies
(Broersma and Edzes 2010: 4).

IMPLEMENTATION CHALLENGES

For the many reasons outlined above, the countries and regions examined in this chapter
are highly diverse. Because CP allocations are very small relative to national GDP, their
independent impact is difficult to assess. Furthermore, it is often not easy to ascertain
whether problems encountered in CP implementation reflect particular features of CP
instruments or whether they are symptoms of generic, internal or external challenges
such as policy integration in public administration, institutional adaptive capacity, or a
lack of private or public resources caused by financial, economic or other types of crises.
This section addresses three common problems: partnership, absorption and administra-
tive procedures.

Partnership

Since the 1988 CP reform introduced the partnership principle, MS have been required to
consult with subnational authorities and interest organisations in CP planning, decision-­
making and implementation. Many observers characterise this reform as the leading edge
of multilevel governance (MLG), although it is worth noting that in its original proposal
on the coordination of the Structural Funds, the Commission included only itself and
MS in the definition of partnership (Yesilkagit and Blom-­Hansen 2007). Academic
debates about the MLG model emerged as soon as the model was proposed and continue
today, focusing on whether empirical studies and critiques have focused on the same
phase of the policy cycle (MLG advocates examine implementation, critics analyse pre-­
implementation), used adequate indicators (establishment of offices by regional and local
authorities in Brussels, informal contacts with Commission representatives, establishment
of EU units within regional governments), or centred on the right unit of analysis (indi-
vidual regions, or the implementation system as a whole) (Pollack  1995; Hooghe 1996;
Marks 1996; Hooghe and Marks 2001; Yesilkagit and Blom-­Hansen 2007; Piattoni 2010).
280  Handbook on Cohesion policy in the EU

In his synthesis of a major MLG study, Marks (1996) suggested that MLG varia-
tion is greater between than within countries, arguing that a country’s system of ter-
ritorial relations is a more powerful predictor of influence than the functional stage of
programming. He also noted that these territorial relations are in some cases shaped by
the Structural Funds and that the influence of the Commission depends on the relative
level of Community funding to MS expenditure on domestic regional policy. According
to Bachtler et al. (2013b), broadly similar conclusions were reached in a wide range of
studies published in the 1990s and 2000s.
Existing territorial relations in our seven countries have played a role in how the part-
nership principle has been implemented and the challenges that have ensued. In Belgium,
the Structural Funds were found to interact with evolving regionalisation pressures
(Bachtler et al. 2013b). In France and Germany, by contrast, the highly formalised nature
of territorial relations precluded any significant influence on prevailing arrangements,
although in France subnational actors have come to play a more substantial role in the
planning of domestic regional politics. In Germany, Länder participation in regional
economic policy making has been ensured through the Joint Task for Improvement of
Regional Economic Structure already established in 1969 (Schwab 2010). Here, ERDF
programming has provided a platform for strategically coordinating territorial develop-
ment instruments at the level of Länder, where policy instruments have been diversified
since the 1990s.
Recent work has focused on a specific aspect of partnership, namely whether strong
regions (in federal systems) have relatively greater access to CP funding than weaker
regions (in unitary systems) and what factors determine regional political strategies
­vis-­à-­vis national governments and European institutions. Callanan and Tatham (2014)
found that strong regions with law-­making powers and financial autonomy appear to
favour cooperation with central government, whereas weaker regions concentrate on
direct participation at the European level. After analysing regional transfer payments in
the EU15 from 2000 to 2006, Dellmuth (2011) argues that the Commission has put in
place incentives to favour strong regions assumed to be able to manage the Structural
Funds effectively. Weaker regions, instead, will be allocated funds if they are known to
actually spend them.
A final point to note is that the degree of subnational participation in CP planning and
implementation also depends on the type of CP instrument and target region. On the
one hand, the large majority of funding allocations in the countries and regions under
consideration targets RCE regions, where projects typically target areas much smaller
than the jurisdiction of the subnational authority that participates in CP planning. On
the other hand, many MS have started to combine all ESF allocations under one national
programme. Both cases raise challenges to the implementation of the partnership prin-
ciple because the dispersal of stakeholders undermines their opportunity to mobilise
collectively.

Absorption

While it may be assumed that rich countries and regions have few problems absorbing CP
allocations, this is not uniformly the case. In an analysis of ERDF absorption performance
of 25 MS at the end of 2000–2006 in the year 2008, Tosun (2014) found that government
 Cohesion policy in the rich central regions  ­281

capacity correlates positively with ERDF absorption performance, but that richer MS
are less likely to maximise absorption. The ERDF absorption performance of the new
MS was in fact better than that of the old MS, with Denmark, Luxembourg and  the
Netherlands showing some of the lowest absorption rates (for a contrasting view on
the Netherlands and Denmark, see Yesilkagit and Blom-­Hansen 2007). By comparison,
ERDF absorption rates for the 2007–2013 period assessed in July 2015 were 86.8 per cent
for Austria (13th among EU28 countries), 83.8 per cent for Belgium (15th), 87.9 per cent
for Denmark (9th), 80.9 per cent for France (18th), 86.0 per cent for Germany (14th), 86.9
per cent for Luxembourg (12th), 82.3 per cent for the Netherlands (17th). Whereas three
of the seven countries were above the EU15 average for the 2000–2006 period by the end
of 2008 (Austria, France, Germany), four countries were above average for the 2007–2013
period by mid-­2015 (Austria, Denmark, Germany, Luxembourg).
The onset of the financial crisis during the 2007–2013 period is an important factor
accounting for the more recent results, even if the impact of the crisis has been felt
at least as significantly in countries that have shown better absorption performance than
those examined in this chapter. Other factors are thus at play. In Germany, a mid-­term
evaluation of the 2007–2013 programming period revealed that programme implementa-
tion was delayed because Länder gave priority to spending 2000–2006 funds during the
overlap of the funding periods (Schwab 2010). In France, variable implementation rates
during 2007–2013 were attributed to the character of cooperation between the state
administration and the regional authorities. Differences also applied to policy areas,
where implementation rates were highest in the ‘knowledge economy’ policy area and
lowest in sustainable development, due to a predominance of small projects and relatively
weaker management capacity than in innovation (Lacave 2010a).

Administrative Procedures

Implementing a programme as large and complex as Cohesion policy is apt to tax admin-
istrative capacities in general, particularly of small public agencies, and with respect to
financial management and control in particular. Adding to this the continued demand to
integrate policies and practices across multiple policy domains makes it unsurprising that
even well-­off countries such as those examined in this chapter face common challenges.
CP rules have doubtlessly increased the administrative burden of public and private
project owners. In Austria, the onset of CP integration in regional policy-­making was
expected to increase efficiency, clarify responsibilities, and bring methodological innova-
tion (ÖIR 2003). However, the complexity of integration under time pressure meant that
little innovation in programme design and management occurred and necessary reforms
were postponed. By the end of 2007–2013, the main CP challenges in Austria were related
to the burden and costs of administrative implementation, especially regarding the use
of ERDF financing (Resch and Naylon 2013). In Luxembourg, the MA has emphasised
the need to adapt the reporting and evaluation process and workload to the size of the
country and the amount of EU funding received by enforcing the proportionality prin-
ciple (Lacave 2010b).
Where CP implementation provides new impulses, for instance in the recent push for
more modern evaluation practices such as counterfactual impact evaluation (comparing
outcomes between those who have benefited from a policy intervention and those who
282  Handbook on Cohesion policy in the EU

have not), administrative inertia and traditionalist bureaucratic cultures often stand in
the way. In France, CP is found to have contributed to modernising the culture and prac-
tice of evaluation at national and regional levels, but traditional methodologies continue
to prevail, as illustrated in the national evaluation of the pôles de compétitivité (Lacave
2010a). In Luxembourg, excluding research and innovation policy, the main problem is
the lack of an evaluation culture in public administration (Lacave 2010b). In Germany,
on the other hand, one of the main evaluation problems concerns the lack of high-­quality
indicator-­based data that would permit the generation of aggregate information, some-
thing deemed necessary given the several tens of thousands of projects (Schwab 2010:
3). In Denmark, it has been pointed out that evaluation tools so far fail to account for
the tendency towards multi-­partner projects, where it becomes necessary to measure the
results and impacts of network creation and the development of platforms are results
(Nordentoft Andersen and Plougmann 2010).

CONCLUSIONS

In the countries examined in this chapter, Cohesion policy funding relative to national
GDP has been very small and decreasing, even if some countries historically received
substantial funding for less-­developed regions (and France continues to do so). As the
importance of CP funding has diminished and CP funding has been channelled to other
European regions, these countries have increasingly demanded that it be spent wisely. The
recent EU budget reduction symbolises their power as net contributors, adding to the
spectre of a policy climate of austerity.
Over the course of the last 25 years, concrete CP outputs such as jobs created, businesses
set up, or workers trained have been increasingly well documented. Beyond these outputs,
CP has generally raised the profile of regional policy in several MS, strengthening the
participation of subnational authorities in policy-­making and implementation. This  is
particularly the case in Austria, which has no major national regional policy instruments;
in France, where regional innovation strategies linked to CP programmes have positively
shaped the commitment of regional officials and politicians; and in Germany, where CP
implementation has generated improved subnational policy coordination.
Yet, because CP funding is very small in relative terms, it generally does not achieve
the critical mass of funding necessary to really change administrative procedures (see
Dąbrowski and Graziano, Chapter 5, this volume). On the positive side, this means that
CP programmes and projects are implemented relatively smoothly. On the negative side, it
means that innovative approaches, especially in evaluation, are often slow to make inroads.
This is likely to become more pronounced as the new regulations demand more sophisti-
cated evaluation techniques, and as national, regional and CP projects increasingly move
to implementation via network structures whose impact is notoriously difficult to evaluate,
especially in small and diverse areas as is the case for most CP funding in the seven countries.
At the dawn of the 2014–2020 programming period, and amidst ongoing economic
and financial volatility, what are the challenges that lie ahead for the rich central regions?
Ironically, some of them are effects of the very reforms the EU’s net contributors have
demanded (to varying degrees). First, growing pressure to use cutting-­edge planning and
evaluation tools, combined with the neoliberal turn from reducing regional disparities
 Cohesion policy in the rich central regions  ­283

to fostering regional potential, may increase differences between central and peripheral
regions, as well as between sectors within regions. If the Bachtler et al. (2013a: 127) study
concludes that what is most needed is a more sophisticated approach to long-­term strate-
gic analysis and planning rooted in theory and practice, as well as a detailed understand-
ing of the distinctive strengths and weaknesses of individual regions, it also suggests this
‘presupposes a level of competence and experience that does not exist everywhere’. In
other words, if CP funding becomes concentrated in regions that already have the capac-
ity to handle complex projects, regions with less prior experience may get left behind.
Second, this tendency may become more pronounced as a result of the place-­based nar-
rative that dominates regional policy theory and practice today. This narrative conceives
of ‘region’ in functional terms, as a bounded entity that shapes economic action and an
economic agent that incorporates similar characteristics (Advikos and Chardas 2015).
Advikos and Chardas argue that new territorial instruments such as Community-­Led
Local Development (CLLD) and Integrated Territorial Investment (ITI) downplay the
role of traditional territorial administrations in favour of ‘territorial imaginary entities’
(ibid.: 15). As a consequence, the alternative view of regions as socially and institution-
ally produced and reproduced and thus as a medium of human activity is downplayed. In
the end, regional policy as currently envisioned may become more efficient in economic
terms, but ultimately less effective if it ignores crucial ingredients of what makes a region,
including the collective identity of the people who inhabit it. Only time will tell.

NOTES

1. Unless otherwise noted, all data are from the Annual Macroeconomic Database (AMECO) of the
European Commission’s Directorate-­General for Economic and Financial Affairs (DG ECFIN) or from
the Directorate-­General for Regional and Urban Policy (DG REGIO).
2. I thank Laura Polverari for help with calculating the figures in this table.

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18. Cohesion policy in the sparsely populated
countries*
Tatjana Muravska, Jānis Aprāns and Aleksandrs Dahs

INTRODUCTION

This chapter reviews the implementation of the European Union’s Cohesion policy in
five sparsely populated European Union (EU) member states: Estonia, Finland, Latvia,
Lithuania and Sweden. These countries differ in terms of their historical background
in the twentieth century, the time when they joined the EU, and their socio-­economic
development; this has led to significant differences in the allocated volumes and goals
of Cohesion policy funding and associated challenges in implementation. In terms of
socio-­economic development, the two Nordic states, Finland and Sweden, are consid-
ered as highly developed with a gross domestic product (GDP) per capita above the
EU average, while the GDPs of the three Baltic states are significantly below the EU
average, with Latvia and Lithuania being among the poorest EU member states. As a
common factor, they all share a population density much lower than the EU average
(21.3 per cent of the land mass but only 4.2 per cent of the population, as estimated
in 2013), leading to unique challenges and opportunities in the implementation of
Cohesion policy.
As the population of the countries concerned differs significantly (as illustrated in
Table 18.1) – from 9.6 million inhabitants in Sweden to 1.3 million in Estonia (Eurostat
2015) – so do the number and characteristics of their Nomenclature of Territorial Units
2 (NUTS 2) regions (the level at which EU Cohesion policy is designed). There are eight
NUTS 2 regions in Sweden and five in Finland, but Lithuania, Latvia and Estonia each
represent only a single region at NUTS 2 level, coinciding with the country as a whole
(Table 18.1).
In Finland and Sweden, where the national territory is divided into a number of NUTS
2 regions, even excluding the exceptional case of the Finnish Åland NUTS 2 region, these
units vary significantly in terms of their population. For example, Sweden’s most popu-
lous NUTS 2 region, Stockholm, has a population that is almost six times larger than its
least-­inhabited region, Mellersta Norrland (Table 18.1). Similarly, when comparing the
land area covered by the regions, it is evident that the size of the largest region within the
five countries – the Finnish Pohjois-­ja Itä-­Suomi region – is almost eight times larger than
the territory of the smallest region, Åland (Table 18.1). Economic differences among the
NUTS 2 regions are also very pronounced. The Stockholm region has the highest GDP
per capita within the five sparsely populated countries, and one that is 3.1 times greater
than the GDP per capita in Latvia as a whole (which is a single NUTS 2 region). Since
the level of GDP per capita has been the main parameter used for establishing the level
of Cohesion policy assistance, the impacts of the policy vary considerably, related to the
size of allocations.

285
 Table 18.1  Main data of NUTS regions in sparsely populated countries

Country Number of Largest NUTS 2 Smallest NUTS Largest NUTS 2 Smallest NUTS Largest GDP Smallest GDP Number
NUTS 2 population, 2014 2 population, area, km2 2 area, km2 per capita, in per capita, in of NUTS
regions 2014 PPS, 2013 PPS, 2013 3 regions
Sweden 8 2 163 042 368 617 164 077 6779 41 100 25 800 21
(Stockholm) (Mellersta (Övre Norrland) (Stockholm) (Stockholm) (Östra
 Norrland)  Mellansverige)

286
Finland 5 1 585 473 28 666 227 148 1580 37 800 22  500 (Pohjois-­ja 20
(Helsinki-­ (Åland) (Pohjois-­ja (Åland) (Helsinki-­   Itä-­Suomi)
 Uusimaa)   Itä-­Suomi)  Uusimaa)
Estonia 1 1 315 819 – 45 227 – 15 500 – 5
Latvia 1 2 001 468 – 64 573 – 13 100 – 6
Lithuania 1 2 943 472 – 65 300 – 14 900 – 10

Source: Eurostat.
 287
Cohesion policy in the sparsely populated countries  ­

Cohesion policy in the countries under review has been in operation since their­
accession to the EU, namely 1 January 1995 in the case of Finland and Sweden, and
almost a decade later, 1 May 2004, for Estonia, Latvia and Lithuania. The assessment of
Cohesion policy implementation in terms of the variety in number of programmes, eligi-
bility for policy objectives, and implementation approaches further confirms the division
of the sparsely populated countries into two subgroups. However, the critical factor for
this d
­ ivision is not so much the EU accession date of the countries, but rather the level of
their socio-­economic development at the moment of accession.
On the one hand, Sweden and Finland were already highly developed countries with
GDP per capita higher than the EU average in 1995, and Cohesion policy allocations
were used mainly for the elimination of the internal differences in the levels of develop-
ment within each country, concentrating on remote and sparsely populated regions. The
three Baltic states, on the other hand, had a GDP per capita lower than the EU average,
and Cohesion policy allocations were used primarily for the ‘catching-­up’ process with
the rest of the EU, which is still ongoing in the 2014–2020 period.
Table 18.2 shows the differences in the initial approach and later evolution of Cohesion
policy within the countries under study. From the moment of their accession to the
EU in 1995 and up until the current programming period, Finland and Sweden have
maintained a rather decentralised planning and implementation approach, although
the two countries appear to have progressed in opposite directions over time: Sweden is
gradually delegating more decision-­making power to its regions, while Finland is moving
towards consolidation and centralisation of its Cohesion policy planning and manage-
ment (with some exceptions concerning the Åland Islands). By contrast, following the
initial institutional set-­up used for managing national regional policy and administering
the pre-­accession funding, all three Baltic states have chosen to maintain a strictly cen-
tralised Cohesion policy planning and management structure since their accession to the
EU in 2004.
Such disparity in approach is largely dictated by the different political, economic and
geographical situations in the countries considered. Finland and Sweden share a need
to support and develop their northern territories (formerly designated as Objective 6
regions), which have somewhat different systems of regional government and develop-
ment planning, dictated by their respective regional composition and institutional struc-
tures (Laegreid et al. 2002).
Estonia, Latvia and Lithuania, in addition to representing a single NUTS 2 region
each, as already noted, still remain wholly within the ‘less-­developed’ category and find
it necessary to focus on activities promoting nationwide growth and stimulating conver-
gence with the rest of the EU. All three Baltic states can also benefit from the additional
resources made available to them via the Cohesion Fund, which requires at least some
degree of centralised national-­level planning. The role and impact of EU Cohesion policy
in addressing these challenges is scrutinised in the following sections of this chapter,
which discuss financial allocations, strategies implemented, outcomes and impacts
achieved, and the implementation challenges encountered.
 Table 18.2  Cohesion policy programmes, eligibility and implementation approaches across programming periods

Country 1994–1999 2000–2006 2007–2013 2014–2020

Sweden Year of accession: 1995
Population (1 January 2014): 9 644 864 (1.9% of EU28)
GDP per capita in PPS 124% of EU28 average (EU28 5 100, 2014)
GDP total €430 258.2 (2014, current prices, € mill), 3.09% of EU28
Programmes Obj. 2: 5 SPDs (22 ROPs) Obj. 1: 2 ROPs Obj. 2: 4 Regional Competitiveness 2 NOPs, 9 ROPs
 Obj. 5b: 5 SPDs   ROPs Obj. 3: 1 NOP  & Employment: 1 NOP, 8
(15 ROPs, 3 NOPs) Obj. ROPs
6: 1 SPD (5 ROPs)
Cohesion Fund No No No No
Less-­developed regions 3 (under Obj. 6) 3 (under Obj. 1) 0 0
(of 8 total)
Implementation approach Mixed (more centralised) Mixed (more centralised) Mixed (more centralised) Mixed

Finland Year of accession: 1995

288
Population (1 January 2014): 5 451 270 (1.1% of EU28)
GDP per capita in PPS 110% of EU28 average (EU28 5 100, 2014)
GDP total €205 178.0 (2014, current prices, € mill), 1.47% of EU28
Programmes Obj. 2: 1 SPDs (3 ROPs) Obj. 1: 2 ROPs Obj. 2: 3 Regional Competitiveness 1 NOP, 1 ROP
 Obj. 5b: 2 SPDs (5 ROPs)  ROPs Obj. 3: 1 NOP, 1  & Employment: 1 NOP, 4  (Åland)
Obj. 6: 1 SPD (4 ROPs) ROP ROPs
Cohesion Fund No No No No
Less-­developed regions 3 (under Obj. 6) 3 (under Obj. 1) 0 (1 phasing-­in) 0
(of 5 total)
Implementation approach Mixed (more decentralised) Mixed (more decentralised) Mixed Mixed
 (more
centralised)

Estonia Year of accession: 2004

Population (1 January 2014): 1 315 819 (0.3% of EU28)
GDP per capita in PPS 73% of EU28 average (EU28 5 100, 2014)
GDP total €19 525.3 (2014, current prices, € mill), 0.14% of EU28
Programmes – Obj. 1: 1 SPD (5 NOPs) Convergence: NSRF, 3 NOPs 1 NOP
 Cohesion Fund – Yes Yes Yes
Less-­developed regions – 100% of territory 100% of territory 100% of territory
(Estonia 5 1 region)
Implementation approach – Centralised Centralised Centralised

Latvia Year of accession: 2004

Population (1 January 2014): 2 001 468 (0.4% of EU28)
GDP per capita in PPS 64% of EU28 average (EU28 5 100, 2014)
GDP total €24 059.7 (2014, current prices, € mill), 0.17% of EU28
Programmes – Obj. 1: 1 SPD (5 NOPs) Convergence: NSRF, 3 NOPs 1 NOP
Cohesion Fund – Yes Yes Yes
Less-­developed regions – 100% of territory 100% of territory 100% of territory
(Latvia 5 1 region)
Implementation approach – Centralised Centralised Centralised

Lithuania Year of accession: 2004

289
Population (1 January 2014): 2 943 472 (0.6% of EU28)
GDP per capita in PPS 74% of EU28 average (EU28 5 100, 2014)
GDP total €36 308.9 (2014, current prices, € mill), 0.26% of EU28
Programmes – Obj.1: 1 SPD (5 NOPs) Convergence: NSRF, 3 NOPs 1 NOP
Cohesion Fund – Yes Yes Yes
Less-­developed regions – 100% of territory 100% of territory 100% of territory
(Lithuania 5 1 region)
Implementation approach – Centralised Centralised Centralised

Notes:
Community Initiative Programmes, Global Grants and European territorial cooperation programmes not included.
Obj. 5 Objective. OP 5 Operational Programme. ROP 5 Regional Operational Programme. NOP 5 National Operational Programme. SPD 5 Single
Programming Document.

Sources:  Authors’ elaboration based on various sources: Eurostat, Nordic Group for Regional Analysis (1996); GRINCOH Working Papers (Granqvist 2013a,
2013b); Single Programming Documents and National Strategic Reference Frameworks of Estonia, Latvia and Lithuania; European Commission, Directorate-­
General for Regional and Urban Policy (DG REGIO), 2014 Partnership Agreement English language summaries.
290  Handbook on Cohesion policy in the EU

FINANCIAL ALLOCATIONS

Although financial allocations as such do not guarantee successful implementation of

any policy, Cohesion policy included, they are the key prerequisite resource for policy
implementation. Therefore, it is worth comparing both the volume of financial alloca-
tions and their significance (measured as the proportion of GDP) in each of the coun-
tries, as summarised in Table 18.3. During the 1994–2020 period, the total commitment
appropriations for Cohesion policy in the five countries amount to €44.2 billion in 2010
prices.
Table 18.3 shows that Cohesion policy allocations are more significant for the three
Baltic states if compared to Finland and Sweden. Despite its later accession to the
EU, in cumulative terms, Lithuania by 2020 will have received the largest amounts of
Cohesion policy funding, followed by Latvia, Sweden, Estonia and Finland. This is con-
firmed when appropriations for Cohesion policy funding are measured as a proportion
of GDP for the previous periods. As the Baltic states were Cohesion policy recipients for
only part of the 2000–2006 period, the 2007–2013 period is more suitable for the com-
parison of indexes of Cohesion policy funding as a proportion of GDP. Cohesion policy
funding for the Baltic states constituted around 3 per cent of GDP on average, while it
was only 0.12 per cent of Finland’s and 0.06 per cent of Sweden’s GDP. Therefore, it
comes as no surprise that the impact of Cohesion policy observed in the countries exam-

Table 18.3 Commitment appropriations for Cohesion policy 1995–2020 (€, constant

2010 prices)

1994–1999 2000–2006 2007–2013 2014–2020 Total

Total 1 402 501 651.60 2 389 717 404.56 1 613 850 372.30 1 984 757 639.98 7 390 827 068.44
GDP % 0.10 0.11 0.06 –

Total 1 196 831 261.26 2 013 201 098.14 1 587 144 181.75 1 381 602 421.75 6 178 778 962.90

GDP % 0.21 0.20 0.12 –

Total – 397 628 806.31 3 368 436 796.85 3 383 323 802.24 7 149 389 405.40

GDP % – 1.08 2.97 –

Total – 671 971 517.25 4 485 007 851.32 4 252 244 288.50 9 409 223 657.07

GDP % – 1.49 3.06 –
Total – 960 676 259.25 6 708 435 017.79 6 430 200 084.31 14 099 311 361.36
GDP % – 1.41 3.13 –

Sparsely Populated Countries

Total 2 599 332 912.86 6 433 195 085.51 17 762 874 220.01 17 432 128 236.78 44 227 530 455.16

Note:  Data for 2014–2020 relate to Structural and Cohesion Funds only and refer to non-­finalised figures
available at the time of elaboration, and do not correspond with finalised Partnership Agreement financial
allocations. GDP percentage values refer to averages of annual percentages.

Sources:  Own calculations from Directorate-­General for Regional and Urban Policy (DG REGIO) data, for
commitment appropriations; and European Commission’s Annual Macroeconomic Database (AMECO), for
deflators and GDP.
 291
Cohesion policy in the sparsely populated countries  ­

ined, as discussed below, has been more significant where Cohesion policy allocations
have been larger.

STRATEGIES

As indicated, Finland and Sweden had a rather different starting position when com-
pared to that of the Baltic states at the time of their accession to the EU. Back in 1995,
while having a rather high national level of development, both countries had similar
and very specific regional issues of south–north dichotomy in terms of population,
economy, infrastructure and the resulting growth dynamics. Therefore, the initial stra-
tegic approach of these countries aimed primarily at fostering an economic and social
catching-­up process of the northern territories and some other regions that fell below
the national average (Nordic Group for Regional Analysis 1996). Starting with the
2007–2013 period, all regions in these countries have levelled above the less-­developed
region threshold, which has prompted changes in the national regional policy responses,
namely a reorientation towards nationwide social issues, employment and competitive-
ness (Lindqvist 2010).
By contrast, a trait of the Baltic states’ Cohesion policy approach was the complete or
partial replacement of national regional policy objectives with the EU Cohesion policy
priorities (Raagmaa et al. 2014). Since their accession in 2004, all three countries have
had a long-­standing policy aimed at nationwide development and convergence with EU
averages, with only a secondary focus on internal social and economic cohesion.
The strategic goals for the current 2014–2020 period are illustrated in Table 18.4.
The table summarises the priorities of the national Partnership Agreements (PAs) and
Operational Programmes (OPs) in Finland, Sweden and the Baltic states. At the PA
level, all five countries generally follow the outlines of funding priorities defined in the
Common Strategic Framework for their respective types of regions. Sweden and Finland
comprise only more-­developed regions and thus focus on competitiveness, sustainability
and access to the labour market; Estonia, Latvia and Lithuania, being entirely comprised
of the less-­developed category of regions, pay more attention to infrastructure, education
and overall employment.
More detail about the relative weight assigned to the different Thematic Objectives
(TOs) of the Common Strategic Framework is provided in Table 18.5 (European
Parliament and Council 2013).
The allocations to various TOs diverge significantly between countries. In Sweden,
the priority areas of Cohesion policy funding in 2014–2020 are environment and
resource efficiency (TO6), climate change adaptation (TO5), competitiveness (TO3)
and research, technological development and innovation (TO1), in total comprising
55.65 per cent of the Cohesion policy envelope. Finland concentrates on one priority
TO: environment and resource efficiency (TO6), which accounts for 42.87 per cent of
funding. Together with competitiveness (TO3), these two TOs represent 60.05 per cent
of the total allocation. Funding is much more evenly distributed among TOs in Estonia,
where five TOs   – technological development and innovation (TO1), competitiveness
(TO3), sustainable transport (TO7), quality employment and labour mobility (TO8)
and social inclusion, poverty and discrimination (TO9) – account for 62.39 per cent
292  Handbook on Cohesion policy in the EU
Table 18.4 Priorities and Operational Programmes in sparsely populated countries in
2014–2020 according to Partnership Agreements
PA Priorities
Sweden ● Fostering competitiveness, knowledge
and innovation;
● Strengthening sustainable and efficient
use of resources for sustainable growth;
● Increasing employment, promoting
employability and improving access to
the labour market.
Finland ● Increase innovative and competitive
business and research environment;
● Reinforce sustainable and efficient use
of resources for environment-­friendly
growth;
● Increasing labour market participation
through improved employment, social
inclusion and education policies.
Estonia ● Research, technological development
and innovation;
● Promoting sustainable transport and
removing bottlenecks in key network
infrastructures;
● Promoting social inclusion, combating
poverty and any discrimination;
● Investing in education, training and
vocational training for skills and
lifelong learning.
Latvia ● Increasing economic productivity,
quality of innovation, research and
science;
● Sustainable and efficient transportation
infrastructure;
● Sustainable use of natural and cultural
resources;
● High employment rate in
inclusive society;
● High quality and efficiency
of education system;
● Balanced and sustainable
territorial development.
Operational Programme themes
(11 OPs) Nationwide growth
  and employment;
Regional programmes for strengthening
 the competitiveness of small and medium-­
sized enterprises (SMEs), contributing to
a more low-­carbon and knowledge-­based
economy and promoting sustainable
urban development.
Northern dimension: Support for
 innovation processes, entrepreneurship
and market behaviour among SMEs
in the low-­density populated areas.
Enhanced capacity and preparedness
for the risks of climate change and
exploitation of natural resources.
(2 OPs) Nationwide: Sustainable
  growth and jobs;
Åland: Entrepreneurship and skills.
Focus on the competitiveness of SMEs,
 research and innovation activities,
low-­carbon economy and reducing
unemployment.
Particular investment in education
  and fight against social exclusion.
(1 OP) Research, technological
 development and innovation (RTDI);
Sustainable transport; Reforming the
general education network; Boosting
the employment rate; Social inclusion;
Competitiveness of SMEs; Shift towards
a low-­carbon and digital economy;
Environmental issues.
(1 OP) Growth and Employment.
 Support for RTDI; Promoting
information society; Supporting the
competitiveness and innovation of
SMEs; Shift towards a low-­carbon
economy; Environment, sustainable use
of natural resources and adaptation to
climate change; Sustainable and efficient
transport infrastructure; Employment
and workforce mobility; Education, skills
and lifelong learning; Social inclusion
and fight against poverty.
 293
Cohesion policy in the sparsely populated countries  ­

Table 18.4  (continued)

PA Priorities Operational Programme themes

Lithuania ● Promoting innovation and
research investments;
● Improving business environment and
enhancing the competitiveness of the
business sector;
●  Promoting digital society;
● Developing modern infrastructure to
enhance competitiveness and foster
sustainable growth;
● Promoting an environmentally
friendly and resource-­efficient
economy;
● Promoting employment; improving
quality of education policies; reducing
the risk of poverty
and social exclusion;
● Ensuring effectiveness of
public administration.
(1 OP) Boosting RTDI; Developing
 e-­services, e-­solutions, e-­commerce;
SMEs’ competitiveness and innovation;
Shift towards a low-­carbon economy;
Environment, sustainable use of natural
resources and adaptation to climate
change; Modernisation and development
of transport and energy infrastructure;
Promoting sustainable and quality
employment and supporting labour
mobility; Access to social housing and
quality of healthcare services for people
at risk of poverty or social exclusion;
Improvement of the educational system;
Quality and efficiency of public services.

Source:  Partnership Agreements.

of financing. In Latvia, three TOs – sustainable transport (TO7), environment and

resource efficiency (TO6) and competitiveness (TO3) – add up to 46.41 per cent of
Cohesion policy funding. And in Lithuania, four TOs – competitiveness (TO3), sustain-
able transport (TO7), low-­carbon economy (TO4) and environment and resource effi-
ciency (TO6) – represent more than half (53.6 per cent) of Cohesion policy allocations
for the 2014–2020 period.
It should also be noted that Estonia, Latvia and Lithuania are eligible for the Cohesion
Fund, whereas Sweden and Finland are not. However, all five countries receive funding
from both the European Regional Development Fund (ERDF) and the European Social
Fund (ESF), although with quite different relative shares. The three Baltic states have
very similar proportions of Structural Funds in their PAs: Latvia has the highest ERDF
(43.95 per cent) and lowest ESF share in its PA (11.69 per cent), followed by Estonia with
the second-­highest ERDF (42.97 per cent) share and the second-­lowest ESF share (13.46
per cent), and Lithuania with ERDF at 42.30 per cent and ESF at 13.62. Finland and
Sweden have similar proportions: Sweden has higher ERDF (26.23 per cent) and ESF
(21.50 per cent) shares than Finland, where they are 20.99 per cent and 13.71 per cent,
respectively. In both Finland and Sweden, the greatest shares of PA allocations are
covered by the European Agricultural Fund for Rural Development.
Following the general tendency to increase the ESF role in the 2014–2020 period, it is
interesting to calculate the proportion of ESF as a part of total Structural Funds (ERDF
and ESF) allocations (see the last row in Table 18.5). Comparing the figures relating to
the proportion of ESF, they appear to be quite similar for Sweden and Finland – 45.04
per cent and 39.51 per cent, respectively – but they differ from the figures for the three
294  Handbook on Cohesion policy in the EU

Table 18.5 Relative distribution of resources to Thematic Objectives in the national

Partnership Agreements (% values of TO allocations over total PA value)

Sweden Finland Estonia Latvia Lithuania

TO1 – RTDI 9.30 10.59 15.27 8.83 8.49
TO2 – Information and 7.00 0.34 1.94 3.53 2.99
  Ccommunication Technology (ICT)
TO3 – Competitiveness 13.88 17.18 14.86 11.91 14.76
TO4 – Low-­carbon economy 5.48 5.82 7.16 9.74 13.50
TO5 – Climate change adaptation 13.90 0.20 3.97 5.23 3.69
TO6 – Environment and resource 16.20 42.87 8.82 13.27 11.40
 efficiency
TO7 – Sustainable transport 2.12 0.00 10.91 21.23 13.94
TO8 – Quality employment and 11.67 9.23 10.60 4.68 9.36
  labour mobility
TO9 – Social inclusion, poverty 9.48 6.60 10.76 8.91 8.38
  and discrimination
TO10 – Education and skills 7.11 5.29 9.71 9.75 8.26
TO11 – Institutional capacity 0.00 0.00 2.74 0.33 1.82
Technical Assistance 3.85 1.89 3.28 2.61 3.40
ERDF share of total PA 26.23 20.99 42.97 43.95 42.30
ESF share of total PA 21.50 13.71 13.46 11.69 13.62
CF share of total PA 0.00 0.00 24.61 24.70 24.75
ESF share of ERDF1ESF total 45.04 39.51 23.85 21.01 24.35

Note:  Youth Employment Initiative not included. The table includes all European Structural and Investment
Funds (ESIF).

Source:  Based on European Commission, DG REGIO, Partnership Agreement English language

summaries.

Baltic states, which have their own similarities: Estonia (23.85 per cent), Latvia (21.01
per cent) and Lithuania (24.35 per cent). Thus, Sweden has the highest ESF proportion
of the Structural Funds allocation, and Latvia has the lowest. These observations under-
line the fundamental difference in Cohesion policy approaches between countries, as the
ERDF (being suitable for infrastructure investment) is much more popular in the Baltic
states that are striving for quicker convergence with the rest of the EU, while the ESF is
more welcome in Sweden and Finland, as both countries are aiming to boost their human
capital competitiveness and to achieve further improvements in issues related to the social
dimension.
Within the OPs, the Baltic states closely follow the list of available Thematic Objectives
(TOs) in an apparent attempt to cover all the possible funding needs within the scope of
a single programme. Finland has chosen a somewhat similar approach, making an excep-
tion only for the Åland Islands, where some more region-­specific needs and priorities are
addressed due to the isolation of the archipelago and unique characteristics such as the
seasonality of economic activities. Therefore, there is a strong need to promote new busi-
ness creation and to deliver education and training that would ensure conditions for the
economic and social prosperity of local communities.
 295
Cohesion policy in the sparsely populated countries  ­

Sweden is more diverse in this aspect, having 11 OPs (two national and nine regional),
some of which are tailored to suit the development needs of specific regions and/or terri-
tories. This country, following its long-­standing tendency towards multilevel governance
(see, e.g., Stegmann McCallion 2007), retains its initial mixed approach to OP elaboration
and design, allowing regions to define their funding priorities. This approach has resulted
in the creation of a series of regional OPs specifically targeting the northern regions, for
example supporting innovation processes, entrepreneurship and market behaviour of
SMEs in the low-­density populated areas, capacity and readiness to tackle the risks of
climate change and exploitation of natural resources in some OPs, and a more marked
focus on knowledge-­based growth and urban development in others (in the more popu-
lous southern regions).

OUTCOMES AND IMPACTS

There have been long-­standing questions about the effectiveness of Cohesion policy
implementation. Questions over effectiveness have been raised from various perspectives,
from the more factual aspects of concrete policy challenges (Bachtler and Wren 2006), to
the effects on interregional disparities (Molle 2015), and to econometrics and financial
forecasts (Becker et al. 2012; Varga and in 't Veld 2010). In response to concerns about
the adequacy of policy spending in relation to the results achieved, the evaluation of
Cohesion policy performance has been introduced as a mandatory requirement by EU
regulations governing policy implementation. Consequently, a large number of research
projects and studies have been undertaken to determine the exact impact of Cohesion
policy, applying various methodologies and evaluation techniques. In addition to these
studies, commissioned by EU and national-­level institutions, a wide range of academic
research literature is also available in this field. Broadly speaking, two main types
of research approaches can be identified: macroeconomic modelling and qualitative
research studies. This section presents the main findings from some of the most relevant
recent evaluation studies.
The macroeconomic impact of Cohesion policy – that is, the extent to which Cohesion
policy has influenced economic growth, expressed as per capita GDP, and unemployment
reduction – is assessed by using modelling techniques such as HERMIN and QUEST.
These models were used to assess the impact of 2004–2006 Cohesion policy expenditure
in the three Baltic states.1
For the three Baltic states, the HERMIN model indicates a moderately high cumula-
tive short-­term (2009) impact of the Structural and Cohesion Funds (SCF) on the level
of GDP: 6.36 per cent in Estonia, 6.71 per cent in Latvia and 7.58 per cent in Lithuania;
and rather high long-­term (2020) expected effects of 12.19 per cent in Estonia, 11.14
per  cent in Latvia and 12.88 per cent in Lithuania (Bradley and Untiedt 2009). The
QUEST model indicates a far more dissimilar short-­term cumulative SCF effect on GDP
in the Baltic countries: 3.51 per cent in Estonia, 11.65 per cent in Latvia and 7.67 per cent
in Lithuania; and rather extreme and very deviant long-­term effects of 12.00 per cent
in Estonia, 41.10 per cent in Latvia and 28.75 per cent in Lithuania. The same QUEST
model shows negative results for the Nordic countries both in the short run (−2.12
per cent in Sweden and −1.45 per cent in Finland) and in the long term (−4.33 per cent
296  Handbook on Cohesion policy in the EU

for Sweden and −2.63 per cent for Finland), which is characteristic for countries with a
majority of more-­developed regions (Varga and in 't Veld 2009).
Another group of evaluation studies has tried to establish the improvements that EU
Cohesion policy investments have brought to certain sectors by performing analyses of
specific themes, primarily applying qualitative research methods. The fields that have
been investigated include, for example, innovation, renewable energy and energy effi-
ciency, job creation, transport, environment and climate change, demographic change,
and rural development, using feasibility studies and recalculations of cost–benefit analy-
sis for large-­scale investment projects. These types of studies usually provide detailed
information on outcomes and achievements of specific indicators (number of jobs
created, enterprises established, and so on), characteristics of developed infrastructure
(number and capacities of wastewater treatment plants, kilometres of roads or railroads
built, and so on), or/and general conclusions and recommendations on the achievement
of EU Cohesion policy’s overall goal of eliminating, or at least reducing, regional dispari-
ties in the EU.
The ex post evaluation of the 2007–2013 period is still largely ongoing. Consequently,
at present, comprehensive qualitative ex post evaluation studies allowing cross-­country
comparisons are available only for the 2000–2006 period. Cumulatively, in 2000–2006
ex  post evaluation studies, the following Cohesion policy achievements and challenges
were highlighted for each of the sparsely populated countries. In Sweden, the policy
‘had a real effect on education and the development of competences and . . . the targets
set for the number of jobs and firms to be created were, in general, achieved’, which is
believed to be partly due to the ERDF-­supported shift from agricultural and low-­tech
manufacturing to knowledge-­intensive services and high-­tech manufacturing (Applica
et al. 2007a: 19). Thus, Cohesion policy has indeed contributed to long-­term growth
and stimulated structural changes in the country, even though the issue of depopulation
remained a serious regional problem in almost all municipalities apart from larger towns
and cities.
In Finland, an increase in the competitiveness of small and medium-­sized enterprises,
including their improved ability for mutual cooperation, sustainable development and
the information society were identified as stemming from the implementation of ERDF
co-­financed measures. However, the gap between Objective  1 regions and the rest of
the country remained a problem, still barring the way towards the achievement of the
main policy goal of eliminating regional disparities. And although Structural Funds’
investments stimulated new job creation and the establishment of new enterprises,
unfortunately they did not contribute to greater equality between men and women as,
comparatively, the numbers of women in newly created jobs and of women starting new
businesses were only a fraction of those reported for men (Applica et al. 2007b).
The ex post evaluation synthesis country reports for Estonia, Latvia and Lithuania
recognise the financial significance of Cohesion policy interventions for each of these
countries. As such, all three countries have recorded considerable GDP growth: in Latvia,
for example, the estimated cumulative GDP growth over 2004–2008 was 21 per  cent.
Furthermore, the resources invested contributed to making Latvia more attractive for
both investment and job creation. The challenge, however, lies in quantifying the direct
effects of Cohesion policy, as growth in GDP and employment are not necessarily evi-
dence of the use of Cohesion policy funds in the these countries. Both indicators are
 297
Cohesion policy in the sparsely populated countries  ­

subject to many other influential factors that have contributed to the recent economic
development of Estonia, Latvia and Lithuania.
Looking at Cohesion policy achievements beyond the 2000–2006 period, the first
evidence on preliminary outcomes of EU Cohesion policy implementation during
2007–2013 is available from a series of reports produced by the Directorate-­General
for Regional and Urban Policy (DG REGIO) Expert Evaluation Network. According
to research undertaken by the Expert Evaluation Network in 2010, ERDF support up
until the end of 2009 was responsible for the creation of some 2500 jobs and 1396 new
firms in Sweden (Nilsson 2010), and for more than 20 000 new jobs and 2500 new firms
in Finland (Laakso and Kilpeläinen 2010). As the three Baltic states were also eligible
for the Cohesion Fund, transport and environment – the two key sectors supported by
the Cohesion Fund – received most of the Cohesion policy funding. Examples of policy
achievements for these sectors in the three Baltic states include a fourfold increase in the
number of properly functioning wastewater treatment plants in Estonia, and an increase
in the number of localised treated contaminated sites from 31 to 53. No completed
projects were included in the report for the transport sector, but projects were under
construction for ports and airports (five projects), rail (four projects) and road transport
(eight projects) (Kalvet 2010). The Latvian country report indicates the realisation of
about 20.8 km of asphalted ‘first priority’ roads (according to the national classifica-
tion of roads, equal to 21 per cent of the target planned by 2009) and 14.5 km of con-
structed or reconstructed TEN-­T roads, while in the environmental sector an additional
315 233 people (against a target for 2009 of 1 458,00) and 270 000 additional inhabitants
(against a target of 1 300 000 anticipated for 2009) were reported as having benefited
from the water and waste management projects supported (Vanags and Valtmane 2010).
Lithuania has also demonstrated progress in the transport sector, with 85.94 km of
Trans-­European Transport Network (TEN-­T) roads built or modernised, and four out
of six planned development projects relating to international airports having been real-
ised. As a result, an additional 430 000 passengers were served in 2009 (see Vanags and
Banyte 2010).

IMPLEMENTATION CHALLENGES
As a shared-­ management policy, EU Cohesion policy is being implemented in a
decentralised way, delivered mainly by administrations in the member states, with the
European Commission performing overall monitoring, audit and evaluation functions.
A well-­designed and smoothly functioning governance system is considered as one the
key factors for successful policy implementation and the achievement of intended goals.
Starting from the ex post evaluation of the 2000–2006 ERDF programmes, this section
highlights the main implementation challenges in each of the five sparsely populated
countries. A brief insight into the implementation arrangements for the 2014–2020
period is presented at the end of this section.
Although, overall, the management of Cohesion policy in Sweden has been recognised
as successful, weaknesses regarding policy coordination, stemming from the separation
between domestic policy implementation and the governance of EU Funds, have been
identified. Specifically, lack of coordination between national policies and the Structural
298  Handbook on Cohesion policy in the EU

Funds across the various public organisations and regions was highlighted in the ex post
evaluation report. In part, the division of responsibilities between a number of managing
authorities, contrary to the single authority for all ERDF programmes that had existed
in Sweden in the 1995–1999 period, can be considered responsible for the resulting lack
of coordination (EPRC and SWECO 2008).
Finland’s system had both centralised and decentralised elements and was found to be
functioning well. The implementation challenges stemmed more from the complex and
fragmented national governance system, characterised by strong sectoral divisions, which
also affected the Structural Funds management and implementation system (EPRC and
Net Effect 2008).
Three main challenges were identified in Estonia in relation to the administration of
Cohesion policy assistance: first, too high a level of centralisation in the hands of the
Ministry of Finance; second, inefficient ongoing monitoring arrangements with inad-
equate response times and accuracy levels; and third, fragmentation of responsibilities
between various bodies in charge of ERDF administration (EPRC and Tartu University
2008).
Structural Funds administration in Latvia and Lithuania was deemed rather success-
ful regarding the management of applications, co-­financing and expenditure. However,
while the implementation system in Lithuania remained solid throughout the period, in
Latvia deficiencies in institutional capacity and the inability of small municipal bodies to
successfully apply for funding emerged as substantial drawbacks. A common deficiency
detected in these two countries during 2004–2006 related to the implementation of the
partnership principle. In Latvia, despite significant efforts to involve all the relevant
actors during programme design and implementation, a lack of resources and experi-
ence prevented the full accomplishment of the partnership principle in the Structural
Funds management and implementation system (EPRC and University of Latvia
2008). Similarly in Lithuania, the partnership principle had limited application and was
adopted only for the projects-­selection process (EPRC and BGI Consulting 2008; EPRC
et al. 2012). However, in both countries significant improvements in this respect were
achieved in the subsequent 2007–2013 and 2014–2020 periods, with all the relevant stake-
holders successfully involved across the programme design and implementation stages,
including in the preparation of the 2014–2020 PAs and OPs.

CONCLUSIONS

Although sparsely populated countries can be distinguished from other EU member

states according to their population density, two subgroups among them can be clearly
identified in terms of their economic development levels: the two Nordic countries of
Finland and Sweden, and the three Baltic states of Estonia, Latvia and Lithuania.
This grouping is also relevant in the context of the role and impact of EU Cohesion
policy in the region. While for the Baltic states this policy is a significant source of financ-
ing of public investment, reaching around 3 per cent of each country’s GDP, for Finland
and Sweden Cohesion policy allocations are essentially an expression of the EU principle
of solidarity and consequently have achieved different results.
The evaluation studies carried out thus far show how, in the less-­prosperous regions in
 299
Cohesion policy in the sparsely populated countries  ­

Finland and Sweden, Cohesion policy funding has contributed mainly to the establish-
ment of new companies and the creation of new workplaces, fulfilling the aim of increas-
ing employment. It was also evidenced that programmes designed to support innovation,
investment in human capital, and the local environment were successful in improving the
competitiveness and networking of SMEs, even for rural areas.
EU Structural and Cohesion Funds have made much more significant contribu-
tions to the economic performance of the less-­prosperous Baltic states, where achieving
regional competitiveness through productive usage of local resources and exploitation of
the specific features of individual regions were the main tasks of regional development
policy. Moreover, EU funding in Latvia, Lithuania and Estonia has yielded substantial
indirect effects that are not straightforwardly apparent. For instance, important struc-
tural changes in the institutional set-­up provided a solid basis for the implementation of
the programmes and introduced a culture of accountability and transparency into the
management systems. Nevertheless, despite all the positive effects observed, the evidence
also suggests that Cohesion policy in Latvia might have contributed to the widening of
disparities between this country’s NUTS 3 regions.

NOTES

* This chapter is dedicated to the memory of Jānis Aprāns.

1. In order to capture the macroeconomic impact of Cohesion policy expenditure through the use of such tech-
niques, this expenditure should have ‘critical mass’, therefore the HERMIN ex post analysis of the 2000–2006
period includes only those countries designated as Objective 1 (that is, less-­developed) regions, and thus not
Finland and Sweden. Ex post evaluations for 2007–2013 had not been completed when this chapter was
prepared, and therefore only studies related to the previous 2000–2006 period were available for analysis.

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19. Cohesion policy in Central and Eastern Europe:
the challenge of learning1
Ilona Pálné Kovács

INTRODUCTION

This chapter discusses the implementation of European Union (EU) Cohesion policy in
the Central and Eastern European (CEE) member states that acceded to the European
Union between 2004 and 2013: the Czech Republic, Hungary, Poland, Slovakia
and Slovenia (which joined in 2004); Bulgaria and Romania (which acceded in 2007);
and Croatia (2013). It shows the evolution of regional disparities in CEE countries and
reflects on the successes and failure of Cohesion policy in the countries examined, in
light of their historical legacy, domestic governance challenges, and in consideration
of the fit of the policy to address the development needs of the CEE countries’ lagging
regions.
Although the EU’s eastward enlargement has been important from the aspect of
regional policy, there have been only few comprehensive analyses of regional develop-
ment in the CEE countries and its pan-­European impacts (Gorzelak et al. 2010; Horváth
2015). The eastward enlargement ‘was driven forward largely by the bureaucratic exper-
tise of the Commission, and most issues remained removed from any form of public
deliberation. The negotiations of 1998–2002 were classic Euroelite talks’ (O’Brennan
2006: 191). As a result, several conflicts and biases have also emerged with regard to the
possible impacts of regional policy. Enlargement was primarily motivated by political
and geopolitical considerations and, following the collapse of the Soviet bloc in 1989, it
has hardly been possible to query it. Furthermore, there is almost general consensus that
enlargement has produced a win–win situation by having improved the economic perfor-
mance of the Continent (O’Brennan 2006).
Enlargement has caused dramatic changes in the regional landscape of the
European Union. The CEE members constitute 24 per cent of the territory, 21 per
cent of the population, but only 7 per cent of the gross domestic product (GDP) of
the European Union (Gorzelak et al. 2010: 1). The new enlargement countries were
included in EU Cohesion policy right after accession, with specific regulations that
allowed them to benefit from EU Structural Funds for the buffer period of 2004–2006.
Then, in the programming period of 2007–2013, they benefited from almost half of
the EU’s Cohesion policy budget (Gorzelak et al. 2010: 1). As a consequence, the
scope of Cohesion policy has widened. Contrary to the former 46 Objective 1 regions
(in the EU15), the number of regions with a GDP per capita below 75 per cent of the
(now lower) European average rose to 70 in 2004 (European Commission 2001:  9).
These proportions show the development gap as well as the sources of conflicts
having emerged between the EU15 and the EU12 member states. Former Objective
1 regions (mostly belonging to Greece, Italy, Portugal and Spain) had to share the

302
 Table 19.1  Number of Cohesion policy programmes, eligibility and implementation approaches across programming periods

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Bulgaria Year of accession: 2007
Population (1 January 2014): 7 245 677 (1.43% of EU28)
GDP p.c. 20.86 (% of EU28 average, EU28 5 100, 2011)
GDP Total €42 010.5 (2014, current prices, € mill), 0.30% of EU28
Programmes NA NA NA 7 7
Cohesion Fund NA NA NA Yes Yes
Less-­developed regions NA NA NA 100% of territory 100% of territory
(of 6 total)
Implementation approach NA NA NA centralised centralised

Croatia Year of accession: 2013

Population (1 January 2014): 4 246 809 (0.84% of EU28)
GDP p.c. 39.95 (% of EU28 average, EU28 5 100, 2011)

303
GDP Total €43 084.7 (2014, current prices, € mill), 0.31% of EU28
Programmes NA NA NA 4 4
Cohesion Fund NA NA NA Yes Yes
Less-­developed regions NA NA NA 100% of territory 100% of territory
(of 2 total)
Implementation approach NA NA NA centralised centralised

Czech rep. Year of accession: 2004

Population (1 January 2014): 10 512 419 (2.07% of EU28)
GDP p.c. 59.8 (% of EU28 average, EU28 5 100, 2011)
GDP Total €154 930.4 (2014, current prices, € mill), 1.11% of EU28
Programmes NA NA 10 17 8
Cohesion Fund NA NA Yes Yes Yes
Less-­developed regions NA NA 7 7 7
(of 8 total)
Implementation approach NA NA centralised centralised centralised
 Table 19.1  (continued)

1989–1993 1994–1999 2000–2006 2007–2013 2014–2020

Hungary Year of accession: 2004
Population (1 January 2014): 9 877 365 (1.95% of EU28)
GDP pro c. 38.52 (% of EU28 average EU28 5 100, 2011)
GDP Total €103 304.1 (2014, current prices, € mill); 0.74% of EU28)
Programmes NA NA 9 15 7
Cohesion Fund NA NA Yes Yes Yes
Less-­developed regions NA NA 6 6 (11 Phasing-­in) 6
(of 7 total)
Implementation approach NA NA centralised deconcentrated centralised

Poland Year of accession: 2004

Population (1 January 2014): 38 017 856 (7.5% of EU28)
GDP p.c. 37.97 (% of EU28 average EU28 5 100, 2011)

304
GDP Total €413 137.9 (2014, current prices, € mill), 2.97% of EU28
Programmes NA NA 9 21 23
Cohesion Fund NA NA Yes Yes Yes
Less-­developed regions NA NA 15 15 15
(of 16 total)
Implementation approach NA NA centralised deconcentrated devolved

Romania Year of accession: 2007

Population (1 January 2014): 19 947 311 (3.94% of EU28)
GDP p.c. 23.86 (% of EU28 average EU28 5 100, 2011)
GDP Total €150 017.7 (2014, current prices, € mill), 1.08% of EU28
Programmes NA NA NA 7 8
Cohesion Fund NA NA NA Yes Yes
Less-­developed regions NA NA NA 7 7
(of 8 total)
Implementation approach NA NA NA centralised centralised
 Slovakia Year of accession: 2004
Population (1 January 2014): 5 415 949 (1.07% of EU28)
GDP p.c. 49.88 (% of EU28 average EU28 5 100, 2011)
GDP Total €75 214.9 (2014, current prices, € mill), 0.54% of EU28
Programmes NA NA 11 7
Cohesion Fund NA NA Yes Yes Yes
Less-­developed regions NA NA 3 3 3
(of 4 total)
Implementation approach NA NA centralised centralised centralised

Slovenia Year of accession: 2004

305
Population (1 January 2014): 2 061 085 (0.41% of EU28)
GDP p.c. 68.94 (% of EU28 average EU28 5 100, 2011)
GDP Total €37 246.4 (2014, current prices, € mill), 0.27% of EU28
Programmes NA NA 3 1
Cohesion Fund NA NA Yes Yes Yes
Less-­developed regions NA NA 1 1 1
(of 2 total)
Implementation approach NA NA centralised centralised centralised

Note:  Community Initiative Programmes, Global Grants and European territorial cooperation programmes not included.

Sources:  Author’s elaboration based on various sources.

306  Handbook on Cohesion policy in the EU

almost unchanged amount of Structural and Cohesion Funds with the regions of the
newly acceded countries, but due to the introduction of the so-­called absorption limit,
less subsidies could be allocated for the newcomers than had been earlier allocated to
the older members. Although the former cohesion countries were anxious about their
shrinking share of EU funds, calculations predicted that the new members would get
relatively less money than the cohesion countries had received before 2004 (O’Brennan
2006: 163).
Cohesion policy is of extraordinary importance for the CEE countries, which
greatly depend on external financial resources (Blažek and Macešková 2010; Ferry and
McMaster 2013). According to the Sixth Cohesion Report, between 2010–2012 about
90 per cent of all public investment was financed by the Cohesion and Structural Funds
in Slovakia and Hungary, 80 per cent in Bulgaria, and more than 60 per cent in Poland
(European Commission 2014: xvi).
It cannot be ignored that Cohesion policy has meant not only the acquisition of
financial aid for the CEE countries, but also an opportunity to learn how domestic
regional policy could be improved. The pervasive influence exerted by the Structural
Funds on the new member states’ administrations at all levels can be explained by the
strong motivation to acquire development resources which, in turn, triggered the process
of Europeanisation via economic conditionality (Schimmelfennig and Sedelmeier 2005;
Hughes et al. 2004; Adams et al. 2011).
Post-­communist countries do not form a homogenous group, however. Instead, they
display significant regional particularities (Horváth 2015). Post-­socialist transformation
has unfolded in different ways (Domanski 2011). The EU’s impact on Europeanisation
should not be overestimated (Grabbe 2003). Before accession, the conditionality mecha-
nisms had already introduced greater rigidity in the process of the CEE countries’
adaptation to EU Cohesion policy requirements. However, the CEE countries nowadays
follow their own strategy in both domestic-­and EU-­financed Cohesion policies, empha-
sising, for example, their need for basic infrastructure, besides the Lisbon and Europe
2020 strategies (Ferry and McMaster 2013).
As the general characteristics and evolution of Cohesion policy have been illustrated
in previous chapters in this volume (Brunazzo, Chapter 1, and Stephenson, Chapter 2),
this chapter will concentrate on the distinctive features of Cohesion policy in the CEE
countries. In particular, it will illustrate how interregional disparities affected the process
of Europeanisation in these countries.

THE ORIGIN AND EVOLUTION OF THE REGIONAL PROBLEM

Central and Eastern Europe has been a disputed geographical, political and historical
region for a long time (Schöpflin and Wood 1989; Szűcs 1988) depending on the different
criteria of grouping the countries of Europe. Neither is it easy to distinguish the CEE
group in EU evaluation documents, due to the different aggregations used in various
comparisons. The European Commission’s periodic Cohesion Reports, for example,
group member states according to the date of accession. However, in the Sixth Cohesion
Report three new categories have been introduced for the comparison of unemployment,
such as developed, transitional and less-­developed countries (European Commission
 Cohesion policy in Central and Eastern Europe  ­307

2014: 58). This mix of grouping criteria may imply that the common post-­communist
past alone is no longer sufficient grounds for making a distinction.
The CEE states are mostly small or medium-­sized countries with historically low
industrial development levels and belated urbanisation (Enyedi 1990). Europe is still
divided into the richer part, the West, and a much poorer part, the East. In 2005, the
vast majority of the economic potential of Europe, more than 80 per cent of the total
GDP, was produced in Western Europe (Orlowski 2010: 10). The gap was not very wide
until the middle of the twentieth century. The big change took place during the second
half of the century, mostly because the communist regime was not suitable for economic
development, since it denied the laws of the market and rejected economic rationality,
following ideological and authoritarian political interests instead.
The relative gap in GDP per capita between Western and Central Europe is estimated
to have increased between 1950 and 1990 (Orlowski 2010: 13). Unfortunately, transition
in the CEE countries did not immediately bring faster growth; on the contrary, the GDP
of the region continued to fall by 15–20 per cent and the benefits of free market and
economic integration could only be felt several years later. After accession, in 2004–2007,
acceleration became faster (6 per cent growth in GDP), but this promising process was
stopped by the global financial crisis, although convergence will presumably go on in the
long term (Orlowski 2010: 16–17).
The CEE countries display many similarities as well as differences. Their common
feature is, of course, their 40-­ year-­long communist past. However, these countries
belonged to different geopolitical spheres before the communist era, characterised by
various demographic, economic, geographic, social and administrative traits (Horváth
2015).
The identity of Central and Eastern Europe based on assessments of commonalities
and differences within this region is a widely discussed topic. Some scholars emphasise
the enduring territorial specificities of the region (Enyedi 1990), while others argue that,
before accession, the CEE region was already undergoing a process of change similar to
that which took place in Western Europe several decades earlier (Gorzelak 1996). This
very heterogeneous region is unquestionably located on the periphery of the EU, both
geographically and economically. Although the regime change in these countries was
unexpectedly fast, their convergence will be a long-­lasting process, calling for treating
this region in a multilevel and multidimensional development setting (Henderson et al.
2012).
Due to the late and less-­intensive urbanisation and the less-­developed economic struc-
ture of the CEE countries, the proportion of rural, peripheral territories is higher and the
majority of the smaller and even medium-­sized towns have never been able to perform
welfare and economic functions for their districts. This polarisation is accompanied
by social differentiation and poverty concentrated in backward, peripheral rural areas.
Starting from a worse economic situation, the relatively rapid economic development
in the new member states was concentrated in the capital cities and in their immediate
surroundings, enabling them to compete internationally. This led to deeper regional dis-
parities with insufficient resources remaining for the rest of the country to catch up (see
Table 19.2). Thus CEE member states are suffering from much sharper regional polarisa-
tion (Blokker and Dallago 2009) than the other EU member states.
Although CEE countries had been formally prepared for the absorption of Structural
308  Handbook on Cohesion policy in the EU

Table 19.2 GDP per capita of regions, % of EU28 average and regional disparities,
2004–2011

Central Region GRDP per capita at Without Central Region GRDP

PPS, EU28 5 100 per capita at PPS, EU28 5 100

2004 2011 2004 2011

Czech Republic 163 171 68 71
Hungary 101 110 47 46
Poland 78 107 44 57
Slovakia 104 100 71 68
Slovenia 129 186 48 59
Bulgaria 51 78 28 30
Croatia 56 62 59 56
Romania 72 122 30 43

Source: Eurostat.

Funds, their territorial pattern of development strongly differed from that of the old
members. The prospects of the impact of accession were differently assessed (Gorzelak
et al. 2010; ESPON 2005, 2006). On average, regional disparities in the CEE countries
were growing, with the regions bordering the West and the capitals developing, and the
eastern heavy industrial regions declining in the 1990s (Bachtler et al. 2001).
After 2000 it became clear that only the CEE metropolitan regions would be able to
join the global economic competition, while the rural areas would decline, and it became
unlikely for them to develop second-­tier urban centres. The so-­called knowledge-­based
economy is also concentrating in the capitals and some secondary cities, but these are not
able to contribute to the development of the surrounding areas (Kujath 2010). Industry
is still the dominant basis of progress in the richer regions; only the metropolitan regions
produced higher and faster development (Gorzelak and Smetowski 2010: 56). There
were calculations prior to enlargement predicting that regional disparities of the richest
to the poorest regions would increase from 1:5 to 1:9 in the EU25 (Bachtler et al. 2001).
However, the disparities between the Eastern and Western capitals are decreasing if com-
pared to the growing disparities between regional, second-­tier centres and their respective
capitals (Horváth, 2015: 52). In the more-­developed Western countries the capitals do not
have strong dominance over secondary cities, which are in fact getting stronger (Camagni
et al. 2015). The urban–rural division has remained characteristic in the East where the
scale of urbanisation is still modest.
According to the data of the Sixth Cohesion Report, the less-­developed regions grew
faster (.3 per cent) in 2000–2008, resulting in the so-­called beta convergence2 decreas-
ing from 3.5 to 2.8 (European Commission 2014: 3). However, this positive trend was
broken after 2010, because the crisis impacted upon the regions and the countries dif-
ferently. Mostly the rural regions suffered from the decline; in particular, the border-
lands are shrinking, and massive outmigration contributes to the backwardness of the
peripheries.
 Cohesion policy in Central and Eastern Europe  ­309

THE PRE-­ACCESSION PERIOD: THE MOST INTENSIVE PHASE

OF LEARNING AND EUROPEANISATION

The conditions of accession for the CEE post-­communist countries were stricter than
ever before (Grabbe 2003; Hughes et al. 2004), following the so-­called Copenhagen
criteria which contained not only economic, policy and legislation requirements, but
also demands for democratic governance and rule of law. Conditionality has motivated
intensive adaptation and a learning process (Schimmelfennig and Sedelmeier 2005). The
conditions of Cohesion policy were especially important in this learning and adaptation
process. The Commission provided crucial financial (Phare, ISPA, SAPARD)3 and tech-
nical support in order to prepare for the absorption of Structural and Cohesion Funds.
The projects implemented during the pre-­accession period provided several opportuni-
ties for civil servants, experts and civil society in these countries to learn techniques,
best practices, the principles of Cohesion policy and to cooperate with other regions
of Europe. The Interreg cross-­border projects were deemed especially successful in this
learning process, as was the project resulting in the publication of the European Spatial
Development Perspective (European Commission 1999) involving consultation between
Western and Eastern European scholars and policy-­makers (Cotella et al. 2012). The
legislative process was also accelerated: special laws were passed on regional development
before 1998 (European Commission 1998).
Regionalism – the emergence of new, larger administrative tiers – and the EU’s regional
policy were definitely correlated. The European principles of subsidiarity and partner-
ship demanded by Cohesion policy forced the new accession states to include regions in
their decision-­making processes and thus regions became dynamic actors of multilevel
governance (Bache 1998). However, the designation of the Nomenclature of Territorial
Units 2 (NUTS 2) regions proved to be an especially hard task, in terms not only of
creating new boundaries, but also of equipping them with institutions, competences and
financial resources. Fulfilling this requirement led to successful territorial reforms of
public administration in some of the countries, while to failures in others.
The establishment of regional consultative bodies was also a ‘condition’ and therefore
it was widely adopted. Development agencies were established for managing the pre-­
accession funds. These new institutions and modes of functioning meant governance
innovations and raised the question of how to accommodate them to the traditional
national public administration. Bassa (2007) pointed out that being unprepared was
an advantage, as it implied less opposition against new regulations and institutions.
However, when monitoring the accession process, the European Commission stated in
several reports that the newly established institutions were only formally functioning and
they had insufficient administrative capacity. This complaint was repeated year after year
and is still valid. Poland was perhaps the only exception, since the partnership principle
was familiar for the country, given the Polish trade union tradition (Wisniewski 2007).
Poland also implemented the regional administrative reforms successfully thanks to its
administrative traditions at this level of government, although the adaptation process,
and particularly partnership building, was not without contradictions (Dąbrowski 2011).
Thus it is not accidental that the Polish management system of Structural Funds is the
most regionalised in the CEE region.
It is difficult to evaluate how prepared the CEE countries were on the basis of their
310  Handbook on Cohesion policy in the EU

national policies. The annual screening of the adoption of the acquis was aimed at moni-
toring progress towards full Europeanisation in different national policies according to
30 ‘chapters’, but in the case of Chapter 21 (that on regional policy), monitoring con-
cerned technical and institutional aspects rather than strategic problems.
The CEE countries had hardly focused on regional development until accession; even
during the accession process they invested most energy in institutional, political and
economic adaptation. They ignored regional issues also because the regional levels were
very weak and not capable of making central governments more sensitive to regional
inequalities. Regional policy in the 1990s was centralised crisis management rather than
conscious strategy. As accession was approaching, these countries became subjected to
the influence of EU Cohesion policy, and they did not have enough time to elaborate
their own policies, to identify their own regional profile and to experiment with their own
policy instruments.
It is necessary to emphasise that although the pre-­accession period was a very intensive
learning and policy adaptation process, after accession the new member states started to
behave more reluctantly, ‘undisciplined’ towards EU principles and regulations, since the
motivational force of ‘conditionality’ became less strong (Bouckaert et al. 2011).

THE FINANCIAL RESOURCES BROUGHT IN BY COHESION

POLICY

Enlargement brought a completely new East–West dimension into Cohesion policy

thinking, due to the different macroeconomic conditions and the diversity and scale
of territorial problems. This diversity was regarded as an obstacle rather than an asset
(Cotella et al. 2012). In 1999 the Berlin Council showed that the net contributors were
not willing to pay more for cohesion and wanted to share the money according to their
own interests. The Second Cohesion Report (European Commission 2001) stated that
although the resources were to be concentrated on the new member states, the persistent
problems of the incumbents should not be ignored either. It also stressed that in order to
achieve greater consistency between Structural and Cohesion Funds, it was necessary to
support investments in environmental protection and transport infrastructure across the
EU, regardless of the geographical area.
In the period 2004–2006, €24.5 billion was allocated for the eight CEE member states,
where out of the 41 NUTS regions 38 were Objective 1 (European Commission 2004).
Maybe because of this, the original principle of support allocation (favouring the less-­
developed regions) got turned upside down: the ceiling imposed upon the amount of
transfers from EU funds resulted in the poorer regions or countries of the EU10 receiving
less, and the more prosperous regions and countries of the EU15 getting more support
from the Structural and Cohesion Funds (Osterloh 2009). Something similar happened
with the Common Agricultural Policy (CAP) subsidies for the EU15 countries ten years
earlier (ESPON 2004). During the 2000–2006 period, the former cohesion countries
of the EU15 had been the main recipients of EU funds, whereas during the 2007–2013
period the new member states received more than half of the resources of Cohesion
policy (European Commission 2007: 174). For more data on individual ­countries, see
Table 19.3.
 Cohesion policy in Central and Eastern Europe  ­311

Table 19.3  Cohesion policy funding, 1989–2020 (€ million, constant 2010 prices)

2004–2006 2007–2013 2014–2020 Total

Bulgaria n/a 6601.20 7632.74 14 233.94
% of GDP – 2.50 – –
Croatia n/a 837.17 8578.00 9415.17
% of GDP – 0.28 – –
Czech Rep. 1712.00 26 308.43 21 791.81 49 812.24
% of GDP 0.49 2.44 – –
Hungary 2145.09 24 620.86 21 746.57 48 512.52
% of GDP 0.76 3.56 – –
Poland 8903.98 66 579.27 77 447.01 152 930.26
% of GDP 1.15 2.67 – –
Romania n/a 18 819.42 23 250.69 42 070.11
% of GDP – 2.05 – –
Slovakia 1204.61 11 382.14 13 938.54 26 525.29
% of GDP 0.94 2.44 – –
Slovenia 257.99 4069.10 3067.61 7394.70
% of GDP 0.27 1.61 – –
Total 14 223.67 159 217.59 177 452.97 350 894.23

Sources:  Own calculations from Directorate-­General for Regional and Urban Policy (DG REGIO) data, for
commitment appropriations; and the European Commission’s Annual Macroeconomic Database (AMECO),
for deflators and GDP. Data for 2014–2020 refer to non-­finalised figures available at the time of elaboration,
and do not correspond with finalised Partnership Agreement financial allocations. GDP percentage values
refer to averages of annual percentages.

THE IMPACT OF COHESION POLICY IN CEE COUNTRIES

The different starting position of CEE countries is one of the explanations for the modest
results in catching up. According to the latest estimates by the European Commission,
2007–2013 Cohesion policy programmes have had an impact on national GDP in the
CEE countries ranging from or above 2 per cent in Poland, Latvia and Estonia; to
between 1.5 and 2 per cent in Hungary, Lithuania, Slovakia and Bulgaria; between 1 and
1.5 per cent in Romania and Czech Republic, and 0.8 per cent in Slovenia.
Except for Poland, the CEE countries were particularly affected by the 2008 finan-
cial crisis. The crisis and the ensuing deterioration of the financial capacity of subna-
tional governments negatively impacted on these countries’ ability to raise domestic
co-­financing, which further diminished their absorption capacity. The economic crisis
accentuated the differences in performance and the European Cohesion policy proved
insufficient to counterbalance this phenomenon. The Sixth Cohesion Report shows the
differences in the main regional investment targets between the EU15 and the EU10–12.
The EU10 had to spend more on infrastructural development and environmental pro-
tection, and less on business support. In the period of 2007–2013 the regions got more
emphasis. The weight of Regional Operational Programmes (ROPs) within the budgets
of the EU10 countries differed. In Poland 29 per cent, in the Czech Republic 13 per cent,
and in Hungary 24 per cent were spent from the ROP funds and Slovakia also paid more
attention to the regions lagging behind.
312  Handbook on Cohesion policy in the EU

The CEE countries had different development priorities: the reason for spending
more on infrastructure and less on economic development was due to real conditions
and needs. As the Fifth Cohesion Report stated, the EU10 group is suffering from grave
problems in transport infrastructure, for example having only about 30 per cent of the
EU25 average motorway density.
The Central and Eastern European actors have progressively started to play a growing
role in defining the terms of Cohesion policy, aiming to support a continued concentra-
tion of EU Cohesion policy on poor countries and regions, instead of supporting all EU
members and regions having specific geographical features (coastal or mountain regions,
and so on) (Cotella et al. 2012). However, the other EU member states imposed a limi-
tation on the future cohesion funds, since they were seeking to reshape the EU budget,
placing more emphasis on other EU policy priorities (Bachtler 2010: 263). The discus-
sions were not only about the insufficient amount of money, but more about the failure
of Cohesion policy in achieving the aim of helping the regions lagging behind to catch
up.
The Cohesion reports that are produced periodically by the European Commission
have regularly used different macroeconomic models to measure the impact of the policy,
showing higher impact in the poorer countries. Other types of studies, however, have
found much less direct impact (Bachtler 2010). It is a widespread opinion that in order
to apply appropriate Cohesion policy interventions, one should know more about the
causes and the softer elements that can affect policy performance, such as decentralisa-
tion, government capacity and public policy coordination (Gorzelak et al. 2010). This
opinion inherently contains the message that a uniform policy for the whole EU does not
work.

WHAT WILL THE 2014–2020 PERIOD BRING? THE EVOLUTION

OF COHESION POLICY STRATEGIES IN THE CEE MEMBER
STATES

CEE countries are facing several challenges in the current programming period. The aim
of competitiveness, contained in the Europe 2020 strategy, has taken precedence over the
aim of convergence. Even the poorest countries and regions have to spend an increased
share of their budget for innovation, information and communication technology (ICT)
and small and medium-­sized enterprise (SME) support. This policy shift will contribute
to the economic competitiveness of Europe in general, but at the same time it might be
a crucial obstacle for lagging regions where the elementary infrastructural and economic
conditions are still lacking (Farole et al. 2011).
EU Cohesion policy, however, is not just about redistribution favouring the lagging
regions and the Lisbon and Europe 2020 agenda of economic development and com-
petitiveness, but it is also meant to foster stronger and deeper integration by motivating
cooperation among member states and regions. Macroregional strategies, for example
the Danube Region Strategy, are important, as ‘macro-­regional strategies are the prime
test of what territorial cohesion means in practical terms’ (CEC 2010: 1). Macro-­regional
strategies may also be an instrument for improving the quality of governance in the
system of multilevel governance (Ágh 2011) (see also Gänzle, Chapter 24, this volume).
 Cohesion policy in Central and Eastern Europe  ­313

Steeped with centuries of historical tradition, the Carpathian Basin is challenged to

form an economic region (Horváth 2015: 210) by developing interregional and cross-­
border cooperation. There are (mainly Hungarian) efforts to identify this region as a
‘macro-­region’, although not all the neighbouring countries of this region are convinced
about the sense of this regional cooperation.
To obtain a sense of the strategies implemented in the CEE member states since acces-
sion it is useful to compare the budget allocations devoted to different priority areas.
Comparing the 2004–2006 strategies of the EU10 with the 2007–2013 strategies of the
EU12, what emerges is a shift towards business support (from 14.2 per cent in 2004–2006,
to 25.6 per cent of allocations in 2007–2013); a reduction of resources for infrastructure
(social, transport, energy and telecommunications-­related; from 41.5 to 36.1 per cent of
the total); a sizeable decrease in allocations for environmental infrastructure and projects
(from 27.3 per cent to 20.8 per cent); a small reduction in support to human capital
(labour market, education, social inclusion; from 14.8 to 12.5 per cent); and a significant
increase in resources for technical assistance (from just over 2 per cent to 5 per cent in
2007–2013). A more precise picture of strategic preferences and foci can be gauged by
comparing the allocations to the 11 thematic objectives of the 2014–2020 Community
Support Framework in the current Partnership Agreements (PAs) (Table 19.4).
For 2014–2020, the national governments seem to have tried to concentrate their action
on the main targets of Europe 2020, but with different emphases. All these countries
formulated as their first priority the promotion of research, development and innovation
(RDI) in order to strengthen the economic competitiveness of regions, with particular
focus on SMEs. The ‘Lisbonisation turn’ will continue, the economic competitiveness
remaining as the most important development target. Some countries have planned very
ambitious increases in research and development (R&D) expenditure in relation to their
GDP, for example, from the present less than 1 per cent to 2 per cent in Romania. Some
of the general European priorities, such as the digital agenda and the increasing share of
renewable energy, emerge in almost all PAs.
Some priorities, on the other hand, reflect the specific characteristics and special condi-
tions and problems of some CEE countries. It is interesting that only the Bulgarian PA
ranks the theme of education, employment and social inclusion in first place. Decreasing
the number of people at risk of poverty is a particularly important aim in Bulgaria,
Romania and Slovakia (especially the socio-­economic integration of Roma people and
rural communities). Bulgaria and Romania aim to improve the conditions of public
services such as education and healthcare. An interesting ambition has been formulated
in the Croatian PA, namely, shifting from institutional to community-­based services.
This might be important for other CEE countries, too, in order to strengthen the quality
and capacity of governance. In several respects, the CEE countries’ approaches differ
from those of other EU member states. For example, none of the CEE countries plan to
further decentralise their administration or to devolve political powers to regions. They
prefer special measures to make the management and administration of Cohesion policy
programmes more flexible, transparent and business-­friendly. The Croatian PA is the
only one containing the ambition of developing social dialogue and impartiality of the
judiciary as democratic values.
The territoriality of the Cohesion policy can be evaluated by the structure of Operational
Programmes (OPs) and the share of ‘place-­based’ schemes, such as Integrated Territorial
 Table 19.4 Budget allocation ratios by Thematic Objective in the 2014–2020 Partnership Agreements

BG HR CZ HU PL RO SK SI
Strengthening research, technological 5.4 6.4 10.5 8.9 11.8 3.5 12.1 12.6
  development and innovation (%)
Enhancing access to, and use 0.3 2.9 4.3 2.8 3.6 1.7 5.4 2.0
  and quality of ICT (%)
Enhancing the competitiveness 10.3 18.0 5.6 11.8 11.1 10.2 6.0 20.0
 of SMEs, and of the agricultural
sector (%)
Supporting the shift towards a low-­ 12.1 7.1 9.4 11.2 10.9 12.7 7.3 7.3
  carbon economy in all sectors (%)
Promoting climate change 4.6 4.7 5.7 4.1 1.6 6.6 6.5 7.5
 adaptation, risk prevention and
management (%)
Preserving and protecting the 22.8 21.6 11.4 13.6 10.4 16.2 12.2 15.9
 environment and promoting resource
efficiency (%)
Promoting sustainable transport 14.2 12.3 26.2 13.3 28.1 20.0 22.9 6.8

314
 and removing bottlenecks in key network
infrastructures (%)
Promoting sustainable and quality 6.4 5.8 5.7 14.1 6.5 7.3 7.8 9.6
 employment and supporting labour
mobility (%)
Promoting social inclusion, combating 12.7 9.1 11.2 9.5 7.6 11.1 9.2 6.8
  poverty and any discrimination (%)
Investing in education, training and 5.1 6.8 5.6 6.9 4.8 5.4 4.8 6.2
 vocational training for skills and lifelong
learning (%)
Enhancing institutional capacity of 2.6 1.8 0.9 2.7 0.2 2.6 1.8 1.6
 public authorities and stakeholders and
efficient public administration (%)
Technical assistance (%) 3.6 3.6 3.6 1.1 3.3 2.6 3.9 3.8
Total amount (million euros) 9794 10 676 23 831 24 989 84 542 30 619 15 257 3865
Per capita (euros) 1352 2514 2267 2530 2224 1535 2817 1875

Source:  Partnership Agreements on ESIF funding.

 Cohesion policy in Central and Eastern Europe  ­315

Investments (ITIs) and Community-­ Led Local Development (CLLD). Most of the
CEE countries dedicate few resources for special urban programmes (between 5 and 7
per cent). Bulgaria, Romania, Slovakia, Hungary and the Czech Republic have integrated
territorial OPs, and only Poland will implement ROPs in each Polish region and manage
around 60 per cent of the subsidies from the European Regional Development Fund
(ERDF) and European Social Fund by regionalised management.

IMPLEMENTATION CHALLENGES

It has long been recognised that governance does matter, and that the quality of gov-
ernance is also one of the unexploited resources for improving the efficiency of EU
Cohesion policy. This statement holds despite the frequent discussions on the relation-
ship among governance, administrative efficiency and Cohesion policy effectiveness, and
on whether centralised or decentralised and/or hierarchical or horizontal governance is
better (Charron et al. 2012; Charbit 2011; see also Charron, Chapter 6, this volume).
Figure 19.1 shows the spending performance of CEE countries, compared to other EU
member states, in relation to 2007–2013 programmes. With a few exceptions – Estonia,
Lithuania and Poland – the CEE countries cluster on the left side of the figure, amongst
the worst performers, with Romania having spent as at May 2014 (one and a half years
from closure) less than half of its resources.
The Sixth Cohesion Report (European Commission 2014) pointed out that the govern-
ance performance of the CEE countries was problematic not just because of corruption.
Administrative capacities and decentralisation are contradictory in the CEE countries
(Adams et al. 2011; ESPON 2012). After 2007 it was required to involve the regions
into decision-­making, but the European Commission displayed little trust towards the
regional government levels, so that it supported sectoral OPs and a centralised model in
managing the Structural Funds. The Sixth Cohesion Report also mentions that a low
number of managing authorities can enhance the efficient utilisation of EU funds, which

% of total Cohesion Policy funding 2007–2013

100 100

80 80

60 60

40 40

20 20

0 0
RO
SK
BG
IT
MT
CZ
HU
SI
FR
UK
LV
ES
LU
CY
NL
AT
IE
DK
DE
PL
BE
SE
EL
FI
LT
EE
PT
EU-27

Absorption rate May 2014 Project selection rate by end 2013

Figure 19.1 Absorption of funding and project selection for the 2007–2013 programming
period
316  Handbook on Cohesion policy in the EU

the central governments can use as an argument for setting up a centralised management
system.
The problems of implementation stem not only from centralisation, but also from
loose regulation, lack of experts, exclusion of social partners and intensive political
interference (Dezséri 2007). Spatial planning has also been neglected, partially due to the
negative connotation of ‘planning’ inherited from the communist era (Stead and Nadin
2011).
During the accession process it was a generally accepted opinion that EU Cohesion
policy would have a strong impact on regionalisation and on regional participation in
the multilevel governance system. The Commission urged the national governments to
implement regional reforms and preferred the elected self-­governments to institutionalise
the NUTS 2 regions (Brusis 1999). However, the ambition to replicate Western European
regionalism has failed in the CEE countries, where the tradition of state centralisation
is extremely strong (Bachtler and McMaster 2008) and the central governments have
enough room for manoeuvre in implementing EU requirements following their own
interpretations (Hughes et al. 2004). In spite of several reform attempts and conceptions
formulated in the CEE countries, most of the regional reforms have been postponed
or have failed, except for in Poland, and have not led to the creation of stronger, larger
elected regions (Hendriks et al. 2011).
It may have been too optimistic to think that the CEE countries would be able to leap
so far ahead in their development, since they had to introduce a new model of democracy
and market, modernise the institutional structure, and make their governance system
more efficient; that is, they have had to implement transition and transformation at the
same time (Adams et al. 2011). It should be taken into account as well that some CEE
countries are in the phase of nation-­building, and the post-­communist past has also con-
tributed to the fragmentation or elimination of the former regional elite networks and
identity (Scott 2009). It was a failed assumption that more decentralised governance is
more democratic per se (Pickvance 1997). Reforms brought in too fast, without distin-
guishing systemic change from modernisation, can become obstacles to implementing
long-­term sustainable reforms (Bennett 1994). The new political elite transferred power
only to the municipalities and it considered meso-­level governance as potential rivals. The
mistrust towards decentralisation is also shown by underfinancing the whole territorial
governance system (Sevic 2008), and by implementing budgetary constraints primarily in
this sector during the crisis.
Generally, regionalism has been used as a tool rather than a target in CEE politics. It
has become a tool of centralisation and resource distribution alongside clique interests.
Transparency and democratic participation have been violated, especially where the
regional and local self-­governments and civil society are not strong enough. The main
problem in most of the CEE countries is that they have not decentralised their public
power system; at most they have rescaled it. Cohesion policy did not prove to be a strong
enough motivation for implementing real regional decentralisation reforms or mod-
ernisation (Yanakiev 2010; Pálné Kovács 2009). Most of these countries just imitated the
reform ambition, but did not intend to learn (Bache 2010).
It is also true that presently the spirit of the “Europe of the Regions” has less influence,
even in Western Europe (Elias 2008), than it had in the 1980s. Nationalisation and/or
centralisation in Europe are strengthening in spite of the ambitions of regions relating to
 Cohesion policy in Central and Eastern Europe  ­317

multilevel governance (Committee of the Regions 2009) (see also Hepburn, Chapter 13,
this volume). At the same time, networks of cities within the regions and Europe-­wide
are becoming more and more important in organising the spatial and governance
systems. In terms of place-­based policy, integrated approaches, territorial capital and the
enhanced legitimacy of all of these factors, one can actually identify new arguments for
regional decentralisation. The question is whether the member states are ready or able to
decentralise domestic regional governance as well as the management of the European
Structural Funds. An especially important question is how cities will be able to manage
their own place-­based development strategies, and form networks with each other and
the surrounding regions (see Atkinson and Zimmermann, Chapter 26, this volume).
National governments are likely to be unenthusiastic about decentralisation and they
might refer to the financial crisis. Experts (Faludi 2007; Zonneveld et al. 2012) have
pointed out that although the EU provides opportunity for different governance levels to
cooperate, it is questionable how the role of the regions could be regulated, since domes-
tic public administration belongs to the competence of the national governments.
Consequently, the Central and Eastern European countries should follow their own
paths to achieve both the desirable status of ‘goodness of fit’ between European region-
alisation and domestic regionalism (Cowles et al. 2001) and the appropriate place-­based
management of the Structural Funds.

CONCLUSIONS

Some ten years after enlargement, several questions arise about whether EU Cohesion
policy is appropriate or inappropriate for the Central and Eastern European context.
The alternative options of cohesion versus competitiveness are still dilemmas and are
even increasingly important (Komornicki 2007). It is a paradox in Cohesion policy
that the more-­ developed countries can more easily cope with their relatively lower
levels of regional disparity. Myrdal’s theory of cumulative causation can be justified
by the recent phenomena of deepening regional polarisation in the poorer Central
and Eastern European countries (Myrdal 1957). There is sufficient evidence to believe
that the permanent peripheral situation, larger distance from the core and closeness to
the poor Eastern neighbours can be explanations for lagging behind. It remains to be
answered whether it is possible to counterbalance the disadvantages of peripheral regions
on the basis of Keynesian demand-­side interventions (Pogátsa 2004).
The question has also been raised often whether low administrative capacity is the main
reason for the generally modest efficiency of Cohesion policy. Analysing the ongoing pro-
cesses in Central and Eastern Europe was an excellent opportunity to examine the con-
nections between development processes and the attributes of space, and especially the
role of communist legacy as a path-­dependency (Pike et al. 2011).
Summarising the results and consequences of Cohesion policy in the CEE countries
one can conclude that these countries have started to catch up and differences among the
member states have decreased. The regional gap, however, is growing within the countries
since, due to their poor competitiveness, they are not able to provide an innovative milieu,
high-­quality infrastructure and public support in their lagging regions. When competing
with other regions, the only advantage of lagging CEE regions is their cheap labour force
318  Handbook on Cohesion policy in the EU

(Gorzelak et al. 2010: 2). Only the bigger and the capital cities are approaching the West.
The question is whether urbanisation and ‘metropolisation’ are the only way to have a
spillover effect on the peripheries.
The dilemma of cohesion versus competitiveness (Adams et al. 2011) seems to be
solved, since the Europe 2020 strategy combines the aim of decreasing regional dispari-
ties with the 11 main sectoral goals focussed on economic performance (and neglecting
the territorial dimensions). The question is whether the CEE countries will be able to
compete and catch up at the same time. Obviously, the interests of the more-­developed
member states are not to be neglected. Enlargement dramatically restructured disburse-
ments from the Structural Funds (Ahner 2010). The gap between net contributors and
net beneficiaries has considerably widened, although net contributors also have to face
serious challenges at home. This gap is one of the causes of the tensions and criticisms
concerning Cohesion policy. Another is that the management of the Structural and
Cohesion Funds is not efficient enough in the CEE countries. Regional disparities have
increased, but not just because of the weaker governance performance. Ultimately, the
degree of success of the current programming period in helping the CEE regions to catch
up will justify or refute the sense of EU Cohesion policy in the future.

NOTES

1. This publication has been supported by the Hungarian Scientific Research Fund (grant #104985, ‘New
driving forces of spatial restructuring and regional development paths in Eastern and Central Europe at the
beginning of the 21st century’).
2. The disparity between the 20 per cent richest and poorest regions.
3. These so-­called pre-­accession funds, simulating the after accession conditions, financed ‘softer’ coopera-
tion and training projects contributing, for example, to region-­building (Programme of Community Aid
to the Countries of Central and Eastern Europe, Phare), to larger infrastructural investments (Instrument
for Structural Policies for Pre-­Accession, ISPA), and rural and agricultural projects (Special Accession
Programme for Agriculture and Rural Development, SAPARD).

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 PART IV

COHESION POLICY AND

BROADER EUROPEAN
STRATEGIES
20.  Cohesion policy and rural development*
Riccardo Crescenzi and Fabrizio De Filippis

INTRODUCTION

An equitable territorial distribution of the benefits of the integration process is a found-

ing principle of all European Union (EU) policies (Article 175 of the European Union
Treaty) and, as such, has been strongly emphasised in recent strategic programming
documents including ‘Europe 2020’ (European Commission 2010a). In the framework of
current reflections upon the future of EU policies, one idea has clearly emerged, namely
that the objective of social, territorial and economic cohesion within the Union cannot
be wholly entrusted to the EU Cohesion policy in isolation (EESC 2007). On the one
hand, the contribution made by all other policies – also those which are non-­territorial
by nature – towards the achievement of this objective (European Commission 2010c)
should be taken into account; and on the other hand, the mechanisms coordinating the
various Community policies in this field should be reconsidered in order to maximise
their synergies.
Notwithstanding the explicit request by EU policy-­makers for conceptual tools and
empirical instruments able to perform a territorial-­level assessment of the interrela-
tions between policies of different nature, a significant gap still exists in this area of
academic literature. Although some contributions have analysed the EU’s Cohesion
and agricultural policies with reference to their impact on the cohesion processes,
with few exceptions their attention has alternated between one or the other policy
area and overlooked both their interactions (synergic or conflicting) and joint impact
at the ­territorial level. This separation can be explained by the different disciplinary
approaches of the scholars concerned (mainly agricultural economists for agricul-
tural policies, and regional economists and economic geographers for Cohesion poli-
cies, Kilkenny 2010) as well as by the division of responsibilities within Community
bodies (Directorate-­General for Agriculture and Rural Development, DG AGRI and
Directorate-­General for Regional and Urban Policy, DG REGIO, respectively) and
the ministries of the single member states. As a result, today’s literature offers few
­analytical insights for understanding the relationships between policies and the pos-
sibilities of influencing territorial cohesion by modifying the territorial allocation and
composition of overall Community spending in favour of instruments with a more
marked territorial vocation. This chapter aims to respond to the foregoing questions,
and to contribute towards the present debate on the future of Community policies,
by focusing on the links between EU’s Cohesion, agricultural and rural development
policies.
The chapter adopts a territorial approach in order to make a comprehensive analy-
sis of the evolution of policies designed and implemented for different objectives and
addressing a highly variegated range of beneficiaries. The chapter looks at the existing
EU documents and regulations that have shaped the structure and the development of

325
326  Handbook on Cohesion policy in the EU

these different areas of Community policy as well as the academic literature in different
relevant fields. The critical review of this vast material makes it possible to uncover the
evolutionary patterns of these policies, their points of contact and their reciprocal coor-
dination (or lack thereof), with special reference to territorial cohesion. The subsequent
analysis of the regional allocations of Community spending for each of the three policy
areas over a period of almost two decades (1994–2013) will test the correspondence
between actual spending and the potential synergies highlighted in the policy debate. The
chapter finally discusses how (and under what conditions) moving resources from one
policy area to another (for example from ‘first pillar’ Common Agricultural Policy, CAP,
to rural development policies) might reinforce EU territorial cohesion.

THE EVOLUTION OF SECTORAL AND TERRITORIAL

POLICIES IN THE EUROPEAN UNION

The debate on the composition of the EU budget has often emphasised the need to har-
monise the different Community policies and ensure their compatibility with the objective
of territorial cohesion. This consensus is by now part and parcel of the Union’s overall
growth and development strategy, Europe 2020 (European Commission 2010a), and has
been an essential component of the reform of the single policies in line with this strategy:
the Barca Report (Barca 2009) and the Fifth Cohesion Report (European Commission
2010c) for Cohesion Policy; the CAP Towards 20201 for agricultural and rural develop-
ment policies (European Commission 2010b). The construction of an appropriate ana-
lytical and evaluative framework to sustain the resulting priorities – above all in order to
evaluate their translation into real policy changes – must first overcome the rigid separa-
tion between sectoral and place-­based policies that has long dominated EU policies (and
their analysis). While some policies may be considered at least in principle ‘space-­neutral’
in terms of both their intent and outcomes (for example, competition policy2), others,
albeit neutral in their intent – as in the case of the CAP – exhibit comparatively stronger
spatial impacts (Duhr et al. 2010). And it is thanks to this common spatial outcome that
a comprehensive analysis can be undertaken of Cohesion and agricultural policies.

AGRICULTURAL POLICIES FROM THE ‘OLD’ SECTORAL

PARADIGM TO TERRITORIAL CENTRALITY

First Pillar CAP

From its institution, the CAP was implemented in the awareness that agriculture is an
integral part of the economy, therefore recognising that its specific problems could not be
resolved by measures exclusively addressed to the farm level and to the agricultural sector
(European Commission 1968). However, excessive emphasis on farm income support via
agricultural market intervention (that is, the so called First Pillar of the CAP) along with
the very marginal role of the measures in support of agrarian structures, which charac-
terised the first 20 years of the Common Agricultural Policy, produced significant imbal-
ances in the distribution of financial resources. In the 1980s, a seminal study on Regional
 Cohesion policy and rural development  ­327

Impact of CAP (RICAP), which examined the impact of CAP resources on European
regions, warned of a trend towards the polarisation of agricultural incomes generated
by CAP spending and forewarned against its potentially perverse impact in terms of
‘distributive equity’ (European Commission 1981). And it is precisely the lack of equity
within the sector and across territories that was identified as one of the principal ‘failures’
of the CAP intervention model (Barbero et al. 1984; European Commission 1985).
A profound overhaul of the CAP commenced with the MacSharry reform of 1992
and continued with Agenda 2000 (1999), the Fischler reform (2003), the Health Check
(2008) and, finally, the last reform of 2013 for the financial period 2014–2020. This
reform process had a considerable impact upon the financial weight of the various types
of spending and attempted to change the foregoing imbalances. However, the impact of
successive changes in the organisation and financial structure of the CAP on the real
territorial distribution of resources is not altogether clear. Tarditi and Zanias (2001)
highlighted a recurrent problem of equitable distribution between the beneficiaries
of the policy, whereby 80 per cent of the beneficiaries receive less than 20 per cent of
the overall payments. This problem remained unchanged within the EU15 until 2006
(Velazquez  2008); the redistribution question was never handled seriously and, in any
case, still remains heavily dependent upon the decisions of individual member states
(Chatellier and Guyomard 2010). As a matter of fact, all redistributive measures under
the first-­pillar CAP are optional and dependent upon the decisions of each member state.
These measures include the definition of a minimum threshold for direct payment eligi-
bility, lump-­sum payments for small farmers, the capping of the maximum total payment
that individual beneficiaries can receive, additional direct payments for less-­developed
areas, the use of redistributive payments in favour of the initial hectares of each benefi-
ciary and the Young Farmers scheme. The ESPON study (2004), using detailed spatial
disaggregation data, revealed the anti-­cohesion impact of first-­pillar CAP spending,
which was only potentially mitigated by the then fledgling rural development measures
(Shucksmith et al. 2005). The analyses by Bivand and Brundstad (2003) continued in the
same direction and using more sophisticated spatial econometric techniques highlighted
the negative impact of CAP payments on the economic convergence processes among
EU regions in the 1990s. Esposti (2007), with reference to the same time period, also
underlined how the enormous volume of CAP spending had no positive effect upon
regional growth, although not constituting ‘counter-­treatment’ with respect to the new
Cohesion Policy. Furthermore, many analyses have emphasised the risk of a fundamental
conflict between the effects of agricultural intervention and the objectives of Cohesion
policy (Bureau and Mahè 2008).
The capacity on the part of CAP to progress towards intervention models that take
due account of its spatial nature is made extremely difficult by interactions between path-­
dependency and ‘temporal resilience’. In the first place, the essential components defining
the CAP go back to the origins of the European integration process, when present-­day
priorities of social and territorial cohesion were not fully developed. The principle of
cohesion first saw the light with the Single European Act (1986), but was only formally
incorporated into CAP objectives (Esposti 2008), while the territorial implementation
of the principle is much more recent.3 Moreover, the distribution of agricultural spend-
ing (with reference to the first pillar) has been and is still linked to the old logic of price
support, due to the recourse made to the ‘historical model’ by many member states (since
328  Handbook on Cohesion policy in the EU

2005) for the calculation of decoupled direct payments: the higher the reliance on his-
torical model, the stronger the perpetuation of the pre-­existing distribution of financial
resources based on strictly sectoral criteria (Bureau and Mahè 2008). As a result of the
2013 CAP reform, the historical model will be completely abandoned in 2019 in favour
of a flat rate that will lead to homogeneous payments for all beneficiaries in the same
country or region. The same reform has introduced a ‘convergence mechanism’ that
will progressively reduce the existing disparities in terms of payment per hectare. This
should  – at least in principle and in the longer run – lead to a more equitable spatial
distribution of CAP spending.

Rural Development

The growing awareness of first-­pillar CAP’s potentially perverse redistributive effects

supported the idea that this distortion originates in the ‘disembedding of agriculture
from regional and local context’ (Gallent et al. 2008: 108), which accentuates the concen-
tration of the policy’s benefits upon a few major producers situated in more economically
dynamic rural areas. However, the vitality of rural areas cannot be determined exclu-
sively by the modernisation of its agriculture, calling for a response able to support the
growing diversification of economic activities with an increasingly territorial (Saraceno
2002) and place-­based (Copus and De Lima 2014) approach. This awareness has also
been enhanced with the recognition of a need for greater integration between the various
areas of Community policy, as acknowledged by the first reform of the Structural Funds
(European Commission 1988).4 This, therefore, is the context in which a series of innova-
tions have come to fruition, such as the coordinated and joint exploitation of Community
funds (ERDF, European Regional Development Fund; European Development Fund;
European Agricultural Guarantee Fund – Guidance; Financial Instrument for Fisheries
Guidance), multi-­year programming, and the concentration of measures upon prior-
ity objectives and additionality. Nevertheless, the territorial component has continued
to occupy a marginal position with respect to other policy objectives that have instead
emphasised the potential territorial synergies and intersectoral complementarity in rural
areas (Saraceno 2002). With the formulation of Agenda 2000 the need for the territo-
rial integration of agricultural policies became more apparent (European Commission
1997). And on this ground, the European Conference on rural development held in Cork
in 19965 confirmed that action was necessary on many issues: a further reinforcement
of rural development policy; the relevance of rural areas in the framework of Cohesion
Policy; the need for a multidisciplinary and multisectoral approach calibrated upon the
territorial dimension; and the concentration of resources. This phase inaugurated a more
systematic approach to rural development policies in an attempt to reinforce them and to
reorganise all the instruments within a ‘second pillar’ of the CAP.
Unfortunately, the mere juxtaposition of a set of highly heterogeneous measures under
the same policy in obedience to a political compromise has led to a fundamental ambigu-
ity in the policy objectives and the territorial approach was reduced to a cosmetic ‘label’
able to increase the political consensus on a set of intrinsically sectoral policy tools (De
Filippis and Storti 2002). In fact, Agenda 2000 introduced a two-­track rural development
programming system designed for Objective 1 regions and regions outside that objec-
tive. A single programming procedure through the Regional Development Programme
 Cohesion policy and rural development  ­329

was in place only in regions outside Objective 1. Conversely, Objective 1 regions lacked
a single source of financing, accentuating the detachment of structural measures from
the Guarantee section of the European Agricultural Guidance and Guarantee Fund
(EAGGF), with the latter being part of a separate programming procedure.
In the 2007–2003 programming period, the EAGGF Guidance section and part of the
specific resources of the EAGGF Guarantee section earmarked for rural development
were absorbed by a new fund for rural development, namely the European Agricultural
Fund for Rural Development (EAFRD) devoted to finance all rural development
measures. On the one hand, this decision is positive since it tends to better organise
the governance of rural development policies; on the other hand, it places the whole
CAP II Pillar outside the legal framework of Cohesion Policy. This new reorganisation
zeroed interrelations between rural development policy and Cohesion policy and con-
solidated the reform process within the framework of the CAP. Even if the regulation
no. 1698/2005 (Council of the European Union 2005: Article 5) lays down that Rural
Development Plans (RDPs) must be in line with the objectives of the other funds (such
as, for example, those for competitiveness and cohesion) and that their contribution to
the attainment of Community priorities should be evaluated (Esposti 2008): ‘the most
widespread concern is with the separation of the Rural Development component of the
European Agricultural Rural Development Fund (EAFRD) from the whole of cohesion
policy’ (Barca 2009: 162).

Cohesion Policy and Economic Performance in Less-­Developed Regions: No Axiomatic

Nexus

The Single European Act (1986) endowed Cohesion policy with its own legal basis and
assigned it the objective of reducing disparities between the European regions. As such
this policy is spatial in both its intention and its outcome, insofar as it is characterised by
a place-­based approach. However, its real contribution towards the cohesion process  –
that is, an effective capacity to address the factors of regional disadvantage (Crescenzi
2009) – can certainly not be taken for granted. This is due both to the significant distor-
tions in its institutional development and implementation, and to the difficulties in pro-
gramming and spending efficiently its financial resources.
As noted elsewhere in this volume (see Brunazzo, Chapter 1, this volume), Cohesion
policy’s turning point coincided with the accession to the European Community of
Denmark, the United Kingdom (UK) and Ireland. At that time the European Regional
Development Fund, which had been initially designed as a subsidiary and compensatory
source of financing for national policies, became a truly Community-­level policy. If the
accession of these three new countries (Ireland in particular), sharpened the degree of
existing disparities, the key political pressure for the establishment of the Community
Cohesion policy came from the UK, which put this issue at the centre of accession nego-
tiations with the EC:

In a Community whose budget was heavily skewed towards the support of continental agricul-
ture, the UK, with less than 2 per cent of its working population active in the primary sector,
considered the establishment of a Regional Fund as a way of recovering some of the payments
delivered to the EC budget. (Rodriguez-­Pose 2002: 44)
330  Handbook on Cohesion policy in the EU

In the 1980s, the accession of Greece, Spain and Portugal emphasised both Union-­
wide regional disparities and the demand for a more favourable redistribution of finan-
cial resources through the EU budget, since their agricultural specialisation patterns
prevented them from taking full advantage of the CAP. These new members of the Union
(together with Ireland) used their bargaining power to increase the expenditure in favour
of ‘poor regions’ and ‘offset the burden of the single market for southern countries and
other less favoured regions’.6 The increase in the resources for Cohesion Policy was justi-
fied as a compensation for the asymmetric distribution of the socio-­economic costs of
the process of integration that seemed to sharpen territorial disparities; this, in turn,
would have been a source of tension among member states (Armstrong 2001; Armstrong
and Taylor 2000; Bachtler and Wren 2006; Bachtler and Polverari 2007). Since then,
the growth (in absolute and relative terms) of structural spending has gone hand-­in-­
hand with a further integration of the EU and its subsequent enlargements, and with
the related needs of political and financial compensation, with special reference to the
heterogeneous capabilities of different countries to attract CAP subsidies. In the period
1994–1999, more than half of the Community population was situated in areas ear-
marked for support, despite the commitment towards a greater concentration of funds.
The Third Cohesion Report targeted concentration, programming and partnership as
the ‘key principles for improving the efficiency of structural spending, while emphasising
that “the evaluations” (of Cohesion Policy) suggested that Community resources were
often still allocated to an excessively high number of beneficiaries and in relative limited
amounts’ (European Commission 2004: 22).
This theme was also invoked for the 2007–2013 programming period in the debate
on cohesion, together with the idea of devolving Cohesion Policy measures towards
the regions and local communities (Wren 2005; Wren and Taylor 1999). The debate
centred upon the design of the reform, which primarily revised the priority objectives,
the financial instruments and the allocation of resources between the priority objectives
(European Commission 2013a).
As concerns the impact of the EU’s Cohesion policy on the objective of economic and
territorial cohesion, the empirical evidence is somewhat contradictory. A large part of the
existing studies – whether neoclassical in their approach (Boldrin and Canova 2001), or
inspired by the perspective of the ‘New Growth Theory’ (Magrini 1999), or adopting the
standpoint of the New Economic Geography (Martin 1999; Puga 2002) – highlight the
very limited or non-­existent impact of EU Cohesion policy on the convergence process,
and stress the fundamental distortion of market equilibria. Some more recent contribu-
tions adopt theoretical approaches capable of capturing the interaction of development
policies with a much wider range of territorial factors. These studies agree upon the
limited impact of the EU Cohesion policy on regional convergence and have proposed a
varied set of explanations for their findings. Midelfart-­Knarvic and Overman (2002), for
example, stress the distortions produced by Structural Funds on the localisation choices
made by companies with the highest innovative potential (in response to the incentives
offered by the localisation policies in ‘disadvantaged’ areas). These firms find themselves
situated in areas with an insufficient endowment of human capital, thus determining a
fundamental mismatch between the demand for and the supply of skilled labour. With
the same close attention to innovative dynamics but from a neo-­Schumpeterian view-
point, Cappellen et al. (2003) concluded (somewhat paradoxically) that the impact of
 Cohesion policy and rural development  ­331

Structural Funds essentially depended upon the receiving capacity of beneficiary regions,
and that this impact was greater in relatively less-­disadvantaged areas.
This result was confirmed from a neoclassical standpoint by Ederveen et al. (2006)
and in a geography of innovation perspective by Crescenzi (2005), Rodriguez-­Pose and
Crescenzi (2008) and Crescenzi and Rodriguez-­Pose (2011). However, Beugelsdijk and
Eijffinger (2005) reached diametrically opposing conclusions by examining the institu-
tional conditions of the recipient countries (rather than the single regions). Nonetheless,
Rodriguez-­Pose and Fratesi (2004) evaluated the impact of Structural Funds on the
convergence process by distinguishing the role played by the composition of spending
and showing how a priori distortions of the policies themselves can limit their effective-
ness. Conversely, Giua (2016) finds a positive impact of the EU structural funds on the
employment levels of Italian Objective 1 regions, suggesting that what matters is the iden-
tification of appropriate counterfactuals for the policy intervention. Crescenzi and Giua
(2016) conclude that the EU Cohesion policy has a positive and significant influence
on economic growth in all European regions. This impact is stronger in the most socio-­
economically advanced areas and is maximised when the Cohesion policy expenditure
is complemented by the Rural Development and CAP funds. Mohl and Hagen (2010)
reviewed at least 15 other quantitative studies, which with similar approaches to those
discussed above reached altogether conflicting conclusions on the impact of the EU
Cohesion policy.
The analysis of the institutional development of the EU Cohesion Policy, as also of its
ex post impact, clearly demonstrates that the compatibility of place-­based interventions
with territorial cohesion cannot be taken for granted (Copus and Lima 2014). In this
context it is particularly important to take into account the manner and extent to which
changes in the composition of overall Community spending, from sectoral interventions
in favour of explicitly place-­based policies, contribute towards cohesion processes.

THE DISTRIBUTION OF EU FUNDING FOR THE VARIOUS

POLICIES

As discussed earlier, the compatibility of the three areas of Community policy with the
general objective of economic, social and territorial cohesion is of increasing importance
for Community policy-­makers. However – as discussed above – there is very limited
understanding of the practical interactions between these different policy areas ‘on the
ground’. Following the methodology developed by Crescenzi et al. (2015), it is possible
to analyse the distribution of Community resources among the European regions for EU
Cohesion, rural development and agricultural policies, in order to evaluate the strength
of the association of these policies at the regional level and its evolution over time in
response to the various reforms discussed in this chapter.
Table 20.1 sets out the analysis of the simple correlations (and of their statistical sig-
nificance) between per capita expenditure at a regional level for, respectively, Cohesion
policy rural development and first-­pillar CAP in the three programming periods consid-
ered (1994–1999, 2000–2006, 2007–2013). If we observe the correlation between expendi-
ture allocations for the same policy in successive programming periods we can evaluate
the level of persistence over time of the policy itself in the distribution of its resources at
332  Handbook on Cohesion policy in the EU

a territorial level. The analysis of persistence in regional expenditure allocations enables

us to make a first evaluation of the territorial impact of the reforms that succeeded one
another over time in the various Community policy frameworks. Both Cohesion policy
and first-­pillar CAP exhibit a high level of persistence in the regional allocation of funds
between programming periods: for Cohesion Policy a 97 per cent correlation was found
between the programming period 1994–1999 and that of 2000–2006, and a 92.5 per cent
correlation between the 2000–2006 and 2007–2013 programming periods; as regards the
regionalised spending of first-­pillar CAP the correlation was, respectively, 94 and 93
per cent, a clear sign of the ongoing link between present-­day agricultural policy and the
‘old’ one, based on a ‘coupled support model’:7 as seen in the section on first-­pillar CAP
above, this is true in terms of regional distribution as well as final beneficiaries, and even
with new intervention instruments (decoupled payments) that are clearly less distortive
than in the past. As regards rural development policies it is possible to observe a relatively
higher level of dynamism over time, as indicated by the correlations between successive
periods of, respectively, 64 per cent between 1994–1999 and 2000–2006; and 80 per cent
between 2000–2006 and 2007–2013. In this trend the impact of Agenda 2000 seems
to be well established, although in a contradictory nature: on the one hand, it had the
merit of introducing a more organic rural development policy; on the other hand, it was
responsible for its dilution by suppressing rural zones as areas of specific intervention,
and including within a single container tools of differentiated nature with a strong bias
in favour of sectoral measures.
By referring to Table 20.1 one can also evaluate the level of correlation between the
various policy areas in the same programming period as well as its evolution over time,
so as to evaluate the degree of complementarity or substitutability. In this context a sig-
nificant reduction in the correlation of regional-­level spending between Cohesion Policy
and rural development is immediately evident: from 80 per cent in 1994–1999, it falls to 59
per cent in the 2000–2006 and to 50 per cent in the 2007–2013, thus suggesting that these
two policy areas are progressively moving apart. As mentioned before, it seems that the
origin of this process can be found in Agenda 2000, and that it has been reinforced during
the last programming period, probably on account of the abandonment of the integrated
programming approach. The association with other policy areas is inferior in relative
terms, but substantially stable over time. Therefore the differential persistence over time
of the various policies can be associated with an evolution in their reciprocal relations in
response to successive reform processes.
In conclusion, the analysis of the correlation between regional allocations for the same
policy in successive programming periods and between different policies in the same time
period has brought to light a complex equilibrium between persistence and compensation
in the relations between the various areas of Community policy.

CONCLUSIONS

The analysis of EU documents exhibits a growing emphasis upon coordination between

policies. However, the analysis of the impact that successive adjustments to the
Community budget and the macro-­processes of reform have had upon the regional
structure of expenditure demonstrate that if, on the one hand, various policy areas show
 Table 20.1  Correlation analysis: per capita expenditure for regional policy, rural development and PAC 1st Pillar

Regional Regional Regional Rural Rural Rural PAC 1st PAC 1st PAC 1st
policy policy policy development development development Pillar Pillar Pillar
1994–1999 2000–2006 2007–2013 1994–1999 2000–2006 2007–2013 1994–1999 2000–2006 2007–2013
Regional policy 1
 1994–1999 (per
capita expenditure)
Regional policy 0.9680* 1
 2000–2006 (per (0.000)
capita expenditure)
Regional policy 0.8961* 0.9250* 1
 2007–2013 (per (0.000) (0.000)
capita expenditure)
Rural development 0.8090* 0.7884* 0.7464* 1
 1994–1999 (per (0.000) (0.000) (0.000)
capita expenditure)

333
Rural development 0.5553* 0.5946* 0.5645* 0.6377* 1
 2000–2006 (per (0.000) (0.000) (0.000) (0.000)
capita expenditure)
Rural development 0.4498* 0.4909* 0.4982* 0.5626* 0.7998* 1
 2007–2013 (per (0.000) (0.000) (0.000) (0.000) (0.000)
capita expenditure)
PAC 1st Pillar 1994– 0.4126* 0.4475* 0.4156* 0.4755* 0.3699* 0.3390* 1
 1999 (total regional (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
payment pc)
PAC 1st Pillar 2000– 0.3897* 0.4315* 0.4110* 0.4760* 0.4545* 0.4961* 0.9374* 1
 2006 (total regional (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
payment pc)
PAC 1st Pillar 2007– 0.3869* 0.4126* 0.3800* 0.4687* 0.4152* 0.4155* 0.8498* 0.9347* 1
 2013 (total regional (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
payment pc)

Source:  Adapted from Crescenzi et al. (2015).

334  Handbook on Cohesion policy in the EU

significant interrelations, on the other, the synergies between policies remain relatively
limited and reveal a trend that is not always in line with the declared objectives of the
reforms undertaken. Successive reforms carried out in all policy areas and the realloca-
tion of resources between policies within the Community budget have produced ambigu-
ous impacts on the level of territorial coordination between the policies.
As regards the composition of Community spending, it is necessary to increase the
coordination between the various contexts of Community policy by leveraging the syner-
gies and reciprocal functions that may be forthcoming from a coherent and integrated
use of resources. Yet it is also clear that neither coordination with Cohesion policy nor
the shifting of resources from one policy area to another are ‘virtuous’ in themselves
as regards economic, social and territorial cohesion. All areas of Community policy –
including Cohesion policy – have their light and dark sides in terms of how they target
resources on structural disadvantage: the capacity to make a positive contribution to
territorial cohesion depends crucially upon the policies actually implemented ‘on the
ground’ within the single policy areas and upon the respective allocation mechanisms.
The first-­pillar CAP is a key example. This policy still accounts for a significant com-
ponent of the Community budget (about one-­third), and its spending is not constrained
by factors of structural disadvantage, thereby allowing it to retain a fundamentally
sectoral approach, despite the growing emphasis by policy-­makers on the need that this
policy adopt a regional vision. Its possible anti-­Cohesion side-­effects can only be justi-
fied for quintessentially sectoral objectives (for example, the conservation of agricultural
land, food quality, food security) of the policy, which would suggest the need for them to
be carefully evaluated. In this sense, therefore, from the viewpoint of compatibility with
territorial cohesion processes, the trend in the budget composition with its progressive
movement towards the second pillar may, potentially, be virtuous in terms of the objec-
tive of promoting economic cohesion. This, though, is largely dependent upon the capac-
ity of these policies to remain focused in thematic and spatial terms, especially by learning
from the experience of Cohesion policy, but without replicating their defects.
As far as rural development policies are concerned, incorporating them in a more
complex framework of Cohesion policy – along the lines of the Barca Report proposal  –
would not by itself constitute a guarantee of greater orientation towards cohesion.
Indeed, the progressive increase in the resources earmarked for rural development has not
produced benefits in terms of spending structure but rather seems to have led to a partial
dilution in the interventions over time (Crescenzi et al. 2015). Conversely, the progressive
reform of the ‘traditional’ top-­down first-­pillar CAP might well achieve pro-­cohesion
objectives.
A relevant example in this regard is the possibility – introduced by the 2013 CAP
Reform – to earmark (part of) the direct payment to less-­developed areas or specific cate-
gories of beneficiaries (for example, young farmers). This mechanism has introduced the
possibility to use a traditionally top-­down and spatially blind policy tool (direct payment)
in order to pursue objectives of territorial and social cohesion. Based on preliminary
information on the decisions of individual member states, the use of these ‘correction’
mechanisms has remained limited (Benos et al. 2015). However, their inclusion in the
CAP toolkit remains a very relevant policy innovation in the slow-­paced evolutionary
trajectory of the CAP. If this particular form of targeting will in practice result in a more
spatially and socially cohesive redistribution of the CAP funds remains an empirical
 Cohesion policy and rural development  ­335

question (and on the agenda of the present authors for future research). However, at least
in principle, the gradual reform of existing top-­down policies might be a more politically
viable and effective approach when compared to their conversion into completely differ-
ent forms of intervention. The capability of CAP funds to work pro-­cohesion crucially
depends – among other things – on the political commitment of individual member states
to go in this direction. For example many Central and Eastern EU countries have shown
very limited attention to ‘pro-­cohesion’ correction mechanisms, shifting resources from
Rural Development into CAP First Pillar in order to maximise their own spending capac-
ity, since top-­down interventions ensure higher absorption rates in terms of financial
resources.
In conclusion, a bottom-­up approach is not necessarily a panacea to maximise ter-
ritorial cohesion. Well-­targeted top-­down interventions might be needed in combination
with bottom-­up policies in order to mitigate some of the drawbacks of the latter. Bottom
up policies – as rural development experimentation has made apparent – show systematic
problems of absorption of financial resources in particular in less developed areas where
weak institutions make policy design and practical implementation difficult and prone to
rent-­seeking behaviour. In addition, in weak areas, the coordination of different policies
‘on the ground’ might prove especially problematic due to limited administrative capac-
ity. Sophisticated and highly selective place-­based policies might prove unable to attract
resources to the most deprived areas, jeopardising their potential benefits in all other
regions.
The capability of all EU policies to work in favour of the objective of territorial cohe-
sion cannot be achieved by simply shifting resources from one policy area to another.
Different approaches to policy design and implementation may need to co-­exist in
order to effectively earmark resources to boost economic development in less developed
regions.

NOTES

* Part of the material included in this chapter is based on R. Crescenzi, F. De Filippis and F. Pierangeli, ‘In
tandem for cohesion? Synergies and conflicts between regional and agricultural policies of the European
Union’, Regional Studies, 49 (4), 2015, by permission of Taylor & Francis Ltd, http://www.tandfonline.
com. The authors are grateful to Simona Piattoni and Laura Polverari for their useful comments. All errors
and omissions are our own.
1. In this document the CAP was given the objective to deliver ‘a territorially and environmentally balanced
EU agriculture within an open economic environment’ (European Commission 2010b: 4). The recently
approved CAP reform remains a compromise between the ‘traditional’ sectoral focus of this policy and
its ‘new’ rationale based on the support for public goods generated by agricultural activities (for example,
environmental or land protection) (European Commission 2013b). Notwithstanding the hybrid nature of
its objectives, the CAP 2014–2020 has further reinforced its territorial and environmental scope.
2. The EU competition policy has special provisions for state aids in less-­developed regions. These special
arrangements are justified by the objective of favouring the development of a level playing field in the
common market. Therefore, even a priori spatially blind policies are often integrated with spatially targeted
components.
3. The territorial cohesion objective was formally introduced into the CAP with the Green Paper on Territorial
Cohesion: Turning Territorial Diversity into Strength (European Commission 2008).
4. 1988 was an important year: it determined the foundations for both regional policy and rural development
policy, which will guide both action and Community interventions in successive programming periods.
5. The Cork Declaration, http://ec.europa.eu/agriculture/rur/leader2/dossier_p/en/dossier/cork.pdf.
6. European Commission website, http://europa.eu.int/comm/regional_policy/intro/regions2_en.htm.
336  Handbook on Cohesion policy in the EU

7. The traditional model of agricultural support was ‘coupled’ in the sense that farmers received a direct
payment only if they produced the specific product to which the direct payment was associated. It meant
that the profitability of producing a certain product (for example cereals, beef meat) did not depend only
on the price at which the farmer could sell the product on the market, but also on the amount of the direct
payment that was associated with that particular product. The 2003 Fischler reform decoupled many direct
payments from production, moving the agricultural sector more towards the free market and giving farmers
greater freedom to produce according to market demand. The 2003 reform permitted member states to con-
tinue to couple a small number of direct payments to production, and this possibility was maintained in the
2013 reform. In some sense, this possibility is related to a cohesion objective, since its rationale is to support
the continued production of particular products so as to avoid land falling out of farming in vulnerable
regions.

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21.  Cohesion policy and transportation
J. Andres Faiña, Jesús López-­Rodríguez and
Paulino Montes-­Solla*

INTRODUCTION

This chapter discusses infrastructural investment policy in the European Union (EU),
both under the rubric of Cohesion policy and under that of EU transportation policy
and, in particular, of investment in Trans-­European Transport Network (TEN-­T) infra-
structure. Investment projects in transportation and public infrastructure (telecommuni-
cations, energy, water, sanitation, and so on) play an important role in European regional
development policy, so much so that they have been mostly financed by the European
Regional Development Fund (ERDF) and the Cohesion Fund (CF). Unfortunately,
there is no conventional wisdom regarding transport infrastructure and regional develop-
ment, nor is there a clear theory to ascertain how much infrastructure helps a region’s
development chances. The focus of this chapter is therefore on the main conceptual
tools for designing and evaluating, usually on a region-­by-­region basis, the right mix of
infrastructure and other development goals in the current state of regional development
theory and policy in the EU.
In the wake of the EU enlargment to the less-­developed Southern European ­countries
(Greece, Spain and Portugal), the Single European Act (1986) predisposed an invest-
ment policy aimed at reducing regional disparities and encouraging growth in the
less-­developed areas. In 1993, upon completion of the European internal market, the
Cohesion Fund was created as a new instrument of Cohesion policy to support invest-
ments in large infrastructure projects in the fields of environment and transport. Praised
by some and criticised by others, investment in infrastructure and transportation projects
has taken up a shrinking share of the total financial endowment of Cohesion policy, yet
it still maintains considerable importance in the less-­developed regions and has recently
been reinforced by the new focus on TEN-­T.

COHESION POLICY AND TRANSPORT INFRASTRUCTURE

NETWORKS

Cohesion policy is the most important framework for solving the problem of insufficient
infrastructure in the less-­developed countries, most of which are situated in the southern
periphery of Europe. Given the fairly peripheral and isolated situation of Spain, Portugal
and Greece, investment in transport infrastructure could initially be carried out without
worrying too much about connecting these member states’ infrastructure with that of the
other member states. However, the unification of the European internal market and the
enlargement to Central and Eastern European countries (CEECs) reinforced the need for

339
340  Handbook on Cohesion policy in the EU

a common transport policy and firmly placed TEN-­T among the top policy priorities
aimed at connecting European territories with one another.
Since 1989, Cohesion policy has developed into one of the main priorities of the
European budget, doubling its resources in real terms and turning this policy into the
main spending item (see Brunazzo, Chapter 1, this volume). The resources currently
dedicated to Cohesion policy appear to have decreased slightly (from €347 billion in
2007–2013 to €325 billion in 2014–2020),1 stabilising at around 34 per cent of total
funding in the 2014–2020 Multiannual Financial Framework (MFF). This funding
is channelled through the so-­called European Structural and Investment Funds (ESIF).
The European Regional Development Fund (representing 56 per cent of the total) and
the Cohesion Fund (reaching 19 per cent) are responsible for financing infrastructure
investments, the latter being entirely devoted to Trans-­European Network (TEN) and
environmental infrastructure. Finally, the European Social Fund (ESF) focuses on
employment and social inclusion and represents around 25 per cent of ESIF funding.
In 2014–2020, Cohesion policy, financed under heading 1b in the MFF (economic,
social and territorial cohesion), will channel the largest part of EU investment towards
supporting small and medium-­ sized enterprises (SMEs), research, development and
innovation (RDI), education, employment and social inclusion, the environment and the
low carbon economy, as well as towards developing infrastructure networks (transport,
energy and digital connections).
Table 21.1 shows the key priorities supported by ESIF according to the information
available at the time the Sixth Report on Social and Economic Cohesion Policy was
issued, that is, after the Commission received all 28 Partnership Agreements (PAs) and
around 150 operational programmes (OPs). Information and communication technol-
ogy (ITC), RDI and SMEs received the greatest financial boost, together with the shift
to the low-­carbon economy. Overall, resources devoted to these priorities increased by
more  than 21 per cent vis-­à-­vis the previous 2007–2013 period, with the largest share
of the funds coming from the ERDF and the Cohesion Fund. In contrast, funding for
transport and energy network infrastructure suffered a 21 per cent cut compared to to the
previous period. This implies a significant shift of funding priorities in Cohesion policy,
which the European Commission (EC) assessed as ‘encouraging’ in accordance with the
new EU aim to increase competitiveness and enhance growth capabilities.
The 2014–2020 Multiannual Financial Framework thus increases EU investment in
RDI within Cohesion policy (heading 1b, MFF), and it also augments by 30 per cent
the funding for Horizon 2020 within the European RDI policy (heading 1a, MFF).
However, common transport policy, and in particular Trans-­European Networks, also
receives a boost, with the new Connecting Europe Facility (CEF) tripling the budget for
infrastructure investment (mostly in transport, TEN-­T) to €26 billion. Table 21.1 shows
the breakdown of this funding, with €11.3 billion under heading 1a in the MFF (com-
petitiveness for growth and jobs) and €15 billion under heading 1b in MFF (Cohesion
policy).
Overall, investment in non-­ environmental infrastructure networks (mainly trans-
port) represents more than 21 per cent of Cohesion policy resources, equivalent to
6.9 per cent of total EU Budget for 2014–2020, with 5.5 per cent corresponding to
­investments financed through the ERDF and CF under Cohesion policy and the remain-
ing 1.4  per  cent under common transport policy allocations in the MFF. The funding
 Cohesion policy and transportation  ­341

Table 21.1 Key priorities and funding in Cohesion policy and Trans-­European Networks
for the 2014–2020 period

Economic, social and territorial cohesion. Heading 1a, MFF

Key priorities in Operational € billion % Cohesion % EU % increase

Programmes of Cohesion policy policy MFF 2007–2013
Research and innovation, digital 100.0 28.4 9.2 21
 agenda, support for SMEs plus low-­
carbon economy policy
Research and innovation, digital 73.3 20.8 6.8 –
  agenda and support for SMEs
Shift to a low-­carbon economy 26.7 7.6 2.5 –
 (energy efficiency and renewable
energies).
Transport and energy 59.0 16.8 5.5 −21
  network infrastructure
Total 159.0 45.2 14.7

Connecting Europe Facility and Trans-­European Network (TEN)

Total funding breakdown by € billion % Cohesion % EU % increase

headings of EU MFF policy MFF 2007–2013
Trans-­European Networks 26.3 – 2.4 300
Heading 1a, MFF: Competitiveness 15.0 – 1.4 –
  for growth and jobs
Heading 1b, MFF: Economic, 11.3 3.2 1.0 –
  social and territorial cohesion

Note: MFF 5 Multiannual Financial Framework; CEF 5 Connecting Europe Facility.

Source:  European Commission (2014).

assigned to the CEF is intended to serve as seed capital to support up to five times as
much investment by member states and induce large investment from private companies
(by 20 times more, if leverage from innovative financial instruments functions properly).
Commercial and interregional traffic which uses the road network has positive effects on
private sector productivity, thus justifying the raising of private capital to enhance infra-
structure investment (Alvarez and Blazquez 2014).
Table 21.2 provides the breakdown of Cohesion policy funding by broad policy area
in the EU15 and EU13. Cohesion policy spending in infrastructure (transport, energy,
telecommunications and social infrastructure) has consistently concentrated in the
less-­developed regions, although it declined during subsequent programming periods.
With the 2004–2007 enlargement round, CEECs represented the largest area of less-­
developed regions, with the highest priority given to investment in non-­environmental
infrastructures.
In general, the share of funds allocated to non-­environmental infrastructure in the less-­
developed EU15, mainly going towards transport networks, amounted to 36 per cent in
 Table 21.2  Cohesion policy funding by broad policy area in EU15 and acceding countries

Cohesion policy funding by broad policy area, EU15, 1989–2013

% of total Less-­developed regions and Cohesion Fund Other regions

89–93 94–99 00–06 07–13 89–93 94–99 00–06 07–13

Business support (including RTDI) 31.5 33.0 28.0 34.4 48.1 31.1 29.2 33.8
Infrastructure (transport, energy, telecom, 36.3 26.1 30.9 23.2 5.2 1.5 13.4 13.2
  social infrastructure)
Human capital (labour market, education, 20.6 24.7 24.5 22.3 39.0 56.8 45.8 34.6
  social inclusion, etc.)
Environment 1.6 14.3 14.0 15.4 7.6 9.8 8.6 14.2
Other 9.7 1.9 0.8 0.4 0.0 0.8 1.1 0.3
Technical assistance 0.4 0.0 1.8 4.3 0.0 0.0 1.8 3.8
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

342
Cohesion policy funding by broad policy area in acceding countries, 2004–2013

% of total EU10 EU12

2004–2006 2007–2013
Business support (including RTDI) 14.2 25.6
Infrastructure (transport, energy, telecom, social infrastructure) 41.5 36.1
Human capital (labour market, education, social inclusion, etc.) 14.8 12.5
Environment 27.3 20.8
Other 0.1 0.0
Technical assistance 2.1 5.0
Total 100.0 100.0

Note: RTDI 5 research, technological development and innovation.

Source:  European Commission (2014: 206–207). Based on Structural Funds Annual Reports and Directorate-­General for Regional and Urban Policy (DG
REGIO) calculations.
 Cohesion policy and transportation  ­343

the 1989–1993 period, falling to 23 per cent (25.6 per cent in acceding countries) during
the 2007–2013 period as transport networks were gradually built.

GROWTH AND DEVELOPMENT SYNERGIES

Regional Operational Programmes (ROPs) in Objective 1/Convergence regions typically

include an assessment of the internal coherence of the development strategy by ana-
lysing the interrelationships between their different goals. This analysis of synergies is
represented in a simple way in Box 21.1: the rows in the table show the influence of each
goal on the others – a plus denoting a significant push effect – and the columns show the
pull effect that each goal receives from the others (sensitivity). The margins of the table
provide indices of influence and sensitivity of different development goals (computed as
the share of positive relationships over the total without considering the relationship of
each goal with itself).
Positive interactions between the push and pull effects of the different goals give rise,
through a mutually reinforcing process of circular causality, to a sustained increase in the
rate of growth. Consequently, those goals which simultaneously possess high influence
and high sensitivity constitute the core of a region development strategy. This is the case
with the core growth goals of RDI, ICT, SME support, and education and human capital
(EHC) support.
Investments to bridge the infrastructure gap are highly influential on the strategic
core of growth drivers (RDI, SMEs, ICT and EHC) and effectively promote growth and
development by unleashing interactions among those other growth drivers. However,
infrastructure is not sensitive to the pull effect of improved RDI, ICT or EHC and this
limits its role as a factor of growth. Investment in infrastructure can choke development
when it is insufficient, but does not spontaneously keep up with investment or develop-
ment in other areas.
In a world of rapid change and technological evolution, the level of ‘adequate
endowment’ of infrastructure should be redefined almost continuously not only
because it is highly influential on core development goals, but also because investment
decisions on RDI, ICT and EHC are taken by forward-­looking agents. Entrepreneurs
and workers must have coherent expectations in order to simultaneously invest in tech-
nological and human capital at large enough rates to keep up the growth momentum.
Improved infrastructure endowments increase market accessibility and in this way
influence the formation of expectations regarding the profitability of investment in
RDI and EHC.

COHESION POLICY AND GROWTH MODELS

From a political point of view, the structural support provided by the new Cohesion
policy was part of an implicit agreement to overcome the fear that less-­competitive
regions would suffer adverse economic effects due to the intense competition from the
more-­developed areas once all trade barriers were removed from the single European
market. From an economic point of view, drawing from the original Solow (1956) model,
344  Handbook on Cohesion policy in the EU

BOX 21.1 INFLUENCE AND SENSIBILITY: CIRCULAR CAUSATION AND

LEVERAGE EFFECT

Influence 1 2 3 4 5 Total
Sensibility influence (Kij)

D1: RDI 1 1 1 o 0.6

D2. ICT 1 1 1 o 0.6
D3. SME support 1 1 1 o 0.6
D4. HC: education and human 1 1 1 o 0.6
capital
D5. Network infrastructure 1 1 1 1 0.8
(transport, energy, telecom)
Total sensitivity (kji) 0.8 0.8 0.8 0 0.8

Note:

Circular causation: An increase in the endowment of a growth factor Di

D Di  Kij * D Di 5 D Di
2 2 2 (RDI, SME support, ICT, RDI, EHC) positively influ-
ences other factors (push effect), and in turn these
positively influence the former (sensitivity), pulling it
DDi  Kii *DDi 5 DDi (pull effect) and generating a new effect of the second
Di Dj order.

DDi 5 Kii *DDi

D2Di 5 Kij * D2 Di

Leverage effect of increasing a growth factor DJ:

D Di
1
 D Dj 5 Kij · D1Di  D2Di 5 Kji · D1Dj 5 Kij · Kji · D1Di
1

D2Di 5 Kij · Kji · D1Di  D2Dj 5 Kji · D2Di  Δ3Di 5 K2ij · Kji ·D1Di

D3Di 5 K2ij · Kji · D1Di
. . .
DtDi 5 Kt−1ij · Kji · D1Di

Leverage effect produced by circular causality: Kji

1 −Ki

different types of growth models were put forward, providing explanations of the role
played by different growth drivers and producing empirical evidence on them.
Solow’s model is based on a ‘production function’ which links gross domestic product
(GDP) growth to the supply of production factors (labour and capital), together with a
technological factor of productive efficiency, known as total factor productivity (TFP).
Solow proved empirically that labour and capital inputs do not completely explain GDP
growth and that a part of it (the so-­called Solow residual) must be attributed to techno-
logical progress.
Current models incorporate other key factors of endogenous growth such as
­technological progress and RDI (Romer 1986, 1990) and human capital (years of educa-
 Cohesion policy and transportation  ­345

tion and skills of the workforce) (Lucas 1988). Early econometric analysis based on this
‘extended Solow model’ found that RDI significantly boosts growth (Lichtenberg 1992;
Coe and Helpman 1993), whereas evidence also supported the importance of human
capital as a growth driver (Mankiw et al. 1992; Barro 1991).
Schumpeterian growth models grounded in innovation economics also highlighted the
continuous extension of ‘quality ladders’ and ‘product spaces’ (Grossman and Helpman
1991; Aghion and Howitt 1992, 2005), pointing out that high growth performance stems
from constant investment in new products and productive technologies fuelled by high
rates of return. Redding (1996) integrated both strands of endogenous growth theory
grounded on RDI investment and human capital accumulation and on the Schumpeterian
innovation process as the main sources of the ‘growth engine’. He produced a formal
model of endogenous growth focusing on the synergies between human capital and RDI
investments, as well as capturing the interplay between workers who invest in human
capital (developing skills) and firms which invest in quality-­augmenting RDI.
These self-­reinforcing dynamics of human capital and RDI investments give rise to
multiple growth equilibria which can be interpreted as the ‘high-­skills/high-­quality’ and
‘low-­skills/low-­quality’ positions described in empirical work and also referred to as a
‘mosaic of positions relative to the technological/quality ladder hierarchy’ (Farole et al.
2013).
The economy of a region can be trapped in a disadvantageous equilibrium of low-­
skills/low-­quality falling into low-­competitiveness/low-­growth dynamic (that is, stag-
nation or even decline). Which equilibrium is selected depends entirely upon agents’
expectations, and a potential role emerges for government policy and development insti-
tutions in designing appropriate policy measures to coordinate expectations and drive the
economy out of the low competitiveness/low-­growth trap. In Redding’s words: ‘introduc-
ing strategic complementarities and indivisibilities in investments allows multiple equilib-
riums to arise, which themselves may provide an additional explanation for differing rates
of economic growth’ (Redding 1996: 469).
This approach to equilibrium selection provides new insights into development policy.
Subsidies improving human capital accumulation and RDI investment stemming from
companies, together with improved transport infrastructure and accessibility, may induce
the right expectations in workers and companies and increase simultaneously investment
in RDI and in human capital which can project a region onto a self-­reinforcing positive
growth path.

SPATIAL STRUCTURE, MARKET POTENTIAL,

AGGLOMERATION ECONOMIES AND URBAN HIERARCHIES

In the first half of the twentieth century, an analogy with the physical laws of gravity was
used to explain the progressive decline of the demand for a product as determined by the
inverse of the distance from the place of production (Reilly 1931). This paved the way to
the drawing up of the concepts of market and population potentials. Market potential
is an index, which for any particular location, i, is defined as a weighting measure of the
influence a whole set of locations, j (economic activities), exerts over i. Usually weighting
schemes are proxied by the inverse of the distance between location i and the different
346  Handbook on Cohesion policy in the EU

j locations, meaning that distant locations exert less influence than nearer ones. Market
potential maps (Harris 1954; Keeble et al. 1982) are a useful way of summarising the vast
amount of information regarding population settlements and market activities by using
simple tools, such as ‘peaks and valleys’ of population and economic potential, which are
useful in territorial planning and in the development of infrastructure networks.
Despite its practical use, the classic concept of market potential put forward by
Harris was criticised for not taking into sufficient consideration the economic deci-
sions, and the usual forces of supply and demand, which operate in the market. The
spatial structure of the EU is characterised by a centre–periphery pattern, where the
population and economic activities concentrate in the central regions (London, Paris,
Ruhr), with a progressive reduction in market potential in the periphery caused by
the regional degree of accessibility to markets. The most central areas in the EU (see
Figure 21.1) extend over 20 per cent of the EU surface area, but metropolitan regions
host 59 per cent of the EU population, offer 62 per cent of all jobs, and produce 67 per
cent of the Union’s GDP.
The tendency towards the concentration of economic activities has been known for
decades, and urban type processes such as the clustering of particular industries or
sectors within cities and/or across regions take advantage of ‘agglomeration economies’
and other specific types of externalities (Marshall–Arrow–Romer and Jacobs externali-
ties). Other specific agglomeration advantages, such as the presence of industrial districts
or firm clusters, affect sectors or industries.
The three large sources of urban agglomeration economies, which drive the produc-
tivity and growth of cities, are essentially the ‘Marshallian trinity’ (after the economist
Alfred Marshall; see Marshall 1920): (1) knowledge spillovers, a technological externality
spreading skills, knowledge and know-­how; (2) large labour and skills markets, allowing
efficient matching between firms’ needs and workers’ skills; and (3) economies of scale,
which are external to the firm but internal to the industry, stemming from indivisibilities
and scale economies by sharing large cost inputs (transport and social infrastructures and
others) among a great number of users. In conclusion, agglomerations, and particularly
the size of the market, offer ample advantages for the qualification of employees and the
strengthening of human capital in productive activities, as well as for firms’ investments
in RDI and high-­quality products.

NEW ECONOMIC GEOGRAPHY AND SPATIAL STRUCTURE

TRENDS

The New Economic Geography (NEG) (Krugman, 1991, 1992; Fujita and Thisse 1996)
focuses on the cumulative mechanisms (circular causation) which result from product
differentiation and economies of scale in production (increasing returns). It is mainly
applied to ‘monetary economies’, in which signals are transmitted through the price
system. Technological and knowledge externalities are more difficult to model but this
does not mean that they are less important in practice. The introduction of differenti-
ated products and increasing returns in general spatial equilibrium models, despite the
difficulty of modelling them, make New Economic Geography an important progress,
which enables the analysis of the spatial distribution of economic activities within
 Spatial structure of EU Spatial structure at EU NUTS 2

Thousands of
inhabitants per Km.

105.291 – 122.197
122.198 – 205.638
205.639 – 289.079
289.080 – 372.520
372.521 – 455.960
455.961 – 539.401
539.402 – 622.842
622.843 – 706.283
706.284 – 9.029.483

347
N
Meters W E
0 237.395 474.790 949.580
S

Source:  Faíña and Lopez-­Rodriguez (2006). Source:  ESPON (2009) map.

Figure 21.1  Central regions at EU NUTS 2 level

348  Handbook on Cohesion policy in the EU

Demand
Demand from distant location is
discounted by the inverse of the
distance

Y km
1/d

1/d

1/d
1/d

X km

Source:  Own elaboration based on the concept of demand cones (Lösch 1940).

Figure 21.2  Demand cones and market areas: the decline of demand with distance

the c­onceptual framework of supply and demand in the market economy (see Begg,
Chapter 3, this volume).
The physical analogy used to explain the decrease of demand from distant locations
(Reilly 1931) can be translated into market-­behavioural terms by considering distance
as a cost which puts a brake on demand. The concept of ‘demand cones’ (Lösch 1940),
shown in Figure 21.2, allows both the computation of market potentials (the volume of
the demand cones) and the definition of the average operational radius of market areas
(the distance which makes demand from distant locations almost negligible).
The NEG can be also thought as a conceptual framework for determining the average
operational radius of market areas and the market access of different regions. The NEG
is based on a trade-­off between the forces that lead to the concentration of economic
activity, which are encouraged by product differentiation (quality-­based competitiveness)
and increasing returns (economies of scale) in large central areas and are facilitated by
low transport cost; and the forces of dispersion, which originate from product homoge-
neity (price or low-­cost competitiveness) and high transport costs.
Low transportation costs allow quality-­ differentiated products from large central
areas to reach distant regions at affordable prices. Increased demand from distant loca-
tions reinforces economies of scale and further reductions in unitary production costs in
large central areas and, in that way, generates ‘backward linkages’ in a circular causation
process feeding growth and GDP concentration in large central areas.
The building of the single market and the elimination of border barriers, as well as the
technological improvement of transport, reduced transport costs. The initial concern that
a strong concentration of productive activities would be strengthened by the creation of
the single market does not seem to have been confirmed. There is a clear centre–­periphery
pattern in the European spatial structure, but a concentration as strong as that which
 Cohesion policy and transportation  ­349

was expected as a result of transport cost reduction, technological improvement and

economic integration has not yet manifested itself, except for the better performance of
large cities and metropolitan areas.
There is a significant asymmetry in the predictive value of NEG models (Head and
Mayer 2004) as regards spatial dynamics and income disparities. NEG predictions on
spatial dynamics (through computer simulations) point to instability and breaking points
which do not fit with the stability of spatial patterns and urban hierarchy exhibited by
empirical data. On the contrary, whenever a centre–periphery spatial structure exists,
inequalities in salaries and income between central and peripheral areas fit well with
available evidence and can be explained by market access differentiation (the so-­called
nominal wage equation). However, this relationship is not deterministic and there are
notable exceptions, as in the case of Scandinavian countries which have been able to over-
come to a large extent the main handicaps of peripheral areas. In sum, the NGE provides
an explanation for the distribution and concentration of economic activity in space and
offers a framework of analysis suitable for application to the study and evaluation of
many different situations which require specific combinations of policy measures.

TRANSPORT INFRASTRUCTURE AND ACCESSIBILITY

Transport infrastructure reduces the problem of distance by improving accessibility both

to the market in general and to networks connecting peripheries to the centres of eco-
nomic activities. Hansen (1959) and Weibull (1976) modelled the concept of ­‘accessibility’
in the middle of the twentieth century. Accessibility is defined as opportunities of poten-
tial access from a place by means of a monetary cost and travel time.
In the last decades, accessibility has been the central concept of numerous studies in
the area of transport infrastructure. Accessibility is a useful tool both for the planning
of the economic development strategy in the long term and to explain good practices
of regional and urban development (Geurs et al. 2012). Several studies relate territorial
accessibility to job markets, and from this point of view studies regarding accessibility
and company location are of key importance (Reggiani et al. 2011).
Recent studies tackle the theme of accessibility in the European area according to
different types of infrastructure. On the one hand, the impact of the urban population’s
access to high-­speed rail and to the road network within a given travel time in Spain was
studied using a methodology of network analysis in a geographic information system
(GIS) environment (Monzón et al. 2013). On the other hand, accessibility was studied in
Germany (Bentlage et al. 2013) by analysing the opportunities opened by physical net-
works (rail, road and air networks) as well as through the connectedness within interfirm
networks (non-­physical networks). Finally, the study of digital accessibility through the
Internet in Europe (Tranos et al. 2013) focused on the potentials for virtual interaction
using a methodology of spatial interaction models and network analysis.
Transport accessibility on a regional scale in Europe has been computed by the first
ESPON programme. Figure 21.3 shows the strong spatial association between road
accessibility and peripheral areas in the European Union. It can be seen that approxi-
mately 60 per cent of European Union territory has an index inferior to the median,
located in the periphery.
350  Handbook on Cohesion policy in the EU

Source:  Own elaboration from ESPON (2009) map.

Figure 21.3  Core and periphery areas

The recent literature studied the effects of transport infrastructure over economic activ-
ity using measures of ‘accessibility potential’ (López et al. 2009; Gutiérrez et al. 2010;
Condeço-­Melhorado et al. 2011). The effects of improved accessibility to the transport
network on the regional specialisation of European regions’ industrial sector were shown
by Mora and Moreno (2013). The economies of regions with a high cost of accessibil-
ity should have a higher level of specialisation in one or various industrial sectors than
regions with lower costs of accessibility. The access potential to transport infrastructure
affects the distribution and regional specialisation of industrial economic activity in
Europe. However, European policy measures are of great importance given that the
 Cohesion policy and transportation  ­351

spatial distribution of activities may change in the long run (Rietveld and Vickerman
2004).
For example, in the case of the Dutch region of Noord-­Brabant, where the city of
Eindhoven is situated (Condeço-­Melhorado et al. 2014), the literature provides empirical
evidence of flooding effects on the location of industrial activities created by transport
infrastructure. In the case of Spain, empirical evidence shows the existence of a positive
effect of high-­capacity roads infrastructure on private production, which is greater when
spillover effects from adjacent regions are taken into account. However, negative spill­
over effects do not seem to be supported by the Spanish evidence (Alvarez-­Ayuso and
Delgado-­Rodriguez 2012).

THE EUROPE 2020 STRATEGY AND THE TEN-­T NETWORK

EFFECTS

The environmental objectives of the European transport policy were to reduce carbon
dioxide (CO2) emissions and to encourage the use of transport means less dependent on
petrol (Givoni 2007), introducing in this manner a new level of complexity in the rela-
tionship between high-­speed trains and other means of transport. The EU TEN-­T policy
integrates different measures of transport by means of a complex central interregional
network which promotes the use of different modes of transport in order to connect the
regions with one another by producing low amounts of carbon dioxide.
Studies on the substitution effect between air travel and high-­speed rail (HSR) in inter-
national journeys within the EU (Dobruszkes et al. 2014) conclude that both means of
transport compete in short-­to mid-­length journeys, but that they become complementary
in mid-­to long-­length journeys. High-­speed rail substitutes airlines for short distances as
they operate from city centres, which reduces users’ time and CO2 emissions (Givoni
2007), but they encourage intermodality (that is, the use of several different modes of
transportation) as they provide a convenient connection to long-­distance air services. In
this way, the time spent on short-­distance flights in currently congested airports is saved
and assigned to long-­distance travel. This approach implies a need for a new kind of
flight connection solutions, the geographic replanning of high-­speed train routes and the
adaptation of schedules, amongst others (Givoni and Banister 2006).
The Trans European Transport Network (TEN-­T) is comprised of a global network
of roads, railways, rivers, ports and airports within European countries as well as a main
network at the European level, structuring the domestic market (see Figure 21.4). The
high-­speed rail network has expanded continuously. Low speeds and low frequencies of
trains in Central and Eastern European member states have a limited appeal compared
to car travel.
TEN-­T consists of two layers (European Commission 2010): a core network to be
completed by 2030, and a comprehensive network which feeds into the core network and
is to be completed by 2050. The core network will facilitate the flow of goods and people
around the EU. It involves connecting 94 main European ports to rail and road links, 38
key airports with rail connections into major cities, 15 000 km of railway lines upgraded
to high speed and 35 cross-­border projects to reduce bottlenecks. The new transport
infrastructure policy is aimed at developing nine major corridors which will form the
352  Handbook on Cohesion policy in the EU

Source:  European Commission (2013), available at http://ec.europa.eu/transport/infrastructure/tentec/

tentec-­portal/site/en/maps.html.

Figure 21.4  TEN-­T corridors

backbone of transportation in the domestic market and will secure high-­performance

East–West connections.
The strategic complementarity between the accumulation of human capital and
RDI investments, as well as the trap of low-­qualification and low-­quality equilibriums
(Redding 1996), are of elevated importance in peripheral areas due to the existence of
synergies between the degree of regions’ centrality and the hierarchy of cities, on the one
hand, and the levels of human capital and firms’ investment in RDI and high-­quality
products, on the other.
 Cohesion policy and transportation  ­353

Redding and Schott (2003) developed an NEG model consisting of two types of
works, unqualified and qualified, which results from employees’ decision to invest in
their ­education. Peripheral regions compensate for their competitive disadvantages by
paying lower salaries and specialising in low-­quality undifferentiated products. In con-
trast, central regions further specialise in high-­quality differentiated products exhibiting
increasing returns to scale, being able to have the greatest intensity in qualified work
and pay higher salaries. This structure of incentives is harmful for peripheral areas,
where lower salaries and lower demand for highly qualified labour generate a penalty
on the investment of human capital, which makes peripheral areas prone to fall into the
weak growth and competitiveness trap, getting stuck in low-­qualification, low-­quality
equilibriums.2
Regions with geographic proximity to knowledge are at an advantage in the generation
of innovation. Since the mid-­1990s, activity in innovation has extended geographically
but tended to concentrate in central areas and in metropolitan cities, and areas in the
vertex of urban concentration hierarchy in the centre of Europe. ‘The link between inno-
vation and agglomeration tends to be self-­reinforcing: innovative activities lean towards
agglomeration; and the greater the economic agglomeration, the greater the potential for
innovation, for knowledge spillovers and for higher levels of economic growth’ (Farole
et al. 2011).
Since the 1980s, EU integration has generated an important convergence in the
development levels of member countries. Nevertheless, regional disparities within each
country tend to increase (Rodríguez-­Pose 1999; Puga 2002; Farole et al. 2013). In Europe
as well as in the whole world, central cities and cities of the largest size tend to reach
higher and more stable rates of growth compared to areas with lower agglomeration
levels (Kanbur and Venables 2005).
The traditional growth models show the negative effects of geographical distance
and signal the need to focus on improving access and reducing travel costs by means of
transport infrastructure modernisation (roads, railways, ports and airports). The lack of
connection and accessibility to large market centres can limit the investment of human
capital and RDI. Difficult connections and reduced accessibility to peripheral areas
generate a complex circle of mutually reinforcing interactions which tend to depress the
economy and push it towards low-­quality, low-­qualification equilibriums. The role of
infrastructure is also extended to changes in expectations, which induce economic agents
to invest in the improvement of their capabilities (knowledge, technology, new products
and processes quality).
Regarding the role of infrastructure as a growth factor in the 1980s, authors such
as Aschauer (1989) and Munnell (1990) introduced capital endowments in infrastruc-
ture within extended growth models. Mixed results were obtained in more-­developed
­countries. In general, the impact of growth in transport infrastructure investment is
contingent upon the existence of development bottlenecks, which result from a scar-
city of infrastructure. When transport infrastructure is weighed by relative saturation
indices or by the impact on commercial and on interregional traffic flows, it is found to
exert a positive effect on development (Alvarez and Blazquez 2014; Alvarez-­Ayuso and
­Delgado-­Rodriguez 2012).
In the first development stages of lagging regions, solid reasons exist to support
adequate endowments to transport infrastructure. Less-­developed regions may find it
354  Handbook on Cohesion policy in the EU

difficult to increase public capital due to their low income levels and, as a result, over-
coming a lack of infrastructural endowments could take too long in less-­developed
regions, hindering their growth rates as a consequence of public capital shortages,
which may depress the return on private investment, hampering economic growth. For
example, peripheral, lagging regions might lack sufficient financial capacity to develop
good transport infrastructure to increase accessibility and connect the region with large
market areas.
The improvement of transport infrastructure networks increases peripheral regions’
accessibility, reducing transport costs and increasing competition from central areas. It
can be said that highways and modern infrastructures have two-­way effects: they bring
the market closer and also intensify the competition of high-­concentration centres.
Nevertheless, improved accessibility also opens new perspectives and opportunities
in peripheral areas, which could result in new expectations and investments in human
capital and firms’ RDI driving the economy out of the low-­competitiveness, low-­growth
trap.
There is no definite theory or one single solution as each situation is different and
should be treated as such. Designing policy measures for less-­developed peripheral
regions in order to build capabilities and expectations, which have the potential to drive
the economy out of the low-­skills, low-­quality trap, enhancing growth and competitive-
ness, is a challenging task. An analysis of a region’s development problems and features is
always needed. However, in light of the growth models and spatial positions commented
on above, some recommendations can be issued regarding transport infrastructure net-
works and connections.
Peripheral and sparsely populated areas have a handicap in reaching high-­skills,
high-­quality growth equilibriums, due to their low accessibility and poor connections to
access technological knowledge and know-­how. Transport infrastructure improvement
can contribute to, or even be a necessary condition for, enhancing growth and develop-
ment, but many other handicaps must be removed in order to effectively increase growth
and competitive performance in peripheral areas. Good connections and reasonable
market accessibility require the implementation of other measures meant to reinforce
regional absorptive capabilities and innovation systems, as well as business internation-
alisation to participate in open innovation partnerships throughout the world and gain
range and penetration in international markets (overcoming the narrowness of local
markets).
Farole et al. (2011) point out that capital and top-­level cities are usually in the best
position to successfully implement such policies, and also give some guidelines for dif-
ferent types of territories. For regions adjacent to core metro regions and secondary
metro regions, the main recommendations include the promotion of integration with
core metro areas and the improvement of their own agglomeration potential. For less-­
developed peripheral regions, infrastructure connectivity is recommended in order to link
with leading regions; and for relatively sparsely populated rural and peripheral regions,
increasing connectedness to metropolitan regions is recommended in order to enable
knowledge transfer and opportunity recognition.
 Cohesion policy and transportation  ­355

INNOVATION, DISTANCE AND KNOWLEDGE NETWORKS

In a world of ample connectivity resulting from the technological revolution in ICT

and transport, the flow of information and open innovation has increased considerably
through complex networks and collaboration consortia. However, interpersonal face-­to-­
face communication and the ‘buzz’ of cities (Storper and Venables 2004) are becoming
increasingly important. Confidence and ease of negotiation in complex situations are
difficult to generate from a distance, and strong distance-­decay effects exist (Audretsch
and Feldman 2004).
Collaboration networks play a crucial role as carriers of knowledge spillovers and
as a means of access to knowledge outside the region. Spatial proximity between the
different agents (universities, research centres and companies) is important in order to
generate collaboration networks of interregional knowledge. Studies carried out for
Europe (Hoekman et al. 2008) in sectors of technological innovation (biotechnology
and semiconductors) demonstrate the importance of networks as well as of proxim-
ity in order to align the different objectives of the agents involved in solving complex
problems.
In terms of scientific and technological knowledge, European peripheral regions have
an approximately average level of academic papers, but when the moment arrives to com-
mercialise and convert this knowledge into patents their results are significantly below
those of Central European regions. Different aspects depending on the sector under
study exist, but in general a central–peripheral pattern is appreciated at a regional level,
especially in the event of having to negotiate complex themes such as the development
and commercial exploitation of academic paper results by companies.
Figure 21.5 depicts the regional distribution of papers and patents in the semiconduc-
tor sector in Europe. It can be observed that within this sector, which has a higher level
of maturity than biotechnology, patents have a much higher spatial concentration level
than papers. This could be due to each region’s individual characteristics or population
formation, the excellence of their universities or the presence of technological firms,
but could also be a result of the central position of the region, which gives it better
market access. This aspect of centrality is important, as the low applicability of patents
in comparison to papers is observed even in extremely active areas such as Sweden and
Denmark.
This means that we cannot yet consider that progress in transport and ­communication
technologies has completely countervailed the adverse influences of distance. Accessibility
still plays a decisive role in facilitating the creation of collaboration and trust-­based
networks as well as the mobility of people and face-­to-­face communications. All these
factors remain important aspects to be taken into consideration in the valuation of infra-
structure and development policy (Rietveld and Vickerman 2004).
356
Source:  Frank Van Oort (2010).

Figure 21.5  Distribution of papers and patents in the semiconductor sector, 1988–2004
 Cohesion policy and transportation  ­357

NOTES

* Paulino Montes-­Solla would like to thank the financial support provided by the UDC-­Inditex 2014 grant
for his predoctoral stage at the IC2 Institute, University of Texas at Austin.
1. These figures are not completely homogeneous, being the 2014–2020 figure expressed in constant 2011
prices.
2. To a large extent, empirical evidence for the EU supports a spatial structure in salaries positively correlated
with market access and the education level of the population (Lopez-­Rodriguez et al. 2007).

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22. Smart specialisation in the reformed EU Cohesion
policy*
Philip McCann and Raquel Ortega-­Argilés

INTRODUCTION

European Union (EU) Cohesion policy has undergone significant changes in recent years
(McCann 2015). These changes are the result of various influences and factors, all of
which have individually played a role in altering specific aspects of the policy. However,
taken together these influences have helped to heavily reshape the overall orientation of
the policy and also its intellectual underpinnings. One of the important influences has
been the concept of smart specialisation. This is a concept which initially arose outside
of the field of regional and urban development studies but which has recently emerged
as being a key component of the regional policy agenda. However, the importance of
the concept, and its particular role in helping to reshaping Cohesion policy, has not been
in isolation but rather has been in tandem or in parallel with some of the other sets of
influences.
Various intellectual debates were already taking place amongst academic circles
outside of the EU policy arena prior to 2008, but these debates were increasingly seen
to be particularly pertinent to some of the challenges facing Cohesion policy. At the
same time, a rethinking of Cohesion policy had already been undertaken at various
junctures (McCann 2015), building on the lessons learned from the implementation
experience of previous programming periods, and these lessons increasingly contrib-
uted to the more recent reflections on reforming the whole policy from 2008 onwards.
These lessons pointed to the importance of key intellectual and institutional influ-
ences. Yet, both the specific mix of influences and also the timeliness of the intellectual
insights, at exactly the time when Cohesion policy reforms were being discussed, have
been very important in shifting Cohesion policy debates and aspects of the overall
policy logic and architecture. However, the insights derived from the smart specialisa-
tion concept proved to be especially important in that they were increasingly under-
stood as being very relevant for addressing some of difficult institutional, governance
and principal–agent problems inherent in the policy. Smart specialisation provides a
way of helping to set policy priorities which is much more grounded in the realities
and opportunities of the region than was the case for many previous priority-­setting
mechanisms and, as such, dovetails with the overall place-­based underpinning of the
policy (McCann 2015).
This chapter will outline these key influences and factors and explain how these
various ideas converged into a cohesive set of principles which are workable and practi-
cable for helping regions which are designing regional, urban and local developing poli-
cies under the overall EU regional policy umbrella. The remaining parts of the chapter
are organised as follows. First we discuss the difficult and perennial issue of policy

359
360  Handbook on Cohesion policy in the EU

prioritisation; then we discuss the intellectual incorporation of smart specialisation

within the EU regional policy agenda, and we also discuss the broader reform context
into which smart specialisation was introduced. In the penultimate section we discuss
various aspects of the implementation of the policy approach and this is followed by
some brief conclusions.

THE PROBLEM OF POLICY PRIORITISATION

Policy-­makers always have to set priorities (Stiglitz et al. 2009). Yet, in many arenas
of policy-­making the criteria and grounds upon which policy priorities are set are not
always as clear as they might be, irrespective of differing political philosophies. On
the one hand, this is due to the fact that policies are shaped by numerous different
influences and the realities of political economy imply that implemented policies are
often the result of an attempt to satisfy different constituencies of opinion or inter-
est. On the other hand, a lack of clarity regarding the grounds on which a policy
is implemented also affords political actors a useful degree of flexibility and room
for manoeuvre in the face of changing circumstances. Both of these considerations
contribute to the fact that the policies of all forms and in all countries often display
a distinct lack of clarity regarding their underlying logic. Indeed, in the case of EU
Cohesion policy these issues are also pertinent. Yet, given that Cohesion policy does
have a specific  remit, and also one which is common across all EU member states,
irrespective of the political orientation of the parties currently in government in each
country, there are grounds for arguing that Cohesion policy does need a common
framework for policy prioritisation which is consistent with the EU-­wide agreed objec-
tives of the policy as well as respecting and building on the local differences in regional
characteristics.
Smart specialisation has emerged as being a key component of the recent reforms of
EU Cohesion policy, in particular regarding this rather thorny issue of policy prioriti-
sation. Indeed, the need to define a smart specialisation strategy is a conditionality for
ERDF funds related to innovation. As we will see shortly, the story of the journey via
which smart specialisation has emerged as a key policy-­prioritisation logic for Cohesion
policy is a rather curious one (Foray et al. 2011), and itself provides important insights
for the whole question of policy priorisation. The important point about smart speciali-
sation is that for regional and urban policies it provides a set of principles for policy pri-
oritisation which are consistent with a wide range of evidence from many different fields.
Such a broad base of evidence therefore also helps to build agreement between diverse
groups of interested parties, different intellectual traditions, different stakeholders, and
also parties of different political orientations. As Rodrik (2014) cogently argues, ideas
are often very powerful tools for overcoming institutional blockages, and in particular,
ideas which differing constituencies or groupings simultaneously perceive to be useful
and in their own interests are powerful vehicles for mobilising action or institutional
changes. The key here is that groups of actors or stakeholders perceive that an idea is
both advantageous and workable; when different groups perceive such opportunities,
then change can occur for the common good. Understanding the role and importance
played by smart specialisation in the EU Cohesion policy reforms requires an awareness
 Smart specialisation in the reformed EU Cohesion policy  ­361

that differing groups of academic and policy-­making stakeholders perceived that such a
concept was workable and also offered advantages that were not so apparent in previous
approaches.

OPERATIONALISING THE SMART SPECIALISATION CONCEPT

IN THE SERVICE OF EU COHESION POLICY

As is well documented elsewhere (Foray 2015; McCann and Ortega-­ Argilés 2015;
McCann 2015), the original smart specialisation concept was not set in a regional or
geographical context, but rather in a non-­spatial context (Foray et al. 2009). The concept
was derived from research undertaken between 2005 and 2009 by a high-­level expert
group of advisors to the then EU Commissioner for Research, Janez Potočnik, who were
addressing the problem of Europe’s weak productivity performance relative to that of
North America since the 1990s. This group were known as the ‘Knowledge for Growth’
expert group1 and they published a series of briefing papers arguing that one of the key
weakness of Europe in comparison to North America was a lack of coherence between
the various knowledge and innovation networks and systems operating in Europe, which
tended to be characterised by bottlenecks and missing links, many of which were primar-
ily of an institutional nature. These bottlenecks and missing links inhibited and limited
the workings of Europe’s knowledge and innovation networks often militated against
the creation of a dynamic entrepreneurial environment. In particular, these failures were
evident in the relatively much weaker ability of Europe’s firms to adopt new technologies
and then to successfully adapt them to their own specific industries and markets. As such,
finding ways to encourage not only the faster take-­up of new technologies, but also their
more rapid adaptation to differing market environments, was deemed to be essential in
order help foster entrepreneurship and innovation, two key drivers of economic growth.
However, in order to allow for such knowledge diffusions, many institutional and govern-
ance issues would also need to be addressed, and the expert group observed that many of
these blockages and bottlenecks operated primarily at the local and regional, as well as at
the national, levels (David et al. 2009). As such, the group’s thinking moved from a largely
sectoral and aspatial context to a regional and institutional context (David et al. 2009;
Foray and Rainoldi 2013; Foray and Goenaga 2013), and it was these observations that
from 2007 onwards brought the scholars working on the smart specialisation concept
into the arena of regional issues.
Knowledge and technology flows span many different dimensions, including sectors,
production factors, activities, institutions, governance systems, regions and nations, and
if the interrelationships between any of these different dimensions are not congruent,
and instead are characterised by disjunctures, then knowledge and technology flows are
inhibited. The expert group identified that numerous aspects of the European economic
environment are characterised by such disjunctures, and these disjunctures are particu-
larly evident in terms of governance and policy settings. An example they pointed to
was the case of skills-­training policies (Foray et al. 2009; David et al. 2009), which rarely
display strong underlying connections with the specific needs and labour demands of the
localities and regions. An obvious area for technology enhancement therefore relates to
improved policy coordination and dovetailing across different sectoral arenas so as to
362  Handbook on Cohesion policy in the EU

smooth the path for wider knowledge and technology diffusion processes. Yet, even with
improved cross-­sectoral policy coordination, there still remained the underlying need
for a framework on which the underlying policy prioritisation logic could be built. Here
again, the originators of the smart specialisation concept had initially developed a set
of principles based on a non-­spatial setting which fortunately were also translatable into
explicitly spatial and regional settings.
The original smart specialisation concept was set within a ‘knowledge ecology’
context in which the knowledge and technology generation and diffusion processes
driving entrepreneurship are understood as being systems phenomena. A key feature
of such systems is that they are only as strong as their weakest links (REDI 2014),
and the central driving force for innovation in response to knowledge and technology
flows are assumed to be entrepreneurial actions on the part of entrepreneurs, firms and
even institutions. Such entrepreneurial actions are a result of entrepreneurial search
processes, whereby individuals, firms or institutions search for new opportunities to
innovate based on new knowledge, technologies and ideas. Yet, the likely success of
entrepreneurial search processes to respond to the opportunities afforded by new knowl-
edge, technology and ideas also depends on the context. More specifically, the ability to
generate, acquire and diffuse knowledge depends on the extent to which the domain in
which the knowledge is evident has relevant size or scale, and also if it has strong con-
nectedness with other domains. However, an important twist of this approach on many
of the previously popular understandings of the relationships between knowledge, tech-
nology and economic development is that neither relevant size nor connectedness can
be afforded simply by transplanting new immigrant sectors, including foreign-­owned
high-­technology sectors, onto the existing innovation system fabric. Rather, much of the
relevant size and connectedness comes from the existing architecture of the innovation
system (Foray 2015).
Fortunately, these non-­spatial principles also translate rather neatly onto parallel con-
cepts already being developed in economic geography and regional economics. Moving
from a non-­spatial to an explicitly spatial context, the relevant size of a domain is
equivalent to the combined local embeddedness and relatedness (Frenken et al. 2007) of
certain activities, where the connectedness is equivalent to the broad notion of regional
connectivity, which moves beyond simple transport-­ related issues and includes all
notions of knowledge, global value chain and monetary connectedness between places
(McCann and Ortega-­Argilés 2015; McCann 2015). Again, when applied in an explic-
itly regional context, in terms of the innovation system fabric the smart specialisation
concept contends that the requisite levels of relatedness and embededdness necessary
to afford relevant size cannot be derived from the in-­migration of activities, but rather
are overwhelmingly related to the existing activities, industries and sectors of the local-
ity. The technological and skills upgrading and diversification around related activities,
skills and technologies (Boschma and Iammarino 2009; Boschma and Frenken 2011;
Neffke et al. 2011; Boschma et al. 2012) of many of the region’s existing and traditional
activities are often found to comprise essential elements in helping a region to develop
successfully (Frenken et al. 2007). At the same time, part of the issue of relevant size
also concerns the positioning of the region within the global value chains operating
locally. A region’s local development prospects are also heavily shaped by the global
value chains operating within the region, and the specific nature and patterns that
 Smart specialisation in the reformed EU Cohesion policy  ­363

these display with regard to other regions both inside and outside of the region’s home
country.
The translation of the aspatial concepts of a domain’s relevant scale, and its connect-
edness into the geographical notions of relatedness, embeddedness and the connectiv-
ity of local and global value chains, together begins to help provide the outline of an
important set of principles for regional policy prioritisation as well as, in many cases, for
governance reforms (McCann and Ortega-­Argilés 2014a, 2014b, 2015; Boschma 2014).
Smart specialisation implies that rather than borrow ‘off-­the-­shelf’ development solu-
tions, or alternatively champion the in-­migration of the latest high-­or nano-­technology
sectors as a means of spearheading local development, a much more fruitful approach
is to encourage entrepreneurs to help regions diversify their traditional sectors and
activities into related sectors and activities, and in particular into activities in which
the region already has potentially strong local and external connectivity (Foray 2015).
This approach implies that the chosen priorities will differ significantly between regions,
depending on the region’s characteristics; and heterogeneity observed across the EU’s
regions also implies that the chosen policy recipes (Rodrik 2007) ought to differ signifi-
cantly across localities, even though the overall framework from which they are chosen
reflects a menu comprising a common set of principles and themes. Moreover, these
common themes and principles emerge from a range of different literatures, including
innovation economics, science policy, economic geography, economic development and
many areas of political science. A key theme combining all of these different fields and
literatures is that much of what generates and constitutes innovation is inherently local
in nature (World Bank 2010; Moretti 2012; Hughes 2012), and it is this key insight which
underpins the rationale for a regional approach to innovation policy and a regional
policy approach to innovation enhancement (McCann and Ortega-­ Argilés 2013c;
OECD 2011).
The basic smart specialisation approach in a regional setting therefore requires that,
in order to make the most effective use of public resources, local policy-­makers should
prioritise development projects aimed at initiating or up-­scaling local entrepreneurial
actions (Coffano and Foray 2014) in activities, technologies or sectors in which the
region already has some significant scale advantages and which offer possibilities for
diversifying into closely related activities, sectors or technologies (Boschma 2014). Such
a policy prioritisation logic is aimed at helping to position a region in those key market
and segments and spatial markets where it has genuine potential to thrive (Thissen et al.
2013), given the realities of the global value chains in which the region operates. This
approach underlies a contemporary model of enhancing regional innovation systems
which is consistent with a wide range of evidence and analysis, and which is also largely
workable and practicable for policy-­makers (Fraunhofer ISI 2013). Indeed, one of the
key observations of the Organisation for Economic Co-­operation and Development
(OECD) (2013) is that many of the individual elements in smart specialisation were
already in a variety of different literatures including science policy, economic geography
and economics, but these elements were largely fragmented and scattered across dif-
ferent disciplines and fields. As such, smart specialisation has brought together these
fragmented elements from diverse fields into a cohesive and workable whole amenable
to policy-­making challenges.
364  Handbook on Cohesion policy in the EU

THE BROADER CONTEXT OF THE COHESION POLICY

REFORMS

While smart specialisation is an important element of the overall EU Cohesion policy

2014–2020 reform, it is by no means the only key element, and its efficacy also depends
on the application of the other key elements. Indeed, it is the specific set of key elements
introduced into the recent policy reforms which is so important. One of the essential
features of the recent reforms is the need for a set of workable and powerful conditionali-
ties which spell out the mutual obligations and requirements which must be fulfilled by
partners within the shared management and multilevel governance settings that charac-
terise EU Cohesion policy. Arriving at a systems of workable and sufficiently powerful
conditionalities has been a difficult process, but one which has built on the experience of
previous programming periods (Bachtler and Ferry 2015; Bachtler et al. 2013, 2014). In
terms of knowledge-­related investments, the implementation of an innovation systems
approach to regional policy design and intervention based on smart specialisation
principles is a formal conditionality (McCann and Ortega-­Argilés 2013a, 2013b) which
regions must comply with. At the same time, the development of an outcome-­oriented or
results-­oriented approach to policy design is also a conditionality, and this approach not
only dovetails closely with many of the smart specialisation principles but is also essen-
tial in order to make it workable, as the original proponents of smart specialisation were
very aware (Foray et al. 2009; David et al. 2009). Indeed, the whole question of smart
specialisation-­related policy prioritisation also depends on an explicit awareness of what
is intended to be achieved by any particular policy intervention, and this is where the
outcome-­oriented or results-­oriented approach is also critical.
As with conditionalities, the outcome-­oriented approach to economic development
policy originally emerged in the international development literature on the basis of
many years of experience of attempting to foster development in economically weaker
countries (McCann and Ortega-­Argilés 2013a, 2013b). Experience of the thorny ques-
tion of policy prioritisation suggests that this is also always intrinsically tied up with the
questions regarding what exactly is the intention of the policy and how is the achieve-
ment of the intended objectives envisaged to take place. Addressing these questions
requires both a theory of change, which is specifically related to both the context and the
intended objectives, and also clarity regarding ways in which the progress of the policy
is to be tracked. This is especially important where innovation in policy is associated
with an experimentalist approach to policy design whereby ‘self-­discovery’ (Haussman
and Rodrik 2003) is regarded as an essential feature of modern policy approaches. Such
approaches explicitly provide the space for bottom-­up initiatives to be trialled, and in
such environments indicators required in order to track the outcomes or results of the
policy are particularly crucial. As Rodrik (2004) makes clear, the use of indicators is
required precisely because the results are not known in advance. The originators of the
smart specialisation approach were aware of the need for indicators (David et al. 2009)
and there is a rapidly growing literature on these issues, and in particular in matters relat-
ing to innovation (Technopolis and MIOIR 2012; Gault 2013), but also for a wider set of
regional policy-­related challenges (Barca and McCann 2011).
The use of results indicators is also important because they also allow for the better
ongoing monitoring of the progress of a policy as well as the ex post evaluation of the
 Smart specialisation in the reformed EU Cohesion policy  ­365

final results and outcomes. Such monitoring and evaluation activities typically combine
quantitative and qualitative mixed-­methods evaluation techniques, and there is now a
large literature on these issues (Davies et al. 2000; Pawson 2006). Moreover, they also
better allow for ‘policy-­learning’, as the progress of the policy can be assessed against
the ex ante theory of expected change on which the policy was based. This logic turns
many aspects of traditional economic development policy on its head in that it demands
a clear theory of change in advance which is tailored to both the context and the intended
objectives, and which, building on smart specialisation principles, requires the diversifica-
tion and upgrading of a region’s traditional activities and sectors via the promotion of
entrepreneurial opportunities in arenas which potentially offer large scale and connectiv-
ity. This logic is also very consistent with the wider place-­based arguments outlined in
the highly influential reports by Barca (2009) and the OECD (2009a, 2009b) which posit
that policy approaches which respond to, and build on, the specific and heterogeneous
characteristics of a region are the most effective way of helping a locality to reach its
development potential.

IMPLEMENTATION ISSUES

Implementing a smart specialisation-­type of approach to the fostering of regional

innovation systems requires changes in the way policy-­makers often think. Firstly,
as we have already seen, it requires a greater focus on the existing industrial and
economic fabric of the region, the identification of areas which potentially can offer
both scale and connectivity, and openness to bottom-­up policy proposals and initia-
tives aimed at enhancing the entrepreneurial climate of the region. Secondly, it also
requires policy-­makers to involve as large a range of stakeholders as is possible in
shaping the policy agenda, and in particular different types of private sector, university
sector and civil society sector actors in the process. Thirdly, it requires policy-­makers
and other stakeholders to agree on a realistic and workable set of results indicators,
which are amenable to the tracking of the progress of any policy intervention towards
its intended objectives and for improved policy monitoring, evaluation and learning
(Rodrik 2007; Hughes 2012). Lastly, it requires policy choices to be made on the basis
of the best available data, and then reassessed in the light of emerging evidence (CST
2007; Hughes 2012).
In order to help regions make progress in developing their new policies for the pro-
gramming period 2014–2020, the European Commission set up a special facility known
as the RIS3 (Research and Innovation Strategies for Smart Specialisation) Platform,
which was hosted at the Joint Research Centre, Institute for Prospective Technological
Studies (IPTS) in Seville, Spain.2 The platform provides numerous sources of data
and evidence as well as important guidance material for policy-­makers (Foray et al.
2012; Foray and Rainoldi 2013; Foray and Goenaga 2013). Just as importantly, it also
provides a forum where policy-­makers are able to peer-­review each other’s ideas and
experiences, and to learn from the insights and ideas of one other. This is an important
form of capacity-­building and technology transfer, and when undertaken at an EU-­wide
level also provides many weaker regions in particular with the possibilities to develop
new policy ideas and initiatives based on shared or similar experiences with other EU
366  Handbook on Cohesion policy in the EU

regions. Moreover, where such peer-­review processes also point to the learning benefits
of further cooperation, financial support for joint pan-­EU interregional collaboration
and support possibilities are also available in the new funding packages. A large number
of EU regions are, and have been, actively engaged in the RIS3 Platform facility and
the interest shown in the facility suggests that the smart specialisation idea provides a
policy-­making narrative (Rodrik 2014) which is able to motivate action and to mobi-
lise stakeholders interested in policy-­making. Wherever necessary, the learning and
evidence-­based assessments associated with these processes can also help to initiate the
requisite local governance reforms appropriate for delivering the new policy agenda in
different regions.

CONCLUSIONS

Smart specialisation has evolved from a conceptual idea set originally in a non-­spatial
context to a key element of the EU Cohesion policy reforms, set squarely within a
regional and spatial context. The idea has emerged as being important in terms of both
providing a framework for addressing the difficult policy prioritisation challenges faced
by all policy-­makers as well as developing an important narrative which links the inter-
ests of different constituencies and institutions into a framework for action (Rodrik
2014). A convergence of ideas, insights and evidence from various different intellectual
traditions and academic fields has given weight to the smart specialisation agenda, and
this helps to foster engagement between diverse and previously largely disconnected
constituencies. Indeed, this also facilitates cooperation between different directorates
within the European Commission, whose various policy interests and specialisations
are also represented and reflected in the approach. On the one hand, while the emerging
popularity of the smart specialisation approach can be considered as being somewhat
surprising (Foray et al. 2011; Foray 2015), on the other hand the timeliness with which
the approach condensed, synthesised and combined the key elements in diverse fields
into a framework which is practicable for policy-­makers suggests that this is in reality
not so surprising at all. As Rodrik (2014) makes plain, good ideas developed at the right
time can be powerful forces for change and transformation, especially if their framing
allows for the integration of different interest groups and for the alignment of diverse
sets of incentives. Smart specialisation does exactly that. At the same time, it should
not be seen as some sort of ‘magic bullet’ which will solve all regional policy-­related
problems, as this would clearly be an inappropriate interpretation of the usefulness,
importance and purpose of the concept. Many regions will still find implementing smart
specialisation principles a major challenge, depending on the region’s assets, economic
structure, institutional environment, and its entrepreneurial climate. Yet, regarding
knowledge and innovation-­related investments, irrespective of how serious these chal-
lenges are, it is still essential to base the policy prioritisation logic on solid groundings
reflecting the realities of the regional context, and in this sense the smart specialisation
logic remains critical.
 Smart specialisation in the reformed EU Cohesion policy  ­367

NOTES

* The research undertaken for this chapter is part of the Research Project ‘Smartspec – Smart Specialisation
for Regional Innovation’. The project is funded through the EU’s Seventh Framework Programme for
research, technological development and demonstration under grant agreement number 320131.
1. http://ec.europa.eu/invest-­in-­research/monitoring/knowledge_en.htm (accessed 14 November 2015).
2. http://s3platform.jrc.ec.europa.eu/home;jsessionid5vpkxVyDDrrmJbjtFJShGxHFXWHcJFTtX7RcvTK
nmdTnvvBQq2j13!599181610!1441973091447 (accessed 14 November 2015).

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23.  Cohesion policy and the green economy
Andrea Lenschow and Jörg Baudner

INTRODUCTION

The title of this chapter, pointing to a link between EU Cohesion policy and the
‘green  economy’, takes up a central element in the present formulation of EU
Cohesion policy. As we will show below, in the ongoing programming period funding
for ‘green innovation’, especially in fields related to the mitigation of and adaptation
to climate change, constitutes a core area of Cohesion policy. We will trace the emer-
gence of the environmental dimension of EU Cohesion policy over time and argue
that the economic framing of the environmental dimension implied in the term ‘green
economy’ and the special emphasis on climate change created a window of opportu-
nity for some policy and procedural reforms in the direction of environmental policy
integration (EPI).
In order to reflect on the linkages between Cohesion policy and the green economy we
will start from the concept of sustainable development (SD). SD entered the EU policy
arena in the second half of the 1980s, when, with the 1987 Brundtland Report (WCED
1987) and the United Nations’ ‘Agenda 21’ (UNCED 1992), this concept became firmly
established in the international developmental discourse. The Brundtland Report defined
SD as ‘a process of change in which the exploitation of resources, the direction of invest-
ment, the orientation of technological development, and institutional change are made
consistent with future as well as present needs’ (WCED 1987: 8–9). Thus, it formulated
the core idea that environmental protection, economic growth and social development
are mutually compatible, rather than conflicting, goals. At the EU level the concept
resonated well, as it built on the economic growth paradigm of mainstream economic
thinking while at the same time responding to emerging environmental concerns. At the
same time, the concept remained ambiguous enough to accommodate both strong envi-
ronmentalism aiming to ‘ensure that the long-­term carrying capacity of nature becomes
a principal or overarching societal objective’ (Lafferty and Hovden 2003: 9) and a weaker
understanding which would consider systematic efforts at balancing environmental, eco-
nomic and social objectives in the decision-­making processes to be sufficient.
Both at Treaty level and in core documents outlining the EU’s environmental policy
agenda, EPI emerged as an operational principle to implement and institutionalise the
(ambiguous) idea of SD (Lenschow 2002a: 21). In its fourth Environmental Action
Programme (EAP) the Council of the European Communities announced that the
‘Commission will develop internal procedures and practices to ensure that this integra-
tion of environmental factors takes place routinely in relation to all other policy areas’
(Council of the European Communities 1986: paragraph 2.3.28). The fifth EAP further
highlighted the governance dimension of EPI by stating that ‘the basic strategy therefore
is to achieve full integration of environmental and other relevant policies through the
active participation of all the main actors in society’ (CEC 1992: 49).

369
370  Handbook on Cohesion policy in the EU

Cohesion policy is a paradigmatic field to witness the implementation of the SD concept

beyond the Treaty and Action Programme level. EU Cohesion policy came into being to
reduce the economic disparities between regions in the EU as part of the preparations for
the 1992 Single European Market programme. In this context, EU funding for lagging
regions constituted what has often been called ‘side-­payments’ to the new Community
members – Spain, Portugal and Greece – for their consent to the Single European Act;
however, at the same time, this was also defined as an expression of solidarity. For this
purpose, small programmes in social policy, regional policy and agricultural policy were
hugely increased and became known as the Structural Funds (see Brunazzo, Chapter 1,
this volume). Bottom-­up development and endogenous growth emerged as buzzwords in
the first phase of Structural Funds development. For this very purpose, not only the tech-
nical integration of the different funds, but also the integration of the respective social,
economic and agricultural policies, was one of the main ambitions of Structural Funds
(Bache 2015). Still, early thematic integration concerned only economic and social aspects
of regional and local development, that is, only two pillars of SD.
With SD surfacing strongly in internal EU discourse and with EU competence for
environmental policy being confirmed with the Single European Act, environmental
measures soon became one of the many policy fields for which EU funding was avail-
able. Moreover, within the Cohesion Fund, introduced in 1993 as a supplement to the
Structural Funds in the run-­up to the European Economic and Monetary Union, con-
siderable funds were assigned to the purpose of making states capable of coping with EU
environmental regulations.
Thus, we can look at almost three decades of SD in EU Cohesion policy and identify
how the relationship between the three pillars of the concept – economic growth, social
development and environmental protection – developed. Analytically, we outline three
dimensions to discuss the ‘greening’ of Cohesion policy:

● First, the programmatic inclusion of environmental aims into the Structural Funds
with their early focus on the integration of economic and social development goals.
● Second, the policies implementing the EPI principle, looking at the overall alloca-
tion, planning, managing and controlling of resources spent.
● Third, the participation of environmental actors in the governance of the funds,
building on the partnership principle that was introduced by the Commission in
support of its bottom-­up and networked governance ideal.

Thus, the character of Cohesion policy as a showcase for the programmatic aims of
the Commission, regular efforts to adjust the policy instruments of the funds to these
programmatic aims, and the institutionalised participation of non-­state actors as part of
wider bottom-­up governance ambitions of the Commission should facilitate the pursuit
of environmental aims in EU Cohesion policy. At the same time, the ­performance of EU
Cohesion policy remains critical from an environmental perspective to this very day. In
this chapter, we will provide a deeper understanding of which form of EPI was imported
into Cohesion policy (for example, strong versus weak environmentalism), of the interre-
lation of the three dimensions of SD, and of the overall dynamics explaining the greening
of EU policies and the obstacles still blocking its path.
Our analysis will focus in particular on the first seminal inclusion of environmental
 Cohesion policy and the green economy  ­371

aims in the Structural Funds regulations in the 1990s and the 1993 Cohesion Fund, and
on the recently strengthened emphasis on the inclusion of environmental concerns in
the current period 2014–2020. First, looking at the early ‘greening’ of Cohesion policy,
we demonstrate that the dimensions outlined above – programmatic integration, des-
ignation of resources and control mechanisms as well as the participation of non-­state
actors – are by no means intrinsically linked. We also show that EPI followed a path
where no principal priority was given to environmental objectives. Nevertheless, the
balancing of objectives was improved to secure the legitimacy of the overall policy in
a series of reforms. Subsequently, looking at the current funds, we identify an impor-
tant programmatic shift. While the idea of a green economy may not be evidence of
environmental protection being considered as the principal priority, it still allowed for
a positive framing of environmental (and increasingly climate) policy as opportunities
for economic modernisation; and arguably came to rescue the increasingly challenged
idea of EU redistributive spending. Early Cohesion policy was still rooted in the idea
of environmental policy being a financial burden especially for lagging economies, a
burden to be compensated in a spirit of solidarity. The current funds treat environmen-
tal measures as an opportunity for a modern economy and overall competitiveness and
growth.

EPI IN EARLY EU COHESION POLICY: BETWEEN SHOWCASE

AND WINDOW-­DRESSING

The issue of greening EU Cohesion policy has a long history in EU policy-­making and
policy reform. Arguably, concerns over widespread disrespect of EU regional spend-
ing for environmental protection in the late 1980s and early 1990s were something of a
starting point for developing a systematic strategy for greening EU Cohesion policy, and
more generally to move towards EPI of all EU policies. Such greening efforts built on
early announcements in the Community’s EAPs to ‘integrate concerns for the environ-
ment into the policy and development of certain economic activities as much as possible
and thus promote the creation of an overall strategy making environmental policy part
of economic and social development’ (Council of the European Communities 1983:
Section I, 8). With the adoption of the Single Market Programme the programmatic
dimension of the Structural Funds as flanking measures to market integration gained
in importance in the Brussels arena with the Commission acquiring responsibility in
planning and evaluating the funds. Linked to announcements in the EAPs, the 1988
regulations of the European Regional Development Fund (ERDF) pointed to the
programmatic field of ‘productive investment and investment in infrastructure aimed
at environmental protection where such investment is linked to regional development’
(Council of the European Communities 1988b: Art. 1(f)). Although environmental
spending was coupled with an overarching economic development objective – something
that was criticised by environmental actors – environmental protection became part of
the programmatic horizon. Furthermore, with the Single European Act, EU environ-
mental policy became legally codified and the principle of integrating environmental
considerations into other policies at all levels was mentioned in the new environmental
title of the Treaty (Art. 130r EC). Subsequently, the Framework Regulation of the
372  Handbook on Cohesion policy in the EU

Structural Funds also declared to engage in EPI (Council of the European Communities
1988a: Art.7 (1)).
Criticisms from environmental actors emerged, however, and targeted not only the pro-
grammatic level, but also the implementation of the funds. Reacting to evidence of wide-
spread violations of EU environmental legislation in the conduct of ERDF programmes
and projects, as was documented for instance by the European Court of Auditors (1992),
a large environmental campaign was launched to continue reforming the funds in the next
programming round and securing a truly effective EPI (Lenschow 1997; WWF and IEEP
1989, 1990; WWF 1993).
Indicating increased awareness of environmental protection problems in Europe
and responding to environmental mobilisation, in 1993 the Treaty on European
Union (TEU) explicitly linked cohesion and environmental objectives in its Art. 2,
stating that ‘the Community shall have as its task . . . to promote throughout the
Community a harmonious and balanced development of economic, sustainable and non-­
inflationary growth respecting the environment’, and elaborated in Art. 130(r)(2) TEU
that ‘[e]nvironmental protection must be integrated into the definition and implementa-
tion of other Community policies’.1 As hoped by the green campaigners, the Structural
Funds went through a new round of reforms which strengthened their environmental
dimension by introducing previously neglected policy integration measures. Spending
in support of developing a green economy was acknowledged as a possibility, although
initially mentioned as a limiting factor with the clear subordination of environmental
spending for economic objectives. Primarily, the reforms targeted poor planning and
monitoring performance by requiring appraisals of the environmental situation of each
region and of the environmental impact of the strategy and operations planned in that
region. Additionally, the Commission began to prepare tools to guide the member states
towards compliance with the EPI principle. With respect to the participation dimension,
the new regulation required that the member states associate ‘competent environmental
authorities in the various stages of programming’ (CEC 1993, cited in Lenschow 2002b).
The inclusion of non-­state actors was rejected in the Council, however.
On the whole, the elaboration of EPI came largely in the form of reminders of the legal
constraints imposed by now effective EU environmental law; consequently, the politics
of greening was confrontational. Yet, environmental actors gained access to the policy-­
making process at Brussels level and could thus build some alliance with the Commission
against non-­compliant member states.
At about the same time as the ERDF reforms, the Cohesion Fund was established to
assist Greece, Ireland, Portugal and Spain in preparing for the Economic and Monetary
Union. Starting even before the ratification of the Maastricht Treaty in an interim phase,
the Cohesion Fund was dedicated to finance environment and transport infrastructure.
Thus, resources available for greening appeared to rise substantially. But, initially and
somewhat paradoxically, the Cohesion Fund performed poorly in integrating environ-
mental considerations in its funding decisions. Critically, most environmental projects
aimed at compensating public authorities in the four recipient countries for costs
incurred in reaching compliance with the EU environmental acquis – explicitly ignoring
the polluter-­pays principle.2 Furthermore, project decisions on investment in transport
infrastructure could be taken disjointedly from overall environmental objectives and no
effective procedures for ex ante assessment and monitoring were established. Yet, after
 Cohesion policy and the green economy  ­373

the early interim stage of the Cohesion Fund progress was made in the 1994 Regulation
(Council of the European Union 1994) – once more following massive campaigning
of environmental non-­governmental organisations (NGOs) (WWF and T&E 1994). In
particular, the Commission was strengthened in its monitoring role and could ask for
reimbursement of ‘sums unduly paid’, for instance the reimbursement of Cohesion Fund
spending for project activities violating EU (environmental) law. The Regulation also
called for an equal balance between environmental and transport projects. Nevertheless,
‘the appeals for environmental impact assessment, monitoring and the participation of
environmental authorities, regional authorities and social and economic partners were
mainly declaratory and lacked the support of operational measures similar to those
developed for the Regional Funds’ (Lenschow 2002b: 200). Hence, while the Cohesion
Fund made available substantial resources for environmental projects, the resources
were at best loosely coupled with SD objectives, and instead aimed at relieving national
budgets from the constraints imposed by EU environmental law. Similarly, the call for
building participatory structures in support of EPI was ignored at first.
The explanation for the comparatively poor status of EPI in the early Cohesion Fund
is largely rooted in its political and institutional set-­up (see Lenschow 1997, 2002b). The
Fund was established as a macroeconomic financial transfer mechanism and initially
situated in the Directorate-­General for Budget of the Commission which had no experi-
ence (and ambition) of operational management. In 1995, the Fund was moved to the
Directorate-­General for Regional and Urban Policy (DG REGIO), which began pushing
for cohesion from a (regional) development perspective and issuing plans for better coor-
dination between the Cohesion Fund and the Structural Funds with regard to environ-
mental monitoring and assessment announced (CEC 1995: 9).
In the late 1990s, the Agenda 2000 aimed at further closing income disparities within
and between member states and preparing for prospective enlargement to Central and
Eastern Europe (CEE) (see Brunazzo, Chapter 1, this volume). Both the Structural
Funds and the Cohesion Fund were once more reformed in this context. Although the
dominant debate centred on the overall resource level and the distribution of funds
between net payers and net (future) beneficiaries, Commission and Parliament – with
the support of environmental NGOs – succeeded in securing further ‘greening’. In the
Cohesion Fund member states were required from now on to provide the Commission
with environmental information of the ex ante appraisals of project decisions and of the
results of environmental impact assessments. The regulation reforming the Structural
Funds (Council of the European Union 1999) introduced ‘environmental needs’ as a
criterion justifying funding; hence, it loosened the narrow coupling to economic develop-
ment objectives. De facto however, and especially in CEE, ‘environmental needs’ denoted
once again the financing of compliance with EU environmental law. Substantial funds
were needed in particular to build waste and water treatment infrastructure. The revised
regulation also broadened the participation of environmental authorities and societal
actors by ‘encouraging’ member states to include environmental actors in the planning
and management of programmes; however ‘according to national rules and practice’.
Furthermore, it underlined compliance with EU environmental law as precondition for
receiving funding by introducing the possibility to suspend or withdraw regional funding.
Yet, at the same time, the 1999 regulation was the first step towards a more decentral-
ised approach in managing the Structural Funds, relying more heavily on national and
374  Handbook on Cohesion policy in the EU

regional managers of the funds, thus undermining the Commission’s grip in controlling
the spending of the funds.
Summing up the first decade of greening EU Cohesion policy, we observe that it
began with the reformulation of the regulations but that it increasingly addressed also
the operational side of the policy. By and large, early reforms paralleled the evolution of
the EPI principles in the EU Treaties. Indeed, the multiannual structure of the Structural
Funds provided windows of opportunity for environmental campaigners to push for
EPI improvements at programming level, in developing EPI policies in the funds and
by widening the participation of environmental actors. EPI in the Cohesion Fund first
suffered from its macroeconomic framing and its member state bias in planning for the
expenditure, but under the auspices of DG REGIO performance improved in the mid-­
1990s. While the overall resources spent on environmental measures in the context of the
Structural Funds was not recorded (or earmarked for that matter), spending for environ-
mental projects in the Cohesion Fund was raised to approximately 50 per cent of the total
by 1995 (Kouvelis et al. 1997). With regard to participation, we note an intensive level
of mobilisation at EU level in the early 1990s pushing for EPI as stated in the Treaties.
This mobilisation consisted in classical lobbying (for example, addressing the Council
presidency in ‘letters to the presidency’; see, for example, WWF 1993) and in critical
campaigning based on ‘scandalous spending’ in the member states. These campaigns also
successfully pushed for the better inclusion of environmental actors in the member states,
at least at the regulatory level.
Compared to other EU policies, the Structural Funds can be considered a first-­mover
with respect to EPI. Interestingly, in the early days the ‘win–win’ scenario of a green
economy was not the dominant frame behind reforming the funds. Rather, it was respect
for EU environmental policy and compliance with the law. Thus, resources (of the
Cohesion Fund) and management and monitoring procedures as well as involvement of
environmental authorities, aimed at removing delegitimising violations of EU policy at
EU level and securing costly compliance at member state level. Bottom-­up awareness-­
raising and the facilitation of a threefold balanced understanding of SD was a rather
secondary theme in the reforms. As several court cases at the time revealed, in seeking the
balance between economic development and environmental protection, the EPI principle
served as a point of reference, but as compromises especially around Natura 2000 areas
showed,3 environmental protection was far from being given principal priority.

FROM THE LISBON STRATEGY TO THE AGENDA 2020

The (in particular British) criticism of the efficacy and rationale of the Structural Fund
programmes was most saliently pronounced in the Sapir Report (Sapir et al. 2004). As
a consequence, the debate over EU Cohesion policy was subordinated to the aim and
auspices of the Lisbon Strategy to make the EU the ‘most competitive region in the
world’, that is, to first and foremost promote economic growth. Criticism of the thematic
conception of the Structural Funds claimed that ‘economic goals have trumped the social
and territorial dimensions . . . encouraging a “misconceived” and “overly narrow” focus
on innovation’ (Mendez 2013: 644).
Moreover, the lacking implementation of the horizontal priority of sustainable
 Cohesion policy and the green economy  ­375

­ evelopment raised massive criticism of EU Cohesion policy by environmental groups

d
and actors. They argued that EU Cohesion policy massively supported environmentally
questionable programmes and failed to enact a coherent ‘green growth’ strategy which
links innovation and environmental concerns. The network of non-­governmental organi-
sations, Bankwatch operates a website (actually produced with the financial assistance
of the European Union)4 which lists environmentally harmful projects in Central and
Eastern Europe. Since 2007, Bankwatch has identified environmental damage amounting
to €16.7 billion. As to Structural Funds resources spent on infrastructure, in the period
2007–2013 54 per cent were used for motorways and airports and only 29 per cent for
railways (Torkler and Steiner 2012: 7; ECA 2014). Thus, environmental NGOs claimed
that the principle of sustainability was not seriously put into practice.
Two major developments led to a renewed emphasis on environmental policies
and EPI after 2009. First, the new EU Cohesion policy cycle, 2014–2020, adopted a
­‘contractualisation’ approach as suggested by the Barca Commission (Barca 2009; Bache
2015) headed by the former head of the Department for Cohesion and Development
Policies within the Italian Ministry of Finance. Barca had, in his position at the min-
istry, used Structural Funds to increase the tasks and the capacity of regional govern-
ments whilst putting them under surveillance by the national government and the EU
(see Baudner and Bull 2013). The second development was the revival of environmental
policies through the (near) consensus across the member states of the EU on the need to
pursue climate policies to prevent the ongoing global warming. The salience of climate
policies pushed for a new adjustment of environmental policies in terms of programmatic
commitments, policies and procedures, and the participation of environmental actors.

Programmatic Commitment

With the Agenda 2020, environmental aims became an integral part of the vision of the
EU as it was conceived and promoted by the Commission. In 2010, the then Commission
President Barroso presented his ten-­year strategy Europe 2020 for ‘intelligent, inclusive
and sustainable growth’ (European Commission 2010). It entailed, next to economic
aims (increase in spending on research and development) and social aims (decrease in
the percentage of the population threatened by poverty), the most salient environmental
aims of the European Union: the reduction of greenhouse gas emissions by 20 per cent,
the increase in renewable energy by 20 per cent and the increase of energy efficiency by
20 per cent by 2020. Climate policies strongly contributed to the ‘sub-­text to the 2013
reform’, ‘the aim of re-­legitimizing cohesion policy, leading to the most fundamental
review since 1988’ (Mendez 2013, cited in Bache 2015: 254).
The 11 thematic objectives of the new Structural Fund regulations (European
Parliament and Council 2013) correspond with the flagships of the Europe 2020
­strategy.5 Climate policies certainly helped to justify Cohesion policy at a time of budg-
etary constraints and member states questioning the ‘value added’ of Cohesion policy.
With Cohesion policy encompassing more than 30 per cent of the European budget,
member states (most notably the United Kingdom) were reluctant to increase the funding
of Cohesion policy or the general budget, and challenged the role of the Commission.
Climate policies justified both the conception of Structural Funds, which encompassed
funding for more-­as well as less-­developed regions, as well as a strong role for the
376  Handbook on Cohesion policy in the EU

Commission. Climate change offered, thus, an overarching opportunity to demonstrate

the need for European solutions, in particular as thematic concentration became one
of the major concerns of the Commission in order to demonstrate the ‘value added’ of
Cohesion policy.
Whereas funding for environmental programmes was one of the options for member
states or regions in previous periods, for the period 2014 to 2020 spending on climate
policies was made compulsory and became a core element of the entire structural action.
Although the ‘usual suspects’, such as the Scandinavian countries, particularly sup-
ported the Commission plan, the minimum 20 per cent allocation in more-­developed
regions to the three Thematic Objectives pertaining to climate change and the environ-
ment (Thematic Objectives 5, 6 and 7, as discussed in the next section) was generally not
controversial. However, Commission officials used the opportunity of an overhaul of the
Structural Funds to push for a new emphasis on environmental policies. This holds true
also for DG REGIO, which strengthened the attention paid to environmental aspects
despite the fact that its ‘DNA’ was characterised by the commitment to social and eco-
nomic development.6 Policy integration within the Commission has been strengthened
by the establishment of ‘mirror units’ in DG REGIO and the Directorate-­General for
Environment (DG ENV).

Policies and Policy Integration

As a result of the above considerations, out of the 11 thematic objectives eligible for
funding in the period 2014 to 2020, three were entirely environmental in nature. These
were:

● Thematic Objective 4, ‘Supporting the shift towards a low carbon economy’.

● Thematic Objective 5, ‘Promoting climate change adaptation, risk prevention and
management’.
● Thematic Objective 6, ‘Preserving and protecting the environment and promoting
resource efficiency’.

In the period 2014–2020, depending on the type of region,7 between 12 and 20

per cent of Structural Funds resources have to be spent on climate policies. According to
Commission data, €38 billion have been earmarked by the member states’ programmes
for 2014–2020 to foster the low-­carbon economy (50 per cent more than required). This
would amount to a doubling of the expenditure on climate policies vis-­à-­vis the ­previous
2007–2013 period. A study on German Structural Funds programmes, conducted on
behalf of the World Wide Fund for Nature (WWF) for the period 2007–2013, concluded
that 19 per cent of the ERDF resources had been allocated to environmental meas-
ures, but only 4 per cent had been allocated to the area of energy and climate (WWF
Deutschland 2010: 60). In contrast, the Operational Programmes agreed for Germany
for the period 2014–2020 dedicate about 20 per cent of the resources to climate change
(Thematic Objective 4) and 10 per cent to climate adaptation (Thematic Objective 5),8
which illustrates a very significant shift in emphasis.
Beyond spending on climate policies, many other environmental measures can still be
supported. According to environmental groups, waste and water treatment spending still
 Cohesion policy and the green economy  ­377

figure much more prominently than measures to foster biodiversity or the enactment
of Natura 2000. Nevertheless, in regions which received less Structural Funds support
than in the previous period (such as the Eastern German regions), the earmarking of 20
per cent of the funds for climate policies meant a reduction in funding for other environ-
mental projects. Significantly, climate change policies, such as investment in renewable
energies, are more easily associated with prospects of ‘green growth’ and ‘green jobs’ than
traditional fields of environmental policy.
Together with the formulation of thematic aims and the earmarking of funding
allocations, advocates of EPI had pushed for strengthening sustainability as one of
the so-­called ‘horizontal priorities’ in the Structural Funds regulations. Compared to
earlier funding periods with numerous priorities, sustainability now remains as one of
only two horizontal priorities, next to equal opportunities, suggesting a true emphasis.
While the regulations for the last period, 2007–2013, had dedicated just a small para-
graph to SD, Article 8 of the Common Provisions Regulations for 2014–2020 (European
Parliament and Council 2013) elaborates at some length on how to enact environmental
­mainstreaming – at least in the field of climate change. Most importantly, it states that
‘member states shall provide information on the support for climate change objectives
using a methodology based on the categories of intervention’ (European Parliament and
Council 2013). As a result, each programme is required to entail specific actions to foster
the climate aims of the EU.
To counter the clear focus on the climate targets of the EU, environmental actors and
the EP successfully pushed for the inclusion of biodiversity as part of sustainability.
However, an exact determination of indicators met the resistance of the member states,
often justifying their opposition by pointing at the principle of subsidiarity. As a result,
the Commission established only a limited number of indicators specifying project cri-
teria for sustainability, and most indicators and criteria for project selection are elabo-
rated by the programmes’ Monitoring Committees. In fact, Monitoring Committees
established specific subcommittees for environmental mainstreaming. Environmental
NGOs and sympathetic Members of the European Parliament (MEPs) and Commission
officials criticise the imbalance of rather few commonly applicable Commission criteria
and the ‘thousands of indicators’,9 which were set up in different national and regional
programmes. Moreover, they lament that baseline data on some important indicators, for
example concerning the measurement of biodiversity, are simply not available or not easy
to produce, for example the simple measurement of jobs created by the green economy.10
Another element of major change in this regard, widely held as a success of the
Commission, has been the introduction of ex ante conditionality. It requires the state
or region in question to demonstrate that current legislation is in line with EU norms
such as environmental law (or will comply with them within the first two years of the
funding period). The examination of ex ante conditionality at an early stage of prepa-
ration lends credibility to the Commission’s threat of not accepting the non-­compliant
programmes submitted for funding. As a Commission official stated, persuasion and
control are the two arms of the Commission’s influence, and ex ante conditionality
finally strengthened the latter.11 Thus, EU regional policy had embraced the delegation
of planning and control functions to member states (or regions) followed by a subsequent
‘contractualisation’.
The assessment of the results to be expected is, however, ambivalent. Whereas it has
378  Handbook on Cohesion policy in the EU

been claimed that the stricter application of the horizontal principle of sustainability has
stopped the funding of infrastructure jeopardising the climate balance of member states
(Schrödter 2013: 22), other environmental actors are critical that, following EP pressure,
the Structural Funds regulations are still allowing huge industrial projects with question-
able credentials with regards to sustainability (Torkler and Steiner 2012: 8). However,
commenting on the early implementation phase, the Commission highlights that funding
for transport infrastructure decreased considerably, for instance in Poland, the main
beneficiary of the Structural Funds. Also, whereas in the period 2007–2013 Eastern
Germany spent one eighth of Structural Funds resources on basic infrastructure, for the
current (2014–2020) funding period the Commission insisted that transport infrastruc-
ture is no longer eligible for funding.12 More generally, in the current programming period
specific policies to ensure EPI have gained procedural strength through an earmarking
of (climate-­related) environmental spending, attempts to develop measurable indicators
and the linking of structural spending to environmental conditionality. These reforms are
welcomed by both environmental watchdogs such as WWF and those insisting on the
enforcement of (economic) value for money.

Participation of Environmental Actors

The procedural character of policy integration further enhances the importance of

the Monitoring Committees in the implementation process of EU Cohesion policy.
Monitoring Committees have been part of the Structural Funds implementation since
their inception in 1988 and since 1993–1999 they also encompass ‘social and economic
­partners’. From 2000 on, environmental actors are explicitly included in the regulations.
Environmental actors can push fund administrators to, first, include indicators suit-
able to measure the environmental impact, and second, challenge fund administrators
to justify decisions in light of the established criteria. The efficiency of the Strategic
Environmental Assessment, which scrutinises Structural Funds programmes, depends on
the willingness, capability and power relations of the actors involved in the Monitoring
Committees, however.
An important step in the Common Provisions Regulation for the European Structural
and Investment Funds for the period 2014–2020 was the introduction of a Code of
Conduct for the partnership in EU Cohesion policy (as a Commission Delegated Act).
It set the framework conditions for the newly introduced Partnership Agreements, which
have to precede the design of the programmes financed by the European Structural
and Investment Funds (see Brunazzo, Chapter 1, this volume). The Code of Conduct
was wanted by the European Parliament; however, it was presented at a very late stage
of the debate on the new Structural Funds guidelines and it was introduced by the
Commission as an Implementing Act, that is, without any deliberation with the Council
or the Parliament. It established criteria for the participation of non-­governmental
actors, prescribing timely information and the commitment to capacity-­building for non-­
governmental actors. Thus, according to Article 7 of the Code of Conduct, Partnership
Agreements have to demonstrate ‘the actions taken to ensure the active participation of
the partners’ and indicate ‘the results of the consultation with the partners and a descrip-
tion of its added value’ (European Commission 2014).
Although the Code of Conduct includes provisions such as that which recommends
 Cohesion policy and the green economy  ­379

‘to  take into account the different institutional and legal frameworks of the Member
States’, it is a long-­standing complaint of the member states that the Commission tries
to enforce its idea of partnership ‘through the back door’ in the implementation process.
Thus, the German Bundesrat (the chamber of the representatives of the regional gov-
ernments), for instance, in the negotiations rejected the development of the Code of
Conduct as a Delegated Act (Torkler and Steiner 2012).
It is an explicit aim of the Commission to establish networks with non-­governmental
actors and to present examples of best practice in the Structural Funds implementa-
tion. However, for environmental actors in particular, the lack of manpower to invest
in the participation in Monitoring Committees is a major difficulty, in contrast to many
­‘economic partners’. Accordingly, the Commission continues to push for the possibility
to use technical assistance for non-­governmental actors to build expertise, this being one
of the most controversial topics in the partnership during the last decade. For instance,
in the Federal Republic of Germany, regional governments were initially reluctant to
allow the participation of non-­state actors, pointing at their shaky democratic legitima-
tion. Yet, once non-­governmental actors began to participate, the Commission encour-
aged fund administrators to provide them with voting rights and technical assistance,
overcoming in most regions the initial rejection of the public administration to spend
‘public money’ on ‘private organisations’. For example, in the monitoring committee of
Mecklenburg-­Vorpommern, which is widely held to provide best practice in Germany,
the public administration now commands eight votes, whereas employer organisations,
trade unions, gender-­related organisations, churches and environmental organisations
command seven in total. Non-­governmental actors have together applied for additional
funding and receive additional resources for capacity-­ building and additional staff.
Nevertheless, even in the region of Mecklenburg-­Vorpommern environmental actors had
sometimes to resort to the Environmental Information Act in order to obtain informa-
tion from a reluctant regional administration.
Moreover, the Commission has started to build networks of governmental and non-­
governmental actors for EPI. The European Network of Environmental Authorities  –
Managing Authorities (ENE-­ MA) for Cohesion policy also includes environmental
NGOs.13 Within Germany, the Federal Ministry of Economy established a Committee on
Environment to advise ERDF administrators on environmental aspects, including WWF
as the representative of environmental groups. Environmental actors, for their part,
intend to play a constructive role in Monitoring Committees. Thus, they became aware
that the establishment of excessively ambitious indicators may result in a loss of funding
in the following period. They also point out that their competence was appreciated by
other actors when it came to the question of which programmes can be supported after
the drastic increase in funding for climate purposes.14
More in general, environmental NGOs have started to pursue a twofold strategy,
in a way reminiscent of the Commission’s strategy. Whereas organisations such as
Bankwatch denounce examples of environmentally damaging projects (in particular in
Central and Eastern Europe) to the public, other organisations such as WWF focus on
presenting examples of best practice.15 Thus, environmental actors strongly benefit from
the opportunity structures established by the Commission even when they criticise its
actions.
380  Handbook on Cohesion policy in the EU

CONCLUSIONS

In this chapter we have traced the link between EU Cohesion policy and the strategic
objective of moving towards a ‘green economy’; aiming at ‘green growth’, which is
the terminology used, for instance, in Organisation for Economic Co-­operation and
Development (OECD) circles, over the past three decades. The very basis of this linkage
was established in the late 1980s and early 1990s, building on the environmental chapter
in the Single European Act, EU Environmental Action Programmes elaborating on sus-
tainable development, and the environmental policy integration principle. While the eco-
nomic development and growth potential of investments in environmental infrastructures
was mentioned in the 1988 Structural Funds regulations, the green economy was not the
dominant environmental theme back then. Rather, subsequent reforms of the Structural
Funds, and especially the establishment of the Cohesion Fund in 1993–1994 were moti-
vated by the aim of securing consistency and compliance with EU environmental law,
at both EU and member state (or regional) level. Nevertheless, although the dominant
framing of early greening measures in the Structural and Cohesion Funds built on the
notion of environmental policy as a financial and administrative burden – particularly for
the poorest countries and regions in the EU – the legitimacy of EU-­level environmental
regulation was no longer questioned and financial compensation to secure costly compli-
ance was deemed necessary. Indeed, environmental NGOs were able to use evidence of
inconsistency between cohesion spending and EU environmental policy to challenge the
legitimacy of the EU funds, and effectively pushed for reforms.
In the early 2000s, with the Lisbon Strategy – focusing on growth and competitiveness
and being relatively silent on the environmental pillar of SD – dominating the strategic
discourse in the EU, EPI largely dropped out of the active agenda and the further devo-
lution of Structural Funds implementation responsibility to the member states removed
some opportunities for the Commission to continue the greening process. However,
with the background of the Europe 2020 strategy, the renegotiation of Structural
Funds regulations for the period 2014 to 2020 presented a window of opportunity to
foster environmental concerns in EU Cohesion policy. At a programmatic level, the
Europe 2020 strategy made ‘smart growth’ a core element of European policy-­making.
Innovation and growth potential was particularly seen in a field where the EU was com-
mitted to act anyway: climate change. In the new common strategic framework of EU
Cohesion policy, innovation and investment in the areas of renewable energies, energy
efficiency and climate change adaptation are mentioned as thematic aims and, during
the negotiations leading up to the new framework, they were widely accepted as ‘win–
win’ areas securing growth, employment and environmental protection. Most notably,
the new Common Provisions Regulation introduced the obligation to earmark funds for
projects related to a low-­carbon economy. Under these programmatic premises, member
states also proved willing to strengthen policy measures to secure EPI at planning, man-
agement and enforcement levels and to extend the participation of non-­governmental
actors in these processes.
Yet, while the insertion of a stronger environmental dimension related to a growing
consensus within the Commission and among member states over climate policies, it
may have also been the ability of the Commission to move in the shadow of other over-
arching questions for the member states, such as the struggle over the allocation criteria
 Cohesion policy and the green economy  ­381

(‘who gets what’) or the link to macroeconomic policies, to pursue a smartly packaged
environmental agenda.16 The future will tell whether this turns out to be a precarious
foundation for Cohesion policy and green growth. Firstly, while the period 2014–2020
entails, with the extended Article 8 of the Common Provisions Regulation, a huge step
forward in comparison to earlier periods, EU Cohesion policy still needs to stand the
test of implementation. Secondly, with the ‘green economy’ agenda Cohesion policy
has adopted a core theme of sustainable development, but the survival of this notion
probably depends on short-­to medium-­term economic performance; only in the area
of climate policy we see some evidence that the ‘sustainability principle’ is receiving
priority status. Indeed, close observers see signs of the EPI principle being replaced by
the narrower CPI (climate policy integration) principle (Adelle and Russell 2013); in
particular, it is feared that the classical focus of EPI in the Structural Funds on secur-
ing the protection of nature and biodiversity is losing salience at the expense of the
climate change priority. Thirdly, in light of recent moves within the newly appointed
Commission to recast or discontinue environmental policies initiated by the previous
Commission (EurActiv 28 and 29 April 2015),17 the signal is out that political com-
mitments once made may be only of a temporary nature. Thus, despite the favourable
discursive framing of cohesion to be achieved through a green economy, the changing
tide in environmental politics in the EU may put the efficacy and the sustainability of
the procedural rules of EPI to the test.

NOTES

 1. For a wider discussion on the establishment of the EPI principle in the EAPs and the Treaties see
Lenschow (2002a) and Jordan et al. (2008).
  2. The polluter-­pays principle has been enshrined in the Single European Act in the then newly introduced
environmental title (today: Art.191(2) TFEU) and aims to secure that the polluter should bear the expense
of carrying out the measures decided by public authorities to ensure a good state of the environment.
 3. Natura 2000 areas form an EU-­wide network of nature protection areas established under the 1992
Habitats Directive. Conflicts of interest arose when regional development plans called for infrastructural
development crossing these areas. Typically, priority was given to infrastructure development with com-
pensatory measures aiming to protect nature and biodiversity.
  4. http://bankwatch.org/billions/ (accessed 29 November 2015).
 5. As part of the Europe 2020 strategy process aiming at ‘smart, sustainable and inclusive growth’ the
Commission formulated flagship initiatives that will commit both the EU and the member states. EU-­level
instruments, including its financial levers, will be mobilised to deliver the Europe 2020 goals.
  6. Interview with official of DG REGIO, 11 June 2015.
  7. The requirements are 20 per cent for more-­developed regions, 15 per cent for transition regions and only
12 per cent for less-­developed regions.
  8. Interview with official of DG ENV, 24 June 2015.
  9. Interview with representative of WWF in Brussels, 8 June 2015.
10. Interviews with representatives of WWF in Brussels, 8 June 2015, and BUND in M ­ ecklenburg-­Vorpommern,
18 June 2015.
11. Interview with official of DG REGIO, 11 June 2015.
12. Interview with representative of BUND, 18 June 2015 and official of DG REGIO, 11 June 2015.
13. Interview with official of DG REGIO, 11 June 2015.
14. Interview with representative BUND, 18 July 2015.
15. Interview with WWF representative in Brussels, 8 June 2015.
16. Conversations with representatives in the Council Secretariat and WWF, 24 and 25 June 2015.
17. http://www.euractiv.com/sections/eu-­priorities-­2020/judges-­limit-­commissions-­power-­retract-­eu-­laws-­3141
29; http://www.euractiv.com/sections/sustainable-­dev/vella-­told-­timmermans-­not-­axe-­circular-­economy-­
package-­314132.
382  Handbook on Cohesion policy in the EU

REFERENCES

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Bache, Ian (2015), ‘Cohesion Policy – A New Direction for New Times?’, in Helen Wallace, Mark A. Pollack
and Alasdair Young (eds), Policy Making in the European Union, 7th edn, Oxford: Oxford University Press,
pp. 243–262.
Barca, Fabrizio (2009), An Agenda for a Reformed Cohesion Policy. A Place-­based Approach to Meeting
European Union Challenges and Expectations, Brussels: European Commission.
Baudner, J. and M. Bull (2013), ‘Reassessing the Europeanization of national policies: a comparative study of
regional policies in eastern Germany and southern Italy’, Comparative European Politics, 11(2), 201–221.
Commission of the European Communities (CEC) (1992), Towards Sustainability. A European Community
Programme of Policy and Action in Relation to the Environment and Sustainable Development, COM(92)23/
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CEC (1993), ‘Community Structural Funds: 1994–1999. Revised Regulations and Comments’, Brussels:
CEC.
CEC (1995), Communication from the Commission to the Council, the European Parliament, the Economic and
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final, Brussels, 22 November.
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Council of the European Communities (1988a), Council Regulation (EEC) No 2052/88 of 24 June 1988 on
the Tasks of the Structural Funds and their Effectiveness and on Coordination of their Activities between
Themselves and with the Operations of the European Investment Bank and the other Existing Financial
Instruments, OJEC L 185/9.
Council of the European Communities (1988b), Council Regulation (EEC) No. 4254/88 of 19 December 1988,
Laying down Provisions for Implementing Regulation (EEC) No 2052/88 as regards the European Regional
Development Fund, OJEC L 374/15.
Council of the European Union (1994), Council Regulation (EC) No 1164/94 of 16 May 1994 Establishing a
Cohesion Fund, OJEC L 130/1.
Council of the European Union (1999), Council Regulation (EC) No 1260/1999 of 21 June 1999 Laying down
General Provisions on the Structural Funds, OJEC L 161/1.
European Commission (2010), Communication from the Commission Europe 2020. A Strategy for Smart,
Sustainable, Inclusive Growth, COM(2010) 2020 final.
European Commission (2014), Commission Delegated Regulation (EU) No 240/2014 of 7 January 2014 on the
European Code of Conduct on Partnership in the Framework of the European Structural and Investment Funds,
OJEU L 74/1.
European Court of Auditors (ECA) (1992), Special Report 3/92 Concerning the Environment together with the
Commission’s Replies, OJEC, C245, 23 September.
European Court of Auditors (ECA) (2014), Special Report No 21/2014: EU-­Funded Airport Infrastructures:
Poor Value for Money, Luxembourg: Publications Office of the European Union.
European Parliament and Council (2013), Regulation of the European Parliament and of the Council (EU)
No 1303/2013 Laying down Common Provisions on the European Regional Development Fund, the European
Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European
Maritime and Fisheries Fund, OJEU L 347/320.
Jordan, Andrew, Adriaan Schout and Martin Unfried (2008), ‘The European Union’, in Jordan, Andrew and
Andrea Lenschow (eds), Innovation in Environmental Policy? Integrating the Environment for Sustainability,
Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, pp. 159–179.
Kouvelis, Spyros, Heather Corrie, Jeanne Meldon and Dirk Schubert (1997), Tools for Economic and Social
Cohesion in the European Union: An Environmental Mid-­Term Review, Brussels: WWF International.
Lafferty, W. and E. Hovden (2003), ‘Environmental policy integration: towards an analytical framework’,
Environmental Politics, 12 (3), 1–22.
Lenschow, Andrea (1997), ‘Variation in European environmental policy integration: agency push within
complex institutional structures’, Journal of European Public Policy, 4 (1), 109–127.
 Cohesion policy and the green economy  ­383

Lenschow, Andrea (2002a), ‘New regulatory approaches in “greening” EU policies’, European Law Journal,
8 (1), 19–37.
Lenschow, Andrea (2002b), ‘Dynamics in a multilevel policy: greening the European Union Regional and
Cohesion Funds’, in Andrea Lenschow (ed.), Environmental Policy Integration – Greening Sectoral Policies in
Europe, London: Earthscan, pp. 193–215.
Mendez, C. (2013), ‘The post-­2013 reform of EU Cohesion Policy and the place-­based narrative’, Journal of
European Public Policy, 20 (5), 639–659.
Sapir, André, Philippe Aghion, Giuseppe Bertola, Martin Hellwig, Jean Pisani-­ Ferry, Dariusz Rosati,
José Viñals and Helen Wallace (2004), An Agenda for a Growing Europe: The Sapir Report, Oxford: Oxford
University Press.
Schrödter, Elisabeth (2013), ‘Innovativ, inklusiv, nachhaltig. Aussichten auf die neue Förderperiode 2014–
2020’, Die Grünen im Europäischen Parlament, accessed 19 November 2015 at http://www.gruene-­europa.
de/fileadmin/dam/Deutsche_Delegation/Broschueren/13_02_Strukturfonds_ES.pdf.
Torkler, Peter and Julia Steiner (2012), ‘Kohäsionspolitik auf dem Prüfstand’, DNR Themenheft, 1/2012.
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Interviews: Cited and as Background Information

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the Monitoring Committee of Mecklenburg Vorpommern, 18 June 2015.
Representative of WWF Germany, 4 June 2015.
Two officials of the Council’s Secretariat General, 11 and 24 June 2015.
Two representatives of World Wide Fund for Nature (WWF) in Brussels, 8 and 25 June 2015.
24. New strategic approaches to territorial
cooperation in Europe: from Euro-­regions to
European Groupings for Territorial Cooperation
(EGTCs) and macro-­regional strategies
Stefan Gänzle*

INTRODUCTION

Territorial cooperation in Europe has grown substantially since the end of World War II.
Reframing state borders as zones of contact instead of areas of separation, the process
of territorial cooperation must be conceived in terms of both a cause and an effect of
European integration.1 It is a process by which local and regional barrier effects of state
borders are gradually reduced through engagement of actors from two or more sides
of a border in purposeful action. Territorial cooperation is often underpinned by some
functional needs for collaboration (for example, the management of common resources,
such as a shared transport corridor, infrastructure and a common lake or sea) or pre-
sents a way of dealing with the local and regional dimensions of supranational integra-
tion (both intended and unintended) outcomes, such as for example the free movement
of persons and the creation of a single market. In addition, cross-­border cooperation
(CBC) as a subset of territorial cooperation may address the issue of reconciliation after
World War II, which became an important moral element in the framework of city twin-
ning, and thus serves as a consistent tool for providing yet another layer of legitimacy
to CBC.2
It is not surprising that territorial cooperation has translated into a plethora of institu-
tions to date, exhibiting very different organisational designs and legal formats, such as
for instance Euro-­regions and, more recently, macro-­regions and ‘European Groupings
of Territorial Cooperation’ or EGTCs (De Sousa 2013: 670). These formats vary from
a sporadic exchange of information and ad hoc consultation or selective cooperation,
to extensive programmes and the creation of joint bodies, such as committees, associa-
tions, councils and working groups; thus they range from loose or weak cooperation to
strong and permanent institutionalisation (Engl 2009: 4). According to the respective
judicial status, it is possible to classify territorial cooperation in terms of associations
with or without legal personality (the latter being of public or private law), which may
further the sustainability and durability of CBC institutions. Today, European Territorial
Cooperation (ETC) has also been recognised as an important principle of European
integration in itself. Its ultimate objective is to contribute to territorial cohesion, which
is a goal enshrined as a core objective of the European Union (EU) since the Treaty
of Lisbon (European Union 2012: Art. 174–178), complementing the goals of social
and economic cohesion already endorsed by the Treaty of Maastricht in 1992. Starting
life in 1988, EU Cohesion policy has had an impact on the emergence and activities of

384
 385
New strategic approaches to territorial cooperation in Europe  ­

Euro-­regions, macro-­regions and EGTCs. Supporting key objectives such as economic

competitiveness, growth and sustainable development, Cohesion policy is based on well-­
established principles such as multiannual programming, strategic orientation of invest-
ments and involvement of regional and local partners; it currently absorbs approximately
one-­third of the EU’s budget (approximately €350 billion for 2014–2020) and has become
the EU’s principal financial tool for implementing the objectives formulated in Europe
2020, the EU’s global strategy for sustainable economic growth (European Commission
2010). Although the Cohesion policy budget for 2014–2020 declined by 8.4 per cent, the
budget for ETC remained at levels comparable to the previous EU budgetary period in
relative terms.
Three components of European Territorial Cooperation are discernible. First, there
exists cross-­border cooperation involving regions on both sides of a borderline. Together
with municipal cooperation across borders (for example, city twinning), this can be con-
sidered the oldest form of territorial cooperation (see above). The intensity of coopera-
tion is determined by factors such as the range of policy areas covered and the scope
of autonomy that actors of cross-­border cooperation ultimately enjoy (see Perkmann
2003: 159f). Perkmann has proposed a useful typology distinguishing two types of
cross-­border regions: whereas the first type exhibits high cooperation intensity, the
second type is characterised by low cooperation intensity in relative terms (Perkmann
2003: 160). Second, there is transnational cooperation, starting with the introduction of
Interreg at the beginning of the 1990s, that embraces large geographical areas such as the
Baltic Sea region, and often involves national, regional and local partners from both EU
as well as partner countries. Nordic cooperation (involving the Scandinavian ­countries
and Finland), Scandinavian groupings and Baltic Sea regional cooperation have often
served as role models for transnational cooperation characterised by a (relatively) high
cooperation density; in sharp contrast to, for example, the Working Community of the
Danube Countries,3 ‘one of the key creations of the Council of Europe’ (Sanguin 2013:
157) together with Euro-­regions. Third and finally, interregional cooperation is based
on thematic cooperation, emphasising networking and exchange between regional and
local authorities across the whole of the EU. One of the prime examples in this particu-
lar area has been the Four Motors for Europe. Composed of the Rhône-­Alpes region
in France, the Italian region of Lombardy, Catalonia in Spain and Baden-­Württemberg
in Germany (with Wales and Flanders also joining at a later stage), the Four Motors
for Europe seek to provide a platform for four highly industrialised regions in Europe
(Borrás 1993). Since the inception of this format in 1988 as a forerunner of interregional
cooperation, these regions have closely cooperated in policy fields such as research, edu-
cation, environment and culture, endeavouring to make their voice(s) heard inside the
European Union.
Over time, territorial cooperation evolved into a core aspect of EU Cohesion
policy. Building on a firm basis of established cross-­border cooperation, the European
Commission introduced Interreg in 1990, thus adding an international dimension to
Structural Funds programming. In the 2007–2013 programming period, the policy
was reorganised into three objectives: Convergence, Regional Competitiveness and
Employment, and European Territorial Cooperation. Hence, the status of Interreg was
enhanced from a Community Initiative, to a European Territorial Cooperation objective.
For the period 2014–2020, Interreg was provided with ‘higher visibility’, a ‘firmer legal
386  Handbook on Cohesion policy in the EU

base’ and a more strategic approach to programming (McMaster and van der Zwet 2016:
53). It is against this backdrop that macro-­regional strategies and EGTCs came into
existence. Macro-­regional strategies emerged as new tools for territorial cooperation with
a view to improving coordination and coherence across different sectors as well as scales
of intervention, encompassing both EU member states (and subnational authorities) and
partner states in a given macro-­region, such as the Baltic Sea or the Alpine regions. The
European Regulation on the European Grouping for Territorial Cooperation, in turn,
was introduced in 2006 (and revised in 2013) in order to eventually provide territorial
cooperation with a legal personality and embrace it in full inside the European Union
(European Parliament and Council 2006, 2013). The EGTC Regulation was developed
to make territorial cooperation more permanent and strategic, while at the same time also
more flexible and simple. The EGTC Regulation aims not only at reducing the difficulties
encountered by regional and local authorities – in the framework of Euro-­regions – when
implementing and managing cooperation activities in the context of differing national
laws and procedures, but also at providing EGTCs with the opportunity to apply for EU
funding and thus become a structural element in the implementation of Cohesion policy.
Figure 24.1 summarises the different types of territorial cooperation in Europe and the
European Union today. The emergence of EGTCs and EU Macro-­Regional Strategies
(EUMRSs) have been introduced as legal (EGTCs) and strategic (EUMRSs) arrange-
ments that cut across – to varying degrees – all existing forms of territorial cooperation
that have been discussed above.
This chapter will proceed as follows. It will first review the emergence and structures
of Euro-­regions as one of the cornerstones – if not the cornerstone – of cross-­border
cooperation. It will then continue to assess EGTCs and EUMRSs as comprehensive
strategic agreements that seek to underpin hitherto existing or, alternatively, inform

Geographical scope Small Large

High cooperation intensity Integrated Scandinavian groupings

micro-cross-border regions (Øresund Council/Committee;

North Calotte Council);
(EUREGIO)
Interregional cooperation
(e.g., Four Motors for Europe)
EGTC
and
EUMRS

Emerging Working Communities

Low cooperation intensity
micro-cross-border regions (e.g.,Working Community of
the Danube Countries)
(e.g.,Transmanche Region)

Source:  Based on Perkmann (2003: 160).

Figure 24.1  Types of territorial cooperation

 387
New strategic approaches to territorial cooperation in Europe  ­

newly ­established forms of territorial cooperation and draw them closer to the European
Union. Ultimately, as will be demonstrated by EU macro-­regional strategies, these tools
seek not only to improve EU Cohesion policy, but to make it a more salient issue in the
planning and implementation of other EU policies as well.

EURO-­REGIONS: COUNCIL OF EUROPE AND EUROPEAN

UNION

It is estimated that there are around 150 ‘Euro-­regions’ today (Svensson 2014: 409;
Svensson 2013); they are generally limited to the scope of competencies allocated to
them by their constituent local and regional authorities and accountable to the consti-
tutional law of their respective member states. Hence, Euro-­regions do not correspond
to any legislative nor governmental institution, nor do they have direct political power.
In 1958, the first Euro-­region was established, the so-­called EUREGIO, located at the
Dutch–German border, and it was expected that it might develop into some kind of
‘laboratory for European integration’ (Knippenberg 2004). A cross-­border coopera-
tion development strategy in EUREGIO received financial support from the European
Economic Community as early as 1972. Cross-­border cooperation continued to develop
throughout the 1960s and 1970s, in particular along the Rhine in Western and Northern
Europe, and surged from the 1990s onwards along the EU’s eastern border (Yoder
2003), a fact that several scholars have explicitly attributed to both the economic incen-
tives set by EU financial support schemes (Perkmann 2003: 166), and the European
Commission’s attempt to frame these initiatives as important stepping stones towards
EU eastern enlargement.

Cross-­Border Cooperation Law outside the EU: The Case of the Madrid (Outline)
Convention

Concomitantly, the Council of Europe – supported by its Congress of Local and Regional
Authorities of Europe (CLRAE) and the Assembly of European Regions (AER) – has
developed some of the legal foundations of cross-­border cooperation since the 1970s.
Most Euro-­regions have been set up using a legal framework proposed by the European
Outline Convention on Trans-­frontier Co-­operation between Territorial Communities
or Authorities, also called the Madrid Convention, which was launched by the Council
of Europe in 1980. It is the first and only international treaty whereby signatory states
commit themselves to enabling their local and regional authorities to fully engage in
cross-­border cooperation. Ratified by 39 states as of 2014, the Madrid Convention
serves as a political statement enumerating core CBC principles and minimum standards,
and provides its member states with model interstate agreements. While the Madrid
Convention encourages participating states to take all appropriate action in order to
enable and drive cross-­border cooperation, it does not recognise the right of local and
regional authorities to engage in cross-­border cooperation per se, thus strongly limiting
the room for manoeuvre of local authorities (Coen 2010: 97). Most importantly, however,
the Convention does not establish a legally binding common institutional framework.
In the aftermath of the Madrid Convention, which entered into force in 1984,
388  Handbook on Cohesion policy in the EU

several bi-­or multilateral treaties or conventions were adopted in the 1980s and 1990s,
based on the formula provided by the Convention. Amongst these treaties are the
Benelux Convention (1986), the German–Dutch Cross-­Border Treaty (1991), the Vienna
Agreement (1993), the Rome Agreement (1993), the Treaty of Bayonne (1995) and the
Karlsruhe Accord (1996).4 Since 1995, the Convention was supplemented by a series of
additional protocols extending the Madrid Convention to include provisions such as to
set up independent bodies for cross-­border cooperation (which eventually may have legal
personality). A second protocol, approved in 1998, addressed matters of interterrito-
rial cooperation, and finally, in 2009, a third protocol covered the issue of Euroregional
Cooperation Groupings (ECGs) for non-­EU members. Despite the process of legalisa-
tion in the domain of cross-­border cooperation, the Convention and the protocols do not
contain any regulations capable of overriding national law. This is why all initiatives have
to conform to the national legal systems of the respective countries, and its additional
protocols, and must consequently be based on either interstate treaties or national law
(see Madrid Convention).

Making Cross-­border Cooperation Law inside the EU

In the mid-­1980s, the European Community began to develop some legal instruments
often mirroring similar processes inside the Council of Europe. First, the European
Economic Interest Grouping (EEIG) was introduced in 1985 as a legal instrument to
simplify CBC at project level, aiming in particular at private partners (such as natural
persons and companies) active in CBC. Since entering into force in 1989, more than  2000
EEIGs have been registered (Jaansoo and Groenendijk 2014: 13). Interestingly, the
EGTC Regulation maintains that these instruments have ‘proven ill-­ adapted’ with
regard to organising and structuring cooperation under the Interreg initiative during the
2000–2006 EU budgetary period (European Parliament and Council 2006: Art. 4), thus
providing justification for establishing the legal instrument of the EGTC.5 Second, more
than 1000 so-­called European Companies (SEs, Sociétés Européennes) and more than
20 European Cooperative Societies (SCE, Société Coopérative Européenne) have been
established since 2004 and 2008, respectively. These instruments are mainly directed
at cross-­border cooperation involving the private sector from different member states.
Although primarily relating to the private sector, governments have also increasingly
made use of these private legal arrangements in order to promote public goals (Jaansoo
and Groenendijk 2014: 14).
While most member states in Northern and Western Europe have been well placed
to establish sufficient legal arrangements for CBC, (partly) based on the Madrid
Convention, the framework agreements suggested by the Convention were used much
less in Southern Europe (Coen 2010; Jaansoo and Groenendijk 2014). Furthermore,
the ratification process of the Madrid Convention and its protocols has generally been
cumbersome and slow. Yet, when the big bang enlargement of 2004 increased the
number of land and maritime borders, arrangements for CBC were needed in particu-
lar for countries that had not yet established the necessary legal formats. The format
of European Groupings for Territorial Cooperation sought to speak to these needs
and most EGTCs are located in Southern and Eastern Europe (Engl 2014; Engl and
Zwilling 2014).
 389
New strategic approaches to territorial cooperation in Europe  ­

EUROPEAN GROUPINGS FOR TERRITORIAL COOPERATION

An EGTC can be considered as one of the ‘reference models for the organisation of a
stable and multilateral territorial cooperation relationship, capable of simultaneously
involving subjects from different states and different government levels’ (Coen 2010: 98)
that address the poor outcome of conventional instruments such as the ones set up by
the Madrid Convention. The EGTC was introduced by Regulation (EC) No 1082/2006
(European Parliament and Council 2006) as a cooperation instrument at the Community
level. After a lengthy deliberation process, it entered into force on 1 August 2006 (on
the development of the instrument, see Nadalutti 2013). One of the contentious issues
at that time was the question of whether or not EU member states themselves could
become party of an EGTC. According to a legal officer of the European Commission,
the ‘original proposal did not foresee that the member states themselves could become
members of an EGTC’ (quoted in Nadalutti 2013: 764); there were no foreseen ex ante
control procedures by the central authorities either. Subsequently, this was amended by
Regulation (EU) 1302/2013 (European Parliament and Council 2013) which entered into
force in August 2014 and aimed at further clarifying and improving the establishment and
functioning of such territorial groupings. Complemented by national provisions adopted
by each EU member state, the primary objectives of the EGTC Regulation are, first, to
help public authorities of various member states to join forces, without prior interna-
tional agreement; and second, to overcome some of the obstacles that have hindered ter-
ritorial cooperation thus far, as well as to implement programmes co-­financed by others,
including the European Union.
The EGTC is the first cooperation structure with legal personality designed to facili-
tate and promote all strands of territorial cooperation – cross-­border, transnational and
interregional cooperation – with a view to strengthening the Union’s economic, social
and territorial cohesion. The Eurométropole Lille–Kortrijk–Tournai EGTC was the
first EGTC. Established at the beginning of 2008, it offers a framework for cooperation
between authorities encompassing three different administrative levels in Belgium and
France. Most EGTCs have been established based on previous Euro-­region agreements,
such as for instance the Euro-­district Strasbourg-­Ortenau that was founded on the
Karlsruhe Accord. The European Urban Knowledge Network (EUKN), a platform for
exchanging ideas and experience in the field of urban development, is currently the only
EGTC in operation whose members are exclusively member states.6 With its Secretariat
based in The Hague, the EUKN defines itself as a platform for exchanging ideas and
experiences in the field of urban development. By the end of 2013, 43 EGTCs had been
established, including about 750 national, local and regional authorities from 20 differ-
ent EU member states. Another 16 Groupings are currently in the pipeline (Pucher et al.
2014: 1).
With a capacity recognised by EU law, upon signing and registering a mandatory
convention, an EGTC can acquire property, hire personnel and be party to legal pro-
ceedings. The establishment of an EGTC requires at least two member states. If a non-­
member state is involved, there should be at least two member states per non-­member
state. In terms of membership, EGTCs can comprise members from the local, regional
and central governments, public law bodies and associations, and are required to set up
a cooperation scheme including a convention, budget, director, assembly and staff. The
390  Handbook on Cohesion policy in the EU

EGTCs operate according to the national law of the member state where the EGTC
has its registered office. They are meant to promote territorial cooperation, mainly
within the framework of Cohesion policy, and can be used for programme management
(joint managing authorities) and/or the management of specific cross-­border projects.
According to Article 19 of the Regulation (European Parliament and Council 2013),
EGTCs can also be used for the management of other EU-­funded cross-­border projects
outside the framework of the Cohesion policy, or for the management of any other ter-
ritorial cooperation scheme that does not involve EU funding (European Parliament and
Council 2013: Art. 305). EGTCs are now explicitly mentioned as beneficiaries of Joint
Action Plans7 and Integrated Territorial Investment,8 as potential intermediate bodies to
implement Integrated Territorial Investment and as programme managing authorities.
Drawing on an analysis of the draft 2014–2020 Operational Programmes available at that
time, Jaanssoo and Groenendijk (2014: 3) found that 21 EGTCs – almost 50 per  cent
of ETC programmes – reported their participation in the preparation of Operational
Programmes at the national and regional levels.
Over the past years, the EGTC instrument has increasingly developed from a general
tool for bilateral cross-­border cooperation at local and regional level, towards an essen-
tial part of the multilevel institutional set-­up of EU Cohesion policy. It has been argued
that EGTCs strengthen multilevel governance in the EU and introduce a new territorial
cooperation scale, or ‘the functional macro-­region’ (Spinaci and Vara-­Arribas 2009: 8).
However, there has also been fierce criticism. First, the EGTCs are blamed for increas-
ing the complexity of governance structures in Europe. In this vein, Sanguin (2013:
158ff) argues that these new structures contribute to redundancy and confusion, as the
Council of Europe was the pivotal driver for the legal and institutional format of cross-­
border cooperation structures (such as the Working Communities and the Euro-­regions).
Second, the launch of EGTCs ‘as macro-­regional multi-­level governance arrangements,
funded by and managed as part of EU Cohesion Policy, could well be understood by
national governments as a new attempt to by-­pass or at least play down the role of the
nation state’ (Jaansoo and Groenendijk 2014: 16). Others have pointed out that there is
already a significant contradiction between those member states that, on the one hand,
create EGTCs, but on the other hand do not provide support for the local or regional
levels of government (Jaansoo and Groenendijk 2014: 16). While EGTCs have been
developed in order to address the legal foundations and durability of cross-­border coop-
eration as well as its functionality within ETC programmes, macro-­regional strategies
have emerged to supersede the issue of ETC and address broader EU policy objectives in
a comprehensive and integrated manner.

EU MACRO-­REGIONAL STRATEGIES AS A NEW TOOL IN EU

(COHESION) POLICY

The EU Strategy for the Baltic Sea Region (EUSBSR), the EU’s first macro-­regional strat-
egy, was forged at about the time when the European Union was deliberating on the design
of the future EGTC. Originally drafted by members of the Euro-­Baltic Intergroup of the
European Union in 2004 and 2005, the strategy was eventually adopted under the Swedish
Presidency of the European Council in 2009. With the exception of the Russian Federation,
 391
New strategic approaches to territorial cooperation in Europe  ­

Figure 24.2  Membership of the European Union Strategy for the Baltic Sea Region

all coastal countries of the Baltic Sea region had joined the European Union in 2004 (see
Figure 24.2). Subsequently, other macro-­regions started to emerge: the EU’s Danube
Region (EUSDR), the Adriatic and Ionian Region (EUSAIR), and the Alpine Region
(EUSALP) were endorsed in 2011, 2014 and 2015 respectively, as EU macro-­regional strat-
egies covering all but nine EU member states (the United Kingdom, Ireland, Belgium, the
Netherlands, Luxembourg, Spain, Portugal, Cyprus and Malta).9 The concept of macro-­
regions and macro-­regional strategies has thus gained increased prominence in both the
policy practice and debates of the European Union (Gänzle and Kern 2016).
According to a well-­established definition by the Commission, a macro-­region refers
to ‘an area including territory from a number of different countries or regions associ-
ated with one or more common features or challenges’ (European Commission 2009:
1), such as environmental degradation. Hence, it has been argued that such regions are
socially construed, establishing ‘soft spaces’ (Stead 2011) ‘demarcated’ by ‘flexible, even
vague’ boundaries (European Commission 2009). This is not an entirely new idea. At the
beginning of the 1990s, the European Commission’s Europe 2000 report on the future
of the then European Community’s territory had already endorsed the idea of ‘regional
groupings’. Towards the end of the 1990s, regional collaboration amongst EU member
states and countries aspiring to EU membership was captured by the label of Europe’s
‘new subregionalism’ (Cottey 1999). In contrast to the concept of ‘subregion’, however,
392  Handbook on Cohesion policy in the EU

the term ‘macro-­region’ also resonates with the idea of functionality, linking interdepend-
ent territories across political-­administrative boundaries through a common challenge or
opportunity, and is grounded in awareness of the specific resource endowments, growth
potentials and vulnerabilities of different regions.
A macro-­regional strategy, in turn, is an ‘integrated framework, endorsed by the
European Council, to address common challenges in a given geographical area where
both member states and third countries are located. The objective is to strengthen
cooperation in order to achieve economic, social and territorial cohesion’ (Council of
the European Union 2014: 1). The concept appeals to five core principles, construed
around the need to: integrate existing policy frameworks, programmes and financial
instruments; coordinate between sectorial policies, actors or different tiers of govern-
ment; cooperate between countries and sectors; involve policy-­makers at different levels
of g­ overnance; and create partnerships between EU member states and non-­member
countries (European Commission 2013: 3), with a view to serving the overall objec-
tives of Europe 2020 (European Commission 2010). EU macro-­regional strategies are
neither single-­issue-­focused in terms of policy, nor exclusively or primarily limited to the
realm of intergovernmental collaboration. Rather, they seek to frame a bigger picture,
with the aim of mobilising existing funding schemes and tapping into the expertise of
existing epistemic communities and stakeholders from all levels of the EU’s multilevel
system. These strategies seek to provide a strategic platform or framework of reference
for learning about the activities of other stakeholders in order to address specific macro-­
regional challenge(s) in a coherent, comprehensive and coordinated manner. In short, EU
macro-­regional strategies seek to offer a ‘new way of supporting territorial cooperation,
representing a joint response to common environmental, economic or security related
challenges in a particular area’ (European Commission 2014: 185).
The macro-­regions were developed in light of three policy principles, the so-­called
‘three No’s’. First, there are no new institutions. Rather than establishing yet another
layer of governance, macro-­regional strategies should appeal to existing institutions –
such as, in the case of the Baltic Sea Region, the Council of Baltic Sea States, the Helsinki
Commission (HELCOM), the EU’s Northern Dimension10 and the Nordic Council – and
forge an integrated approach to coordinating all the sectoral policies that are relevant to
the Baltic Sea region. Whereas the Russian Federation and Norway are not formally inte-
grated into the strategy, both the EU Strategy for the Danube Region (EUSDR) and the
EU Strategy for the Adriatic and Ionian Region (EUSAIR) exhibit a significant external
dimension as they have accepted non-­EU countries such as Moldova and Ukraine or
Bosnia-­Hercegovina on an equal footing as participants to the strategy. Clearly all of
these countries are adamant about becoming EU members in the not too distant future;
in contrast to Norway and the Russian Federation.
Second, there is no new legislation. The macro-­regional strategies have been pre-
pared and communicated by the European Commission and endorsed by the European
Council. It is at the discretion of the EU member and partner states to implement
the strategies, which are legally non-­binding. Instead of creating new EU legislation, the
strategies aim to reinforce existing regional conventions and action plans, such as the
Baltic Sea Action Plan of the HELCOM; as well as EU legislation relevant to the imple-
mentation of macro-­regional objectives, such as the EU Marine Framework Directive
(for example, for the EUSBSR, or the EUSAIR) or the EU Flood Directive (for example,
 393
New strategic approaches to territorial cooperation in Europe  ­

in the EUSDR), which are in line with the environmental objectives of the respective
macro-­regional strategy. Macro-­regional strategies shall thus be used as filters to adapt
existing EU legislation – for all member states – to the specific needs and functions of
smaller areas or macro-­regions. While eutrophication, to give but one example, is one of
the major environmental challenges of the Baltic Sea, it has not been addressed in the EU
Marine Framework Directive, thus the EUSBSR shall help to deliver a more tailor-­made,
macro-­regional approach to European legislation.
Third and finally, there is no new funding. Although this decision triggered a lot of
discussion, no new EU financial resources have been specifically allocated to macro-­
regional strategies, as their primary goal is to provide a platform for better coordination
of existing resources at the EU, national and regional levels. These include, above all, EU
Structural Funds and resources from international and regional financial institutions,
such as the Nordic Investment Bank (NIB), the European Investment Bank (EIB) and
the European Bank for Reconstruction and Development (EBRD).
Prior to the endorsement of macro-­regional strategies, the European Commission con-
ducted a series of conferences and (Internet) stakeholder consultations, in order to reach
out to institutions and organisations. Not only member states, but also the subnational
level and, in particular, communities such as cities and associations of municipalities,
were strongly encouraged to contribute their views. Both the subsequent EU Strategy for
the Baltic Sea Region and its Action Plan have, in general, been recognised as reflecting
the outcome of these consultations very well. They have also identified the core objectives
for macro-­regional cooperation, such as environmental protection of the Baltic Sea and
navigability of the River Danube. Action plans, structured around pillars (Objectives)
and priority areas help to convert high-­level strategies into action and, ultimately, meas-
urable results.
As macro-­regional strategies refrain from setting up new institutions, they are built
into the existing multi-­level governance architecture involving stakeholders from differ-
ent tiers. Although the approaches vary across the different strategies, the following key
elements are shared by all macro-­regional strategies. First, in terms of strategic leader-
ship, the member states – represented through the High Level Group that brings member
states together – provide the necessary political guidance and commitment. Second,
National Contact Points or National Coordinators, in most cases based in the Ministries
of Foreign Affairs, coordinate the work at the senior administrative level. Third, there are
experts – Horizontal Action Leaders as well as Policy or Priority Area Coordinators  –
dealing explicitly with the priority areas supporting the overall macro-­regional objec-
tives. In most cases these coordinators are supported by steering groups, which bring
together experts from different line ministries and other bodies. Finally, the European
Commission, in particular the Directorate-­General for Regional and Urban Policy (DG
REGIO), is responsible for monitoring the overall implementation of the strategies and
their so-­called ‘rolling action plan’, allowing for timely revisions and updates. It has been
argued that DG REGIO has been successful ‘at making itself more important inside the
European Commission’ (interview with former official of the Council of the Baltic Sea
States, 23 May 2015). Yet, at the same time, the Commission’s resources are strained, and
various Commission officials insist on macro-­regional strategies being ­‘intergovernmental
strategies’ (Ahner 2016: 3). Most recently, in the case of the EU Strategy for the Danube
Region, a so-­called Danube Strategy Point, supported by the European Commission and
394  Handbook on Cohesion policy in the EU

Baden-­Württemberg, has been established in order to assume some of the more practical
work.
Together with the National Contact Points that are in charge of macro-­regional strate-
gies across all relevant policy sectors at member state level, Priority Area Coordinators
(PACs) or Policy Coordinators are key to the success of macro-­regional strategies. They
are charged with ensuring the implementation of the Action Plan defined for the Priority
Area by agreeing on planning with targets, indicators and timetables, and by making
sure there is effective cooperation between project promoters, programmes and funding
sources. Working in close consultation with the Commission as well as national and
regional bodies, PACs also provide technical assistance and advice. Each priority area
is managed by two PACs from different countries and provides entry points for mutual
learning processes. PACs assume a key role in the implementation of the macro-­regional
objectives since they are first expected to streamline their respective priority area and
then to provide the tools for linking the different sectors horizontally and vertically.
Macro-­regional strategies are compelled to enter into a dialogue with existing regional
bodies and actors – such as, in the case of the Danube Region, the Regional Cooperation
Council, the Danube Commission and the International Commission for the Protection
of the Danube River (ICPDR) – in order to tap into their sectoral expertise and knowl-
edge. To give an example: the ICPDR aims to ensure the sustainable and equitable use of
waters and freshwater resources in the Danube River basin, and is considered by its par-
ticipating states as a platform for generating a common awareness of problems, as well
as for developing the common strategies needed to tackle these problems. The ICPDR
convention has served as a basis that has informed the EU’s Water Framework Directive
(2000/60/EC) and the Flood Directive (2007/60/EC). The convention is only binding in
political terms vis-­à-­vis its contracting parties; there are no legal means to enforce its
provisions. However, in combination with EU directives its provisions ultimately become
enforceable under EU law. Furthermore, EU directives are connected with concrete
implementation targets and deadlines from which the ICPDR can benefit; the ICPDR, in
turn, provides technical expertise and direct contacts to relevant stakeholders and hydro-
logical agencies in the EUSDR participating states.
The development of such platforms connecting various regional actors, regimes and
institutions, with a view to fostering a common framework for referential purposes and
an appropriate division of labour, is certainly one of the main goals of macro-­regional
strategies. Furthermore, the strategy provides existing regional bodies with the opportu-
nities not only to influence its shape and implementation, but also to embed their own
activities in a larger and more comprehensive design in which they can coordinate with
other partners. The EU itself can benefit from the macro-­regional expertise of a wide
range of actors. The purpose is to achieve effectiveness gains by improving the efficiency
of coordination and communication between the different stakeholders.
Nevertheless, there have also been challenges in building and maintaining policy coordi-
nation and coherence. A recent report on the governance structures of macro-­regional strat-
egies criticised them for lacking clear ownership and leadership, and highlighted the need
for new institutions to more effectively administer and implement the strategy (European
Commission 2014). Hence, the approach to governance and implementation structures has
brought a number of questions and challenges to the forefront. With a view to the EUSBSR,
it has been cumbersome to manage links with non-­EU member states such as, for example,
 395
New strategic approaches to territorial cooperation in Europe  ­

the Russian Federation. In this specific case, existing frameworks for external relations – in
particular the CBSS (Council of the Baltic Sea States) and the Northern Dimension frame-
work – have been used in the past to foster cooperation. However, with bilateral relations
between the EU and Russia deteriorating, and in the wake of the EU’s sanctions regime
agreed by the European Council in 2014, funding for new Northern Dimension projects was
frozen, thereby calling the future of this ‘common policy’ into question.
As both the EUSBSR and the EUSDR were approved midway through the 2007–2013
budgetary period, it has not always been easy to accommodate the existing programmes
within the macro-­regional objectives. And even now that the European Commission has
asked member states to embed the macro-­regional objectives in the partnership agree-
ments and operational programmes for the EU’s 2014–2020 budgetary period, it does not
seem to be satisfied with the results (Brask 2014). In addition, EU transnational coopera-
tion programmes have been identified as one resource for the strategies. In this vein, it
seems that the establishment of a new Danube region transnational Interreg programme
in 2014–2020 appears to be partly driven by a desire to have a single transnational pro-
gramme that covers most of the strategy geographically in order to assist with day-­to-­day
implementation (McMaster and van der Zwet 2016: 66). EU macro-­regional strategies
adjust to the EU’s Europe 2020 objectives of smart, inclusive and sustainable growth,
while recognising the objectives of social, economic and territorial cohesion, as well as
the specific focus of individual Cohesion policy programmes. Whereas the relationship
between macro-­regional strategies and Cohesion policy programmes is still evolving, it is
clear that ‘Cohesion Policy programs in areas covered by macro-­regional strategies have
to adapt to a new policy environment’ (McMaster and van der Zwet 2016: 68) and to
new demands in what were already complex programmes. This is not an easy task, since
macro-­regional strategies are often organised in a top-­down fashion and heavily involve
high-­level central state actors, in particular in those macro-­regions where there are no
other relevant stakeholders and institutions available. Transnational cooperation pro-
grammes, in turn, function at a regional level and represent a more bottom-­up approach.
Nonetheless, the aim of creating an interface between these differing levels is precisely
one of the major objectives pursued by macro-­regional strategies.

CONCLUSIONS

Although there are a number of differences between these strategic agreements, both the
European Groupings of Territorial Cooperation (EGTCs) and the EU Macro-­Regional
Strategies (EUMRS) converge around common objectives and aspirations. EGTCs and
EUMRS are relatively new instruments in the EU’s toolbox for territorial cooperation
and aim at establishing greater coherence within their respective territorial units of
reference as well as across the entire European Union. Although EGTCs and EUMRS
allow for some differences in terms of objectives and organisation, they have introduced
a comparable structure that is being used by all EGTCs and EUMRS that have been
established in the European Union thus far. Whereas EGTCs somewhat generalise the
organisational format to be used for various forms of transnational cooperation, the gov-
ernance architecture that has developed under the umbrella of a macro-­regional strategy
has been remarkably similar in all instances to date: National Contact Points, policy or
396  Handbook on Cohesion policy in the EU

priority area coordinators and steering groups have emerged as the principal workhorses
in terms of implementing macro-­regional strategy goals. It is from this perspective that
the EU Strategy for the Baltic Sea Region has developed into an informal benchmark for
other macro-­regional strategies that are currently being established or discussed in the
European Union (European Parliament 2015).
EGTCs and EUMRS are quite compatible with hitherto existing forms of territo-
rial cooperation, such as Euro-­regions and Working Communities (see Table 24.1). The
Working Community of the Danube Countries, for example, has been drawn closer to
the EU Strategy for the Danube Region, symbolised by the fact that both bodies held
meetings back-­to-­back at the occasion of the 2015 Annual Forum in Ulm. It is not far-­
fetched to expect that some parts of the existing macro-­regional governance architecture
are going to be merged under the umbrella of EU macro-­regional strategies.
Furthermore, both EGTCs and EUMRS have made different forms of territorial
cooperation, which have taken place outside the EU context before, EU-­compatible –
also in terms of law. Whereas Euro-­regions were often founded on the international law
provided by the Council of Europe in the past, EGTCs are legal instruments developed
by the European Union. Subregional cooperation of the early 1990s has now, as a conse-
quence of the expanded EU presence in most of these geographical areas, matured into
macro-­regional cooperation under the lead of the European Union. Many of the subre-
gional bodies in the Baltic Sea region, although formally independent, are increasingly
co-­evolving into subsidiary roles vis-­à-­vis the European Union.
It would be wrong to perceive both EGTCs and EUMRS as exclusive instruments of
European territorial cooperation. Both can speak to important themes of cross-­border
cooperation, such as for instance the provision of joint services or the establishment of
trans-­European energy grids; yet, as a matter of fact both instruments have increasingly
been applied to various programmes offered under the Cohesion policy label, beyond
territorial cooperation. Macro-­regional strategies have thus far not yet triggered an
increasing readiness on the part of member states to reallocate funding from the national
to the regional level in order to foster European or transnational objectives. With regard
to EGTCs, one former EGTC official criticised that the EGTC Regulation provides a
new framework for cooperation, but it does not alter the fact that cooperation still has
to follow the law of one member state that is part of the EGTC (interview with former
EGTC official, 2015). In the past, this has often created problems and frustration as the
administrations remain deeply enmeshed in national legal and administrative practices
and traditions that ultimately affect the functioning of cross-­border cooperation. EGTCs
do not introduce new legislative foundations that might be needed to substantially
advance collaboration. It therefore remains to be seen whether these strategic agreements
are ultimately well placed to bring about change in the medium term, something which
will perhaps also be part and parcel of the transnational experience gained by many
officials working at the level of National Contact Points and Priority Area Coordinators.

NOTES

  * I thank Jamie Quinn (University of Plymouth) for the cartography in Figure 24.2. Furthermore, I am
grateful to the comments and suggestions by Dirk Ahner (University of Strathclyde), Sara Svensson
 397
New strategic approaches to territorial cooperation in Europe  ­

(Central European University, Budapest), Sarah Wing (Central European University, Budapest) and
the Handbook editors, Simona Piattoni (University of Trento) and Laura Polverari (University of
Strathclyde). Remaining errors are my own.
  1. This includes a significant factor of Nordic integration: the Nordic Council was instrumental in promot-
ing CBC in Scandinavia throughout the 1960s and 1970s which was not directly linked to the European
level. In Scandinavia several of the early Euro-­regions were called Border Committees. (I am grateful to
Sara Svensson for drawing my attention to this).
 2. Others have downplayed and differentiated the normative elements (e.g. Medve-­Bálint and Svensson
2012).
  3. For a definition, see Sanguin (2013: 157): ‘The Working Communities are groupings of local authorities
which try to establish a multilateral trans-­European cooperation. The purpose of a Working Community
is to gather cross-­border local authorities who share several common issues to be solved. Its aims take
shape with the drawing up of a Cross-­Border Management Master Plan’.
  4. The Nordic Council Agreement (1977) on cross-­border-­cooperation between municipalities in Denmark,
Finland, Iceland, Norway, Sweden, the Faroe Islands, Greenland and the Åland Islands was already in
place prior to the Madrid Convention.
  5. Still, there are three ETC programmes in operation using the EEIG format; furthermore, the BONUS
programme covering the Baltic Sea region is managed by an EEIG (Jaansoo and Groenendijk 2014:
14).
 6. Its network currently comprises Belgium, Cyprus, the Czech Republic, France, Germany, Hungary,
Luxembourg and the Netherlands.
  7. The Joint Action Plan (JAP) allows bundling of funds in order to simplify the administrative management.
  8. The Integrated Territorial Investment (ITI) is a framework for regional policy aiming at the establishment
of a strong bond between member state, regions and lower territorial elements such as cities. In agreement
with the member state and the managing authority of the programme through which the ITI will be devel-
oped, cities can take responsibility for implementing activities at an urban level.
 9. The EU Strategy for the Baltic Sea Region targets, for example, eight EU member states: Denmark,
Sweden, Finland, Estonia, Latvia, Lithuania, Poland and Germany – that is, the German Länder
of Schleswig-­Holstein, Mecklenburg-­Vorpommern and Hamburg – and also two partner countries,
the Russian Federation and Norway; hence, it can almost be conceived as an internal strategy of the
European Union. In contrast, both the EU Strategy for the Danube Region and the EU Strategy for the
Adriatic and Ionian Region are far more diverse in membership and exhibit a strong external focus.
10. In 2008, the Northern Dimension became a common policy of the EU, Russia, Norway and Iceland.

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25. EU Cohesion policy in the Eastern Partnership
region: a case of external Europeanisation
Attila Ágh and Attila Kovács

INTRODUCTION

For the European Union (EU), Eastern Europe (EE) has always been a part of
‘wider Europe’, although the institutionalisation of the relationships with EE has taken
place relatively late through the European Neighbourhood Policy (ENP), the Eastern
Partnership (EaP) and the recent series of Association Agreements (AAs).
The European integration process as ‘Europeanisation’ has moved eastwards
and has recently reached this easternmost region in its special form of ‘exter-
nal  Europeanisation’. This extension of the EU has been highly complex for both
historical and geopolitical reasons. Historically, the contacts between east and west
in the economic, political and cultural realms were rather weak during the Cold War
period. The east has remained isolated from the dynamism of the EU due to a lack
of intensive cooperation even in the aftermath of the Cold War, and this isolation has
only slowly diminished. Thus, in the eastern states, the European identity has been
rather ambivalent: it has always been historically determined and there has been a
sort of mental barrier between east and west, mostly bred by mutual ignorance. The
identity of the eastern states has become ‘European’ to the extent that they could see
their European future within the EU or at least with the EU. Although in 2004 the EU
in its European Neighbourhood Policy (ENP) defined Europe by its borders – and the
Eastern Partnership (EaP) with its six states in 2009 was also a practical definition – a
European perspective was not given for these countries, and it is not given nowadays
either.1
Geopolitically, the EaP region has remained an in-­between area under the dual influ-
ence of the EU and Russia. Russia refused to join the ENP; therefore, the EaP region
with its six states has become an area of competition between the EU and Russia. What is
the EaP for the EU is the ‘near abroad’ for Russia, an internally rather differentiated area
(see Table 25.1). Whereas the interest of EaP countries in the EU was mounting in the
1990s, it turned to be one of the most contested issues in the 2010s due to their domestic
crises and, recently, to the Russian authoritarian revival. In general, in the last decades,
there has been some fluidity in positions on both sides with large elements of uncertainty
in a quickly changing global environment. All in all, in the 1990s it had already become
clear that the ‘Easterners’ were behaving and thinking as European, and to that extent
they were taken seriously by the EU.2

399
 Table 25.1  The six countries of the Eastern Partnership (EaP)

Category Armenia Azerbaijan Belarus Georgia Moldova Ukraine

Population* 2 976 566 9 416 598 9 466 000 4 476 900 3 559 000 45 489 600
Area (km2) 29 743 86 600 207 595 69 700 33 846 603 500
Population density 100.1 108.7 45.6 64.2 105.2 75.4
 (capita/km2)**
Russian minority (%)*** 0.4 1.35 8.3 1.5 9.4 17.2
Capital city Yerevan Baku Minsk Tbilisi Chisinau Kiev
Prime Minister Hovik Artur Rasizade Andrei Irakli Iurie Leanca Arseniy
 Abrahamyan  Kobyakov  Garibashvili  Yatsenyuk
President Serzh Sarsyan Ilham Aliyev Alexander Giorgi Nikolae Timofti Petro Poroshenko
 Lukashenko  Margvelashvili
Government Semi-­presidential Dominant-­party Presidential Unitary semi-­ Unitary Unitary semi-­
 republic  presidential  Republic  presidential  parliamentary  presidential
republic republic republic constitutional
republic
Military force 81 000 soldiers 95 000 active 12 000 (2001) 18 to 34 years 18 years of age 78  0000-­man

400
1 additional personnel contract soldiers of age for for compulsory military force
reserve of 32 000 (2002), 17 000 1 conscripts compulsory and or voluntary
troops paramilitary serve for 12 voluntary active military service;
troops months duty military male registration
service; conscript required at age
service obligation 16; 1-­year service
is 18 months obligation (2012)
(2012)

Government 2013 57.89 38.76 17.22 69.38 41.15 30.14

 effectiveness**** 2013/1996 1.45 2.34 0.43 2.5 0.99 1.17
Political 2013 49.76 33.18 46.45 30.81 45.50 21.33
 stability**** 2013/1996 1.75 1.77 1.02 4.58 1.05 0.58

Note:
* World Bank (2013).
** Own calculation based on World Bank (2013) data.
*** Based on official national censuses: Belarus and Azerbaijan, 2009; Armenia, 2011; Georgia, 2002; Moldova, 2004; Ukraine, 2001.
**** World Bank, World Government Indicators.
 EU Cohesion policy in the Eastern Partnership region   ­
401

EXTERNAL EUROPEANISATION THROUGH THE EUROPEAN

PARTNERSHIP

Cohesion policy is the main instrument at the EU level for pursuing economic, social and
territorial cohesion. With the eastern enlargement, the entire EU Cohesion policy has
been radically restructured (e.g. Ágh 2012; Baun and Marek 2008; Dąbrowski 2013) to
perform its integrative role in the EU28. Given the low absorption capacity of the new
member states (NMS) (Bachtler et al. 2014), the effectiveness of Cohesion policy in these
states has been questioned (Freise and Garbert 2013), and this debate has influenced the
extension of Cohesion policy to the EaP region beyond the EU. Serious changes have
taken place again in EU Cohesion policy and in the philosophy of differentiated integra-
tion as illustrated by the Sixth Cohesion Report (European Commission 2014). The ‘new’
Cohesion policy began at the turning point between the 2007–2013 and the 2014–2020
Multiannual Financial Framework (MFF) periods in 2014. Two main trends can be
identified. First, given the necessity of building an Energy Union (European Council
2015), a major emphasis has been put in the current (2014–2020) Multiannual Financial
Framework on connectivity-­related (infrastructure, transport and energy transfer) invest-
ments (see also Faiña et al. Chapter 21, this volume). Second, since in the former period
(2007–2013) the gap between the most-­and least-­developed Nomenclature of Territorial
Units 2 (NUTS 2) regions had increased mostly due to the global crisis, the ‘new
Cohesion policy’ tries to decrease this gap. Both trends very closely concern EU Cohesion
policy in the EaP, because connectivity has also been important in strengthening relations
with this area and because the adjacent EU territories on the borders of EaP are among
those least-­developed NUTS 2 regions. Thus, there is a positive correlation between the
EU Cohesion policy in general and its particular EaP version in all aspects of economic,
social and territorial cohesion as well as in the area of institutional capacity-­building.
In developing a conceptual framework for Cohesion policy in the EaP region it is
important to note that the EU with its rules and values has acted as a ‘normative power’
and it has played the role of a global actor as the ‘civilian superpower’ (Larsen 2014).
Altogether, Cohesion policy gives substance to the process of Europeanisation, as
these terms have become more and more evident during a series of enlargements. The
accelerated pace of globalisation has led the EU to pursue for this region a process of
‘globalization cum regionalization’ (Ágh 2010), which has been managed through the
process of external Europeanisation in the EaP. This ‘external governance’ has been
widely analysed in European Studies. Its concept has been outlined by Lavenex and
Schimmelfennig (2009), although it still needs further elaboration in the present situation
of the deep Ukrainian crisis. It comes as no surprise that the issue of external govern-
ance was an eminent topic in the European Studies in the second half of 2000s and that
it has turned out to be a vital issue in the mid-­2010s. Basically, according to Lavenex and
Schimmelfennig, external governance results in Europeanisation, since ‘the EU projects
its own regulatory model(s), institutions and rules of governance beyond the borders of
formal membership and does so in institutional forms of coordinated action that aim at
the production of collectively binding agreements’ (Schimmelfennig 2012: 657). European
governance is based on general principles coming from EU norms and rules; at the same
time it has arguably been even more shaped by ‘the issue-­specific regimes of the EU in a
broad variety of areas of public policy’ (ibid. 658). Therefore, the Europeanisation effects
402  Handbook on Cohesion policy in the EU

Table 25.2 ENPI: indicative average allocations by country, 2014–2020, 2014–2017,

2018–2020 (€ million)

Eastern Partnership country 2014–2020 2014–2017 2018–2020

Armenia 280 155 125
Azerbaijan 154 85.5 68.5
Belarus 143.5 80 63.5
Georgia 678 372.5 305.5
Moldova 678 372.5 305.5
Ukraine 920.5 680 240.5

Source:  European Parliament, Committee on Foreign Affairs.

are ‘patchy’ (ibid.: 660). Consequently, external governance is an indirect mechanism of

Europeanisation based both on the EU proactive actions to promote its values and on
the socialisation process of the participants from the EaP side. External Europeanisation
in EaP is the goal, and EU Cohesion policy is the main instrument.
External governance has become quite relevant in the specific case of the EaP states
after the eastern enlargement and the extension of Cohesion policy to Eastern Europe;
now this comprehensive Cohesion policy has become a substitute for enlargement.
As Cohesion policy was extended to the east, it acquired a special regulatory frame-
work through the financial transfers from the former European Neighbourhood and
Partnership Instrument (ENPI) and the present European Neighbourhood Instrument
(ENI) (Table 25.2).
But EU Cohesion policy in the EaP has been a much larger and complex process than
these financial constructions. It has mainly worked through intensive economic contacts
that have been innovative in many ways, since a ‘comprehensive institution building pro-
gramme’ (EaP 2010: 3) has been attached to it. External governance is very specific in the
EaP, since in this region the external and internal peripheries of the EU meet and create
a special mix. The eastern member states and the EaP states, as neighbours, have neces-
sarily intensive contacts, having had both a common experience with similar problems;
and also striking differences as to convergence in the general development efforts and
divergence in the specific Europeanisation strategies.

FROM ENP TO EaP: FROM DEMOCRACY PROMOTION TO

‘DEEP TRADE’ PRAGMATISM

External Europeanisation has evolved as a historical process in several stages (Table 25.3).

The original aim of ENP in 2004 was the creation of a ‘ring of friendly states’ and to
encircle the EU with ‘well-­governed countries’. In the optimistic spirit of the Orange
Revolution in Ukraine, during the first stage of the eastern Cohesion policy the EU
envisioned not only increasing economic contacts with the eastern countries, but also
widespread democratisation through external governance (Balfour, 2011; Buscaneanu
2015; Freyburg et al. 2011; Lavenex and Schimmelfennig 2011). Europeanisation meant
 EU Cohesion policy in the Eastern Partnership region   ­
403

Table 25.3  EaP: historical milestones

Category Armenia Azerbaijan Belarus Georgia Moldova Ukraine

Partnership and 1999 1999 1997 1999 1998 1998
 Cooperation
Agreement (PCA)
European 2004 2006 Belarus is 2006 2004 2005
 Neighbourhood covered
Policy (ENP) by the
Action Plan ENP but
no action
plan is yet
in place.
Eastern Partnership 2009 2009 2009 2009 2009 2009
 Initiative (EPI),
2009
Association No AA In 2010, AA is 2014 2014 2014
  Agreement (AA) will be the EU and neither
signed Azerbaijan ratified
began nor
negotiations envisaged
on an
Association
Agreement.
Deep and No Envisaged Not 2014 2014 2016
 Comprehensive DCFTA after the applicable
Free Trade Area will be WTO
(DCFTA) signed membership
of Azerbaijan

Source:  European External Action Service.

institution-­building at both the state and civil society levels. The EU expected a relatively
quick adjustment of the Eastern European countries to the EU, intensive economic con-
tacts supposedly promoting welfare and prosperity, and through many spillover effects,
the fostering of the establishment of a democratic order.3
In the efforts to extend Cohesion policy to Eastern Europe, the institutional transfer
was the dominating theme in the external governance literature, without raising the issue
of whether the new institutions would remain a mere formal legal façade or could become
an active part of society. The EU in its relations with outsiders seemed to favour a top-­
down governance approach based on rule transfer and conditionality. However, the origi-
nal ENP was too general and not specific and differentiated enough, either between the
east and south or within the east. Hence, the institutional reforms remained shallow and
ineffective (Korosteleva 2011), since the big, national formal institutions would have to be
based on many smaller local informal institutions and premised on civic patterns of behav-
iour that were missing in Eastern Europe. The emergence of a full democratic order would
have needed a much longer process and a more favourable international environment.
404  Handbook on Cohesion policy in the EU

This normative approach produced an obvious ‘conditionality crisis’ because the EU

had nothing relevant to offer the Eastern European states other than the prospect of
joining the EU in order to facilitate structural reforms. This led to the Polish–Swedish
proposal to launch the Eastern Partnership. To revitalise the aim of extending Cohesion
policy to Eastern Europe, a joint declaration on the EaP was signed in Prague in 2009
with the six eastern partners – Armenia, Azerbaijan, Belarus, Georgia, Moldova and
Ukraine – to facilitate closer cooperation in both political association and economic inte-
gration. The EaP, with its more realistic spirit, constituted a turning point in the strategy
of introducing Cohesion policy in Eastern Europe, since it wanted to remedy the weak-
nesses of the original ENP scheme. The promotion of democracy has not been given up,
and the respect for common values of deep and sustainable democracy has been apparent
in all EaP documents, but they have become more specific and more complex.4
Thus, by keeping the emphasis on shared values and joint ownership, this pragmatic
turn in Cohesion policy signalled the abandoning of naïve ideas of rapid democratisation
through massive institution transfer and easy harmonisation through multilateral and
bilateral agreements. Cohesion policy towards the EaP now focused on the extension of
economic and/or trade relationships by elaborating the notion of ‘deep trade’, meaning
comprehensive economic and social transformations as effects of intensive trade.
Supposedly, the Deep and Comprehensive Free Trade Area (DCFTA) would have strong
spillover effects pushing towards harmonisation across many policy fields, and also
among all EaP countries. The intensive and increasing trade relations would also generate
structural changes in some other policy fields, thus deepening external Europeanisation,
first of all through the improvement of the social environment for the business, trade
and investment sectors. This ‘new EaP’ project was indeed more pragmatic and more
successful in intensifying trade relations, even though to a lesser extent it also reproduced
the former Western fallacy on the relative ease with which institutional transfer may take
place. This ‘new EaP’, elaborated at the Prague Summit (2009) and developed further at
the Warsaw Summit (2011), was based on a dual-­track approach involving both bilateral
relations and multilateral agreements, but it can be argued that it overvalued the regional
approach. Principles such as multilevel governance and multidimensional governance
also appeared in the extended governance of the EaP; above all multilevel governance
emphasised the involvement of civil society for democracy promotion. Multidimensional
governance was applied less forcefully, but the high complexity of policies and the preva-
lence of the EU interest in promoting trade relations would have necessitated a more
intensive use of this approach.5
The EaP partnership structures were much more sensitive to the individual states
involved in the relationship of multilateral and bilateral approaches, since the six states
diverged considerably in their socio-­economic situation, and consequently in their par-
ticipation in, and contribution to, the EaP. In general, flexible external governance has
been apparent in the rapid conflict management in Ukraine and Moldova (see, e.g.,
Baltag and Romanyshyn 2011); there was, however, low-­intensity conflict management in
Georgia, and partly also in Armenia and Azerbaijan; whereas there was ‘benign neglect’
in Belarus. Moreover, differentiated integration appeared even more clearly in the ‘more
for more’ principle. This meant that the more a country progresses in democratic reforms
and institution-­building, the more additional support it can expect. The EaP was a big
step forward compared to the original ENP in specifying the financial instruments,
 EU Cohesion policy in the Eastern Partnership region   ­
405

but the content of the partnership structure remained vague, since the added value of
strategic partnership was not defined properly: ‘In summary, as the research indicates,
EU “politics of inclusion” remain patchy and inconsistent, making it difficult for the
neighbours to commit themselves to the European course of reform . . . All neighbours
felt that they were caught between the EU and Russia’ (Korosteleva 2011: 14–15). Thus,
ENP had a ‘patchwork character’, that is, the sectors were not really coordinated. At the
same time the sectoral efforts were important in order to progress in some fields, without
being disturbed by other policy fields that might have involved conflicts (for example,
trade versus energy security).6
The EaP with its spillover effects worked to some extent, although such effects were
not as significant as expected by the EU. In addition, energy policy and energy security
became increasingly higher-­priority issues for both the EU and the EaP. External govern-
ance in energy matters is especially difficult, as it hampers the spillover effects in other
policy fields. The EaP introduced a complex set of specific rules, well beyond the general
democratisation, but this more lenient approach raised the issue of compliance with the
new rules. Effective compliance means adherence to the provisions of the accord and to
the implementing measures not only as formal legal transposition, but also as enforce-
ment and application. Several factors go against this fuller notion of implementation,
such as weak administrative capacity, high domestic adoption costs (namely, a misfit with
national rules), general domestic preferences, and party-­political interests. This situation
leads to actual non-­compliance accompanied by reform fatigue and placebo reforms.
Therefore, in 2015, the EU introduced a large set of indicators, summarised in the Eastern
Partnership Index, in order to evaluate the country-­specific partnership system. This EaP
Index charts the progress made by the six countries in EU integration through indicators
on: (1) linkage – the depth and intensity of the contacts with the EU; (2) approximation
– the convergence with the EU rules and values; and (3) management  – the performance
of the institutional structures. Hence, it provides a cross-­country and cross-­sector picture
in a historical trajectory between 2011 and 2014 (Table 25.4).

FROM WARSAW TO VILNIUS: FROM DEEP TRADE

PRAGMATISM TO OPERATIONAL PRAGMATISM THROUGH
MULTILATERALISM
At the Vilnius Summit in 2013 there were negotiations on Association Agreements
to replace the Partnership and Cooperation Agreements. Finally the Association
Agreements with Georgia, Moldova and Ukraine were signed in Brussels on 27 June
2014. Moreover, in Vilnius an ambitious agenda was agreed upon with a commitment
on political, economic and social reforms, since the Deep and Comprehensive Free Trade
Area ‘goes beyond a classical free trade agreement. It concerns not only the liberalisation
of trade in goods . . . and services, but broad provisions on establishment of companies
and on the harmonisation of the partner countries’ trade-­related legislation with the EU
acquis communautaire (the body of EU laws and regulations)’ (EaP 2014: 5). In general,
‘The EU shared its cohesion and regional development experience with partner countries
to help them address internal regional socio-­economic disparities’ (ibid.: 13). This state-
ment can indeed be taken as the motto of EaP.
406  Handbook on Cohesion policy in the EU

Table 25.4  The Eastern Partnership Index

Country Linkage Approximation Management

2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014
Armenia 0.42 0.48 0.49 0.52 0.57 0.56 0.59 0.61 0.32 0.43 0.51 0.48
Azerbaijan 0.32 0.38 0.41 0.42 0.49 0.42 0.42 0.42 0.28 0.34 0.33 0.31
Belarus 0.19 0.31 0.31 0.32 0.37 0.31 0.33 0.32 0.20 0.19 0.24 0.25
Georgia 0.53 0.54 0.57 0.59 0.63 0.58 0.63 0.69 0.92 0.58 0.58 0.74
Moldova 0.70 0.70 0.70 0.70 0.67 0.65 0.67 0.70 0.88 0.57 0.59 0.71
Ukraine 0.60 0.67 0.65 0.66 0.57 0.55 0.58 0.60 0.68 0.52 0.52 0.50

Source:  www.eap-­index.eu.

The EaP multilateral dimension in the Vilnius Declaration provides a new forum
between 2014 and 2017 for strengthening multilateral cooperation through four the-
matic platforms: (1) democracy and good governance; (2) economic integration and
convergence with the EU sector policies; (3) energy security; and (4) contact between
people. It indicates the outlines of further activity and main directions of EU Cohesion
policy: ‘The participants of the Vilnius Summit acknowledge the significance of
multilateral cooperation in support of deeper bilateral relations . . . the fora of mul-
tilateral dimension are the place where exchanges between the EU and all six part-
ners can be held’ (EaP 2013: 11). Accordingly, in the financial support of European
Neighbourhood Instrument, ‘Assistance will be focused on a few sectors of concentra-
tion, with the aim of increasing ownership, quality as results as a means to contribute
towards the ­modernisation and social cohesion of societies.’ At the same time, the
participants also emphasised the importance of regional cooperation and encouraged
‘the development of efficient inter-­regional and cross-­border cooperation dialogue,
including EGTC (European Grouping of Territorial Cooperation), to facilitate part-
ners’ social and economic development’ (EaP 2013: 12) (see Table 25.5 for summary
economic indicators).
Paradoxically, the Vilnius declaration was the big event concluding the pragmatic
stage and, at the same time, it turned out to be the beginning of crisis management
due to the Ukrainian events. In Vilnius, the Ukrainian President Yanukovich refused
the Association Agreement for Ukraine, which provoked the pro-­EU mass protest
movement which ousted him from power. With the explosion of the Ukrainian crisis
from late 2013, the traditional military and security dimension has come back with
a vengeance and, since then, the EaP has been overburdened by crisis management
deriving from the escalating conflict between the EU and Russia. The policy coor-
dination has also appeared beyond the military dimension, in economy, energy and
politics, and it has become the new pragmatic priority. Although the energy policy
looked like the unifying factor in the security challenge as ‘the external dimension of
regulatory state’ (Goldthau and Sitter 2014), traditional security in fact became the
most important issue when the non-­conventional war broke out. Together, the hard
and soft dimensions of security management have influenced the EU eastern policies
more and more directly with the mass migrations, and with the violations of human
 EU Cohesion policy in the Eastern Partnership region   ­
407

Table 25.5  Main economic indicators of EaP countries

Category Armenia Azerbaijan Belarus Georgia Moldova Ukraine

Per capita GDP 3505 7812 7575 3.605 2.239 3.900
  (US dollars)*
GDP total (millions 10 432 73 560 71 710 16.140 7.970 177.431
  of US dollars)*
Currency dram manat Belarusian lari (GEL) Moldovan Ukrainian
(AMD) (AZN) ruble (BYR) leu (MDL) hryvnia
(UAH)
FDI stock EU 909 3768 3807*** 3855 992 42 979
  from** Russia 2450 478 9037 450*** 204 3786
Trade balance with −458 10 454 −5201 −1365 −1322 −10 122
 the European
Union (EUR
million)****
Share in EU 27.9 44.6 26.2 27.5 46.4 31.2
 total trade Russia 24.3 7.3 49.5 6.1 21.9 27.3
(%)****

Note:
* World Bank (2013)
** UNCTAD (2012), millions of US dollars
*** Data for 2011
**** Eurostat (2013).

rights and persecutions of civil organisations in the EaP states. EaP-­driven regional
integration embedded in multilateral EU external governance has become a dream, or
reduced to diplomatic nicety.7
The conflict with Russia in the EaP region has also generated an internal conflict in the
EU. In fact, the eastern policy of the EU has divided the EU from the very beginning,
due to the opposition of the southern member states to the EaP. The Ukrainian crisis and
the sanctions against Russia has divided the EU even more because some member states
have preferred more confrontation with Russia, and others less confrontation. Beyond
this uneven record of attention of the EU towards the EaP, there has been a special inter-
est of NMS in the partnership with their close neighbourhood. Nonetheless, this new
divide between the tough and soft policies has also appeared in NMS, mainly as the split
between its northern and southern parts, because the former have been more concerned
with the EaP and the latter with the Black Sea region. The EaP was a Polish–Swedish
initiative, and so far all biannual EaP summits have taken place in NMS. This special
interest of NMS has become quite intensive in the period of the ‘new Cold War’ at the
crossroads of energy, traditional security and border management (Dąbrowski 2013).
Although some eastern EU members – first of all Poland – have tried to keep the EaP
high on the EU agenda, the EU’s eastern policy has still been influenced to a great extent
by the fact that the EU’s integration capacity has been limited in the case of NMS, since
in the first decade of membership they have failed in ‘transcending the East–West divide’
(see Epstein and Jacoby 2014).
408  Handbook on Cohesion policy in the EU

FROM VILNIUS TO RIGA: FROM PRAGMATIC

MULTILATERALISM TO CRISIS MANAGEMENT

The increasing security challenge has produced the ‘crisis of crisis management’ in the
effort of the EU to extend Cohesion policy to the EaP. The eastern crisis has come as
a surprise, since Europeans must have lost the habit and the expertise to analyse the
world in geopolitical terms in the relatively relaxed period of the multipolar era (Biscop
2015:  2). In this respect, the ‘rethinking of the EU’s development paradigm’ in the EaP
may be relevant (EPC 2015:1). In 2015 uncertainty was expected more than ever before,
since ‘The revised ENP Strategy will be characterised by the abandonment of “more for
more, less for less” conditionality and the further differentiation of relations with each
of neighbouring countries, taking their own and their neighbours’ interest more into
account. As such, the ENP will be detached from the EU’s enlargement philosophy
and thus come to resemble a more classic foreign policy’ (Blockmans 2015: 2). Indeed,
the European External Action Service (EEAS) has increasingly become involved in
the eastern policy (EEAS 2015) as regional security has come to the fore. The ‘more
for more’ principle cannot be kept in place after 2015, since the room for manoeuvre
in the EaP states has shrunk drastically, and the commitment towards democracy has
forced a clearer positioning of the EaP states between the EU and the autocratic Russia
(Buscaneanu 2015). The Riga Summit focused on the Ukrainian crisis and it has only
taken small steps in the visa liberalisation process (Kaca 2015).
The recent Polish Report about this state of crisis management questions the EU’s
security, energy and migration governance in EE. The Report criticises first of all the
security policy as regards the ‘soft line’ towards Russia in the new Cold War: ‘The EU’s
neighbourhood policy has been driven by a strong liberal assumption that the best way to
secure stability is to improve governance, and to strengthen economic cooperation . . . the
EU conducted its security policy with economic means accompanied by political dialogue’
(Godzimirski et al. 2015: 7–8). The Report also notes that the EU is not ready to meet the
mass migration challenges from the EaP region, and is even more critical about its energy
policy: ‘The external dimension of the EU energy policy, as an extension of internal EU
regulations, is prone to the same weaknesses’ (Godzimirski et al. 2015: 14). All in all:

In the wider realm of security, some alterations in the EU’s neighbourhood policies are clearly
needed. Although there are some confirmations of the role of the EU’s economic clout and
security instruments, and of the continuing attractiveness of its governance model, the Russian–
Ukrainian crisis has revealed that the previous framework was insufficient. (Godzimirski et al.
2015: 25)

However, the analysts quoted above have not distinguished between two issues: (1) the
pre-­crisis approach to the EaP was inadequate in many ways; and (2) the approach in
times of crisis needs new policies that have not yet been elaborated. The same problem
appears in the four scenarios (Friedrich Ebert Stiftung 2014) elaborated by the joint
group of the EU–EaP experts in late 2014. In 2015 both Scenario I (Shared Home) and
II (Common Home) had already lost their relevance. The Shared Home scenario presup-
poses that the EU and Russia after this lost decade of political crises and economic stag-
nation would focus on the shared interest, so that the EaP countries could be developed
through deep trade and are not forced to decide between them. The Common Home
 EU Cohesion policy in the Eastern Partnership region   ­
409

scenario puts even more emphasis on the democratisation of Russia and on its common
interests with the EU in global competition to resolve the European conflicts in order to
counter the common threats. Scenario III (Broken Home) takes the authoritarian mod-
ernisation of Russia into account and predicts continuing confrontation with it, turning
the EaP region into a zone of permanent instability. Finally, Scenario IV (Divided Home)
forecasts even further deterioration of EU–Russia relations due to the Russian efforts
to carve out a sphere of influence, therefore no political and economic transformation
would take place, and the EaP region would be locked in a stalemate. In 2016 the EU is
closest to this worst-­case scenario.

CONCLUSIONS: THE NEW SECURITY CHALLENGE AND THE

EU TRANSFORMATION CRISIS

The post-­global transformation crisis is a multilevel game, with increasing tension within
the EU and the new security challenge in the east. Nowadays the biggest problem for the
EU is how to restart economic growth, first of all in the southern periphery due to an
increasing core–periphery divide, when facing a tough global competition. Moreover, the
EU democracy depends not only on the newly developed internal forms and content, but
also increasingly on international pressure, including the level and forms of democracy
in its neighbourhood (Cheneval et al. 2015). Thus, the security challenge in the east, in
its largest meaning as the military, political and energy security issue, has overburdened
the EU and it has led to frozen external Europeanisation with growing internal instability
of the EaP states. This situation of high complexity needs complexity management that
will be elaborated by the EU, step by step. The rethinking of the current crisis manage-
ment has to produce a new eastern policy, since the extension of Cohesion policy to
Eastern Europe is still an important part of the future Europe.
The top challenge is, indeed, that ‘The EU should carefully differentiate between the
six Eastern partner countries, and provide intense support to Ukraine to help it overhaul
its system of governance against the backdrop of the war in Eastern Ukraine’ (European
Integration Index, 2015: 7; see also EaP, 2015). In this spirit the March 2015 Presidency
Conclusions declared that: ‘The EU is fully committed to the Eastern Partnership. It will
strengthen, in a differentiated way, relations with each of six partners. Particular efforts
should be devoted to advance cooperation in state building, mobility and people-­to-­
people contacts, market opportunities and interconnections’ (European Council 2015: 4).
Similarly, the EU has severe problems in the southern part of the ENP (for example, the
migration crisis), so the Presidency Conclusions have reiterated the EU’s commitment to
assist in both the eastern and the southern crisis: ‘The ongoing review of the European
Neighbourhood Policy should ensure the continued deep involvement of the EU with
both Eastern and Southern partners’ (ibid.).

NOTES

1. The Centre for European Policy Studies (CEPS) and European Policy Centre (EPC) have been pioneers
in the ENP research and documentation: CEPS with the European Neighbourhood Watch since February
410  Handbook on Cohesion policy in the EU

2005 (see Blockmans 2015) and the EPC with large horizon analyses (see EPC 2015). In the huge literature
see also the Special Issues of the Journal of European Public Policy, 6 (6), 2009; Democratization, 18 (4),
2011; and International Politics and Society, 3, 2011. The European Integration Index (2015) is a deep and
comprehensive overview of the six states, with detailed data on their historical trajectory.
2. Russia has also been a main player in the ENP game, but there is no space here to deal with its role in detail.
In the Introduction to the Special Issue of Communist and Post-­Communist Studies on Russian foreign
policy, the editors conclude that: ‘The crisis in Ukraine exploded the status conflict between Russia and
the West . . . the West is willing to recognize Russia’s status as a great power in terms of existing norma-
tive order. It seems that this does not satisfy Russia’ (Forsberg et al. 2014: 267). Regarding dependence on
Russia as a constraining factor of the EaP, see Dimitrova and Dragneva (2009).
3. The EaP has established some institutions that have been helpful both in the EU–EaP and in regional
cooperation. Euronest Parliamentary Assembly (3 May 2011 in Brussels) is a parliamentary forum to
promote political association and economic integration, composed of a European Parliament delegation
(60 Member of the European Parliament, MEPs) and 50 EaP delegates (ten from each country, except
Belarus). The EaP Civil Society Forum (CSF) is part of the programme to facilitate and monitor demo-
cratic transition; its Steering Committee meets annually.
4. In this spirit, the establishment of European Endowment for Democracy (EED) in 2011 was to encourage
‘deep and sustainable democracy’ by ‘[f]ostering – not exporting – democracy and freedom’ (EED 2015),
just supporting civil organisations.
5. The European governance has also meant an extension of the multilevel governance literature to
Eastern  Europe, see Faludi (2012). Simona Piattoni (2010: 177–191) has pointed out that the multilevel
governance principle has involved not only an empirical challenge in the EU, but also a normative challenge
in decentralisation, accountability and transparency.
6. On the conceptual and practical limitations of EaP as a continuing conditionality crisis, see Korosteleva et
al. (2013, 2014).
7. The conceptual shift in security policy from the narrow, traditional meaning to the widest, most
complex meaning, embracing financial, economic, energy-­related and political–global dimensions, has
been described in a recent paper on the EU foreign policy (Ágh 2014: 116–117). This shift can easily be
pointed out in the present Ukrainian crisis. In this respect the EaP countries need also ‘security integra-
tion’ with the EU through the EaP, since all countries under scrutiny are ‘contested states’ to a great
extent.

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Bachtler, J., C. Mendez and H. Oraze (2014), ‘From conditionality to Europeanization in Central and Eastern
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Balfour, R. (2011), ‘Debating the Eastern Partnership: perspectives from the European Union’, International
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26.  Cohesion policy and cities: an ambivalent
relationship
Rob Atkinson and Karsten Zimmermann

INTRODUCTION: THE URBAN DIMENSION IN EU COHESION

POLICY

Cities initially began to attract the attention of European policy-­makers in the late
1980s and early l990s due to an extensive debate on urban poverty, social exclusion
and deindustrialisation which had a major impact on many urban areas in Europe
(Atkinson 2000; Oberti 2000; Kazepov 2005; Murie and Musterd 2004). Since then
the urban dimension of European policies has been the focus of considerable debate
and discussion; in part this has been a result of the increased presence of cities at the
European level, as ‘actors’ (LeGalès 2002) in the European multilevel polity. Moreover,
and arguably more importantly, cities were increasingly seen as the ‘drivers of the
economy and of European economic competitiveness’, an emphasis strengthened
by firmly linking cities to the Lisbon–Gothenburg Strategy (see Commission of the
European Communities 2005, 2009) and Cohesion policy as major sources of jobs and
growth (Commission of the European Communities 2006). More recently the European
Union (EU) discourse has been supplemented by a recognition that competitiveness
can produce negative consequences and that not all cities can be ‘winners’, also that
the single-­minded pursuit of growth for its own sake may have negative consequences
(for example, social exclusion, decline in social cohesion) if the benefits are not more
widely distributed, thus cohesion has become more important. The inclusion of eco-
nomic, social and territorial cohesion in the consolidated Treaty of European Union
(Commission of the European Communities 2012), has led to a wider consideration of
the need for ‘balanced and sustainable development’ which seeks to support forms of
urban development that attempt to reconcile competitiveness and cohesion, although
arguably the primary emphasis remains on competitiveness. Thus the search for ‘urban
competitiveness’ has been supplemented by various forms of cooperation and collabo-
ration enshrined in notions such as polycentricity and collaborative planning which are
intended to function as mechanisms of both development and inclusion. Nevertheless
cohesion remains a rather ill-­defined term, and how its three dimensions – economic,
social and territorial – are to be integrated and reconciled with competitiveness is
unclear.
We will argue in our chapter that, despite some promising changes during the last
decade, the role of cities and the recognition of urban areas as a relevant scale of
implementation of European Cohesion policy remains limited. The renaming of the
Directorate-­General for Regional Policy as the DG Regional and Urban Policy (DG
REGIO) in 2012 indicated a stronger recognition of the importance of the urban
dimension. However, the draft Urban Agenda of the European Commission (European

413
414  Handbook on Cohesion policy in the EU

Commission 2014b) published for consultation in late summer 2014 crystallises this
uncertainty, as for the moment it is unclear whether it will ever be published as a formal
document.1
Since 2000 a considerable share of the Structural Funds subsidies have been invested
in urban areas, reflecting a growing consensus that cities across Europe need to be sup-
ported, not only because of their role as the motors of the European economy, but also
because they face a variety of challenges (demographic growth and shrinkage, social
exclusion, lack of economic resilience, sustainability issues) that require a coordinated
European response.2 Also, what might be termed a European model for integrated
urban policy has emerged in recent years. There is, at the very least, an implicit EU
‘urban policy’; what may be described as an ‘urban agenda’ (see Atkinson 2001), or
what has more recently been termed the acquis urbain (see Commission of the European
Communities 2009). This term has been employed to suggest the building up of a
common European methodology of intervention, a body of knowledge and examples
of action (for example, good practices) that can be seen in broadly similar terms to the
acquis communautaire (European Parliament 2014; Atkinson and Rossignolo 2010).
However, it remains questionable whether the Structural Funds and Cohesion policy
have developed a clear European urban strategy for sustainable urban development. In
addition, within the context of multilevel governance, cities still largely tend to be seen as
passive recipients and less as active participants.
In this chapter we will firstly describe the role of cities in European governance. Then
we summarise the emergence of European urban policy initiatives since the early 1990s
in two sections, giving more emphasis to recent developments. The regulations for the
Structural Funds for the period 2014–2020 have signalled the importance of sustainable
urban development; for instance, a minimum of 5 per cent of a member state’s European
Regional Development Fund (ERDF) funding has to be allocated to support integrated
actions for sustainable urban development and new instruments, such as Integrated
Sustainable Urban Development (ISUD) and Integrated Territorial Investment (ITI)
have been created, that could allow local authorities to take a more active role in using
these funds to address urban problems (including cohesion). However, it seems likely
that many member states will either not use or make relatively limited use of these
instruments, because national and regional governments wish to retain control (that is,
as gatekeepers) of the funds. Therefore, in our concluding section we will reflect on the
critical aspects of a form of federalised European urban policy in a multilevel governance
system that potentially contains conflicts between member states and DG Regional and
Urban Policy which wants to cooperate directly with city administrations and supports
decentralisation.

CITIES AS ACTORS IN THE EUROPEAN MULTILEVEL

GOVERNANCE SYSTEMS

Strictly speaking, municipalities are not actors in a European multilevel polity domi-
nated by member states’ governments. Municipalities have lobbied, for some time, for
both more voice at European level and greater recognition of their needs on the grounds
that they are responsible for implementing much of the EU’s legislation and regulations
 415
Cohesion policy and cities  ­

(John 2000; Tofarides 2003; van den Berg et al. 2007). Within the institutional fabric of
the EU, the Committee of the Regions (CoR) is the forum where cities and regions make
themselves heard. The CoR was introduced in 1993 with the finalisation of the Common
Market (Treaty of Maastricht) but its competences were limited (see Schönlau, Chapter
10, this volume).
Many European cities reacted quite early to address these deficits by creating city
networks and associations such as EUROCITIES, Quartiers en Crise and the Network
of European Metropolitan Regions and Areas (METREX)3 as lobby organisations
(Atkinson and Rossignolo 2010; K. Zimmermann 2008; Heinelt and Niederhafner  2008).
In addition there are also the Covenant of Mayors4 and the Council of European
Municipalities and Regions (CEMR)5 that both represent the interests of local authori-
ties and their associations. Despite all these efforts, the role of cities as actors in European
politics is limited, as the aforementioned networks and initiatives largely rely on informal
measures and persuasive strategies. Their impact may also be limited as it is questionable
which, if any, of these networks represents all of Europe’s cities. In other words: they lack
a coordinated voice. In general the larger cities or city regions such as Stuttgart, Milan
and Barcelona are most engaged in these city networks, while small and medium-­sized
cities are not well represented. The situation is further complicated by the existence of
different local government systems in Europe which may result in a dispersion of inter-
ests, and the fact that cities also play different functional and political roles in their own
countries (Loughlin et al. 2010). Taken together, this makes the development of a unified
voice difficult to achieve.
Nevertheless in the course of the preparation of the Lisbon Treaty (2007) lobbying by
urban actors had some impact. The treaty brought some changes, as the text now reveals
a clear commitment to local self-­government6 and the principles of subsidiarity and
proportionality. Also, the CoR has been strengthened (it may now call for the European
Court to make a judgement if the rights of subsidiarity and proportionality are violated;
U. Zimmermann 2008). Nevertheless, the active role of cities in the European policy
process remains limited as it is more of a watchdog role rather than that of an active
policy-­maker.
The situation is slightly better when it comes to the programming of the Operational
Programmes of the ERDF. For instance, in some of the German federal states, cities
were actively involved in the policy-­making process; but this is certainly not the case in all
member states, as we will discuss later.

HISTORICAL BACKGROUND: FROM THE URBAN PILOT

PROJECTS TO URBAN MAINSTREAMING

As a result of the developments outlined in the previous section since the late
1980s, the Community’s actions in urban matters have gradually multiplied and
taken various forms (many of these are catalogued in Commission of the European
Communities 2009; see also Table 26.1). For instance, through the Community
Support Frameworks the Commission, between 1989 and 1999, supported 59 Urban
Pilot Projects (UPPs) under Article 10 for innovative actions of the European Regional
Development Fund (ERDF) regulations which sought to promote urban innovation
416  Handbook on Cohesion policy in the EU

Table 26.1  Milestones of European urban policy

Year Milestone
1993–1999 Urban Pilot Projects
1996–1999 URBAN I
1997 Towards an Urban Agenda in the European Union (Urban Agenda)
1998 Sustainable Urban Development in the European Union: A Framework for Action
1999 European Spatial Development Perspective
2000 Lille Agenda
2000–2006 URBAN II and Urban dimension under target 2 of ERDF
2003 Beginning of URBACT (Network of URBAN II cities)
2004 acquis urbain (common principles of successful urban policy)
2005–2006 Bristol Accord
2005 Report on the Urban Dimension in the Context of Enlargement
  (authored by parliamentary group of the European Parliament)
2005 Start of EUKN (European Urban Knowledge Network)
2006 Communication of the Commission on Cohesion Policy and Cities
Urban Framework for action period 2007–2013
2007 Leipzig-­Charta for sustainable urban development
2007 Guidelines on The Urban Dimension of cohesion policy 2007–2013
2009 Barca Report on place-­based approach
2010 Toledo Declaration
2014 Draft Urban Agenda published for consultation process
2014–2020 European Structural and Investment Funds (ESIF) period with integration of
 Integrated Territorial Investment (ITI), Community Led Local Development
(CLLD), and integrated sustainable urban development

and ­experimentation in ­economic, social and environmental matters, aiming to develop

an ‘integrated approach’ to urban regeneration. In 1994 the Commission launched
a special Community Initiative to support urban issues, URBAN I (the URBAN
Community Initiative). In 2000, encouraged by the positive experiences of the UPPs
and URBAN  I, the Commission introduced URBAN II, which then became the main
Community Initiative for sustainable urban development, within the general regula-
tions on the Structural Funds (Frank 2006). Another relevant initiative launched in the
2000–2006 period was the URBACT network7 (part of the URBAN II programme)
which supports the exchange of information and experience on sustainable urban
development across the EU.
The regulations and guidelines for the 2007–2013 programming period of the Structural
Funds included a ‘stronger’ urban dimension. The ERDF, the European Social Fund
(ESF) and the Cohesion Fund (collectively denoted also as Structural and Cohesion
Funds) financed a wide range of urban development projects, while the URBACT II
programme continued the exchange of know–how and experience among key players in
urban policy across Europe. Moreover, urban development was also supported by new
Initiatives such as Joint Assistance to Support Projects in European Regions (JASPERS),
Joint European Resources for Micro and Medium Enterprises (JEREMIE), Joint Action
to Support Micro-­ finance Institutions in Europe (JASMINE) and Joint European
 417
Cohesion policy and cities  ­

Support for Sustainable Investment in City Areas (JESSICA) (Commission of the

European Communities 2009: 36–37).
We can see from this chronological review that EU actions in urban matters have
grown incrementally since the late 1980s, supported by the positive experiences with
urban initiatives (most notably URBAN I and II) and the recognition that cities play
a vital role in a balanced and competitive Europe. This led the European Commission
to mainstream sustainable urban development into the Cohesion policy during the
2007– 2013 period. In this period, European cities were expected to benefit in many ways
from Cohesion policy as the Commission anticipated that urban development issues
would be integrated in all regional and national programmes supported by the Structural
and Cohesion Funds (Commission of the European Communities 2009). As a conse-
quence of this mainstreaming, high-­profile initiatives such as URBAN disappeared.
The developments outlined in the preceding paragraphs led to the production and dis-
semination, through both official and informal mechanisms, of a considerable amount
of ‘urban knowledge’ and an associated ‘urban methodology’ of action relevant to cities
across Europe. What developed was a form of consensus (or conventional wisdom) that
both constitutes and functions as a body of semi-­official ‘urban knowledge’ developed
over the last 20 years, based on practices and experiences that have been sanctioned by
the European Commission (in this case DG Regional and Urban Policy). For instance the
Commission Communication (2006) Cohesion Policy and Cities: The Urban Contribution
to Growth and Jobs in the Regions codifies the argument, within the framework of the
Lisbon–Gothenburg8 Agendas, that for Europe strengthening cities is coterminous with
strengthening Europe (a similar, arguably stronger, argument is developed in Commission
of the European Communities 2009).
In addition to advocating widely held notions such as the dissemination of good prac-
tice in urban policy, supporting innovative urban projects and capitalising on knowledge
(knowledge transfer between cities and benchmarking), the added value of these develop-
ments, and their contribution to the acquis urbain, may be seen as being constituted by
the following:

● coordinating strategies and actions for urban development, supporting public–

private partnerships, growing public participation in policy-­making (horizontal
and vertical coordination);
● integrating local problems (housing degradation, socio-­spatial polarisation, urban
poverty, traffic congestion, pollution, degradation of the built environment, and so
on) and single projects into wider strategies and city-­wide visions in a city-­regional
context based on an agreement on sustainable long-­term perspectives;
● the need to monitor progress, in different phases of projects (ex ante, ongoing,
ex post evaluations) according to different sets of criteria and indicators (not only
quantitative, but also qualitative).

In this context DG REGIO’s Promoting Sustainable Urban Development in Europe:

Achievements and Opportunities (Commission of the European Communities 2009) may
be seen as summarising and bringing together the outcomes of these experiences. But it
arguably sought to do more than this: it attempted to create a particular way of think-
ing and acting by enunciating a particular methodology (the integrated approach) that
418  Handbook on Cohesion policy in the EU

entailed new modes of governance (including an enhanced role for citizens) and manage-
ment (drawing upon New Public Management, NPM9).
The question remains: what has been the cumulative impact of all these developments?
In some countries with long-­standing national urban regeneration policies (for example,
the United Kingdom, France and the Netherlands) the impacts were relatively marginal;
while in Southern European countries, but also in Germany, initiatives such URBAN
were considered to be policy innovations and had a considerable impact at the local
level (Frank 2006; Güntner 2007; Zimmermann 2005; Tofarides 2003). From the 1990s
onwards in many European countries local governments experimented with area-­based
initiatives to combat social exclusion in distressed urban neighbourhoods (Oberti 2000;
Atkinson 2000; Atkinson and Carmichael 2007). The contribution of the URBAN expe-
rience to the programming and design of the German Social Integrative City programme
in the late 1990s was significant. The actual amount of subsidies was less relevant to
the process. What took place was a diffusion of urban policy principles and governance
mechanisms that were adapted to local contexts. Since then a common set of principles
of urban policy has also emerged in connection with the formulation of the Territorial
Agenda of the European Union (German Presidency 2007).
Atkinson and Rossignolo (2010) described the European methodology of urban inter-
vention (the acquis urbain) as a body of knowledge and examples of action. It is more a
selection of good practices and principles, but not a formalised procedure or set of instru-
ments. The Ministry for Regional Development of the Czech Republic (2010), referring
to EU documents, defined the methodology as six principles of urban policy:

Principle 1: The regional nature of urban policy (functional interdependence of cities

and towns in regions)
Principle 2: Strategic and integrated approach to urban development
Principle 3: Polycentric development of the population pattern
Principle 4: Promotion of the development of towns as development poles in a territory
Principle 5: Care for the urban environment
Principle 6: The deepening of cooperation, the creation of partnerships, and the
exchange of knowledge in sustainable urban development.

These principles have been repeatedly mentioned as forming the core of integrated and
sustainable urban development in Europe (Swaniewicz et al. 2011; Commission of the
European Communities 2009). However, despite the fact that they are widely circulated
in background reports, policy papers, and so on, they have never found their way into
Structural Funds regulations nor been explicitly accepted by all member states; moreover,
the mainstreaming of these principles has arguably proven to be even less successful.

RECENT DEVELOPMENTS, 2014–2020

There was significant discontent surrounding the mainstreaming of URBAN during the
2007–2013 period, with even DG REGIO (2008) expressing concern about the overall
success of the process; the situation was summed up succinctly by Swianiewicz et al.
(2011), who noted:
 419
Cohesion policy and cities  ­

according to the analyses of the European Commission and the opinion of numerous experts,
in many EU Member States (mainly in the EU-­12) in the course of . . . [the 2007–2013 period]
mainstreaming the approach that had been successfully implemented under URBAN Initiatives
was lost or blurred. At the same time, it has to be underlined that the regulations enabled the
Member States to prepare instruments or solutions that could support the integrated urban
development – some Member States decided however not to take advantage of those opportu-
nities. On the other hand, in Member States such as France, Germany or the Netherlands, the
mainstreaming of the urban dimension is showing good results (ibid.: 9).

As a result, the Commission decided to take a more proactive approach and took some
significant steps to more firmly anchor the urban dimension in the new programming
period (2014–2020). The measures and mechanisms now in place are:

● Each member state has to ensure that a minimum of 5 per cent of its ERDF alloca-
tion will be invested in integrated sustainable urban development, which in princi-
ple implies that local authorities will have a greater role in administering the funds.
● €330 million will be invested in innovative actions in the field of sustainable urban
development over a seven-­year period.
● A network of cities is supposed to review the ‘deployment on the ground’ of
European funds. Following the experience of URBACT and European Urban
Knowledge Network (EUKN) this network will also facilitate the exchange of
experience between cities involved in integrated sustainable urban development
and in the above mentioned urban innovative actions.
● A new instrument, Community-­Led Local Development (CLLD), derived from the
LEADER Community Initiative, will be implemented and should secure greater
involvement of local stakeholders (or action groups) from all societal sectors. This
is expected to be implemented in particular in the realm of neighbourhood regen-
eration, but also more widely.
● Another new instrument called Integrated Territorial Investment (ITI) may be used
to implement flexible and targeted place-­based strategies that combine funding
streams from different funds and priority axes (including ESF).

However, it remains to be seen to what extent member states engage with the spirit of
these new proposals and actually use them. The Commission has attempted to provide
a European framework based on Europe 2020 (European Commission 2010) and the
Territorial Agenda of the European Union (Hungarian Presidency 2011) which also
refers to the principles of sustainable urban development. The intention is that economic,
social and territorial cohesion should be at the centre of the approach and the Structural
Funds are to be deployed to support these objectives. To emphasise this, the Commission
has published a Common Strategic Framework (CSF) to achieve enhanced coordination
between all European Structural Investment Funds (ESIF). The objective of the CSF is
to ‘increase coherence between policy commitments made in the context of Europe 2020
and investment on the ground. It should encourage integration by setting out how the
funds can work together’ (CEC 2012: 3).
In practice the Partnership Agreements will have an important role in structuring ter-
ritorial development in ways that allow for the greater integration and more focused use
of different strands of the Structural Funds. It is in the Partnership Agreements that
420  Handbook on Cohesion policy in the EU

the role of the ‘urban dimension’ within individual member states will be more clearly
defined. It is here that the strategic use of Integrated Sustainable Urban Development
(ISUD), ITI (Integrated Territorial Investment) and CLLD (Community-­Led Local
Development) will be outlined; they will also include the criteria for selection of the cities
in which integrated actions for sustainable urban development will be implemented, while
Operational Programmes will include the list of criteria for the selection of cities in which
integrated actions for sustainable urban development will be implemented. However, the
regulations allow some room for manoeuvre, in the dual translation process from the
European level to the national level (Partnership Agreements) and then to regional level
(Operational Programmes) it is quite possible, if not likely, that the urban dimension
could become ‘lost in translation’ in some member states. Indeed in some member states
there are already signs that there will be only limited use of the new instruments such as
ISUD, CLLD and ITI.10 Initial feedback suggests that member states will use these new
instruments selectively and sectoral approaches will tend to dominate over integrated ter-
ritorial approaches.
As a result the way(s) in which the urban dimension develops in the new period will
vary from country to country, and within countries from region to region (Van der Zwet
et al. 2014). Much will depend upon which cities are selected for action, how ISUD and
ITI are deployed, and the role allocated to CLLD. What is likely to happen is that some
member states will enthusiastically utilise these new opportunities to develop the urban
dimension, although these are likely to be coupled with existing strategies to support the
development of urban areas and/or clusters of cities and towns identified as having a
key role in improving national and regional economic development and competitiveness
(European Parliament 2014; Van der Zwet et al. 2014). What remains unclear is the extent
to which this approach will be used, along with other instruments, to address wider ter-
ritorial imbalances and enhance territorial cohesion. Furthermore the degree to which
cities take on responsibility for managing integrated sustainable urban development is
likely to vary; in part this will depend on the attitudes of national governments and man-
aging authorities, but also on the capacity of cities to carry out such a task. However, we
do not agree with Tortola (2013), who stated that the mainstreaming of URBAN ended
the ‘EU’s engagement in explicit urban policy’ (Tortola 2013: 2), not least because it is
highly questionable whether the EU has ever had what amounts to an ‘explicit urban
policy’. Arguably, as we have suggested above, there has been an ‘implicit urban policy’
for some time, and if anything this has been strengthened in recent years.

IMPACT AND LEARNING

We would contend that despite recent developments the role of cities in European Cohesion
policy is ambivalent. Today many cities in the member states are potential beneficiaries of
Cohesion policy; the CSF and new ERDF regulations directly refer to integrated urban
development and support the use of new instruments such as CLLD and ITI. But we can
also conclude that European urban policy or the urban dimension of Cohesion policy is
a somewhat slippery notion, and it remains difficult to pin down exactly how it will be
implemented in the member states and what it means in practice. In part this is inherent in
the need to take on board that the process should not simply be viewed from a top-­down
 421
Cohesion policy and cities  ­

perspective, but also as a process that can take bottom-­up and horizontal forms. Moreover,
we should see it as taking place at different spatial scales that interact in unpredictable
ways, and varying across policy and sectoral domains. In addition to Cohesion policy
other EU policies such as the European environmental policy (air pollution control, noise
reduction) and the European transport policy have considerable impact on local govern-
ments and cities. Also the Directorate-­General for Communications Networks, Content
and Technology (DG CONNECT) identified cities as a relevant scale and object for inter-
vention, referring to the notion of ‘smart cities’.11
In strictly formal terms there is no role for a European urban policy in the Treaty of
Lisbon, but a process of ‘Europeanisation’ of urban policies across Europe has clearly
taken place during the last two decades. There is no question that the reluctance of
member states and regional authorities to accord a significant, treaty-­based role for the
EU in urban matters is a major obstacle to the emergence of a European urban policy.
There are, however, a number of other factors that need to be taken into account.
Firstly, a lack of coordination, as stated in a Commission document: ‘The differ-
ent European Commission DGs are tackling urban agendas differently’ (European
Parliament 2014: 53). Urban policy as well as Cohesion policy is a cross-­cutting issue
and urban mainstreaming within the Commission faces the same problems that can be
observed at the national and regional levels. Sectoral approaches to policy-­making are
frequently acknowledged to be ineffective but a lack of coordination and integration is
a problem that is spread across all levels of policy-­making. This has been confirmed by
a report about the implementation of 50 urban projects in the ERDF phase 2007–2013
(Ramsden and Colini 2013).
Secondly, different salience and prioritisation among member states. Some member
states give priority to urban policy, while others do not. Indeed some member states have
an explicit national urban policy, while others do not. The different priorities and empha-
ses accorded to urban issues across Europe have obstructed the emergence of a more
binding European model for urban intervention that goes beyond the above-­mentioned
policy principles.
Thirdly, there is a need to acknowledge that there is diversity of cities and urban reali-
ties in Europe. At a general level it is difficult, perhaps impossible, to identify a common
notion of the ‘European city’ (in both a normative and conceptual sense) (see the discus-
sion by Häussermann and Hailia 2005). This creates a challenge for any European urban
policy, which therefore requires both a clear vision of what sustainable urban develop-
ment means and one that is able to embrace this diversity. Such a task is a challenging
one within such a diverse body as the European Union when there is not even agreement
among member states that an EU urban policy is necessary.
Moreover, urban realities and local government systems are highly diverse in Europe
and so are the challenges that need to be addressed locally (shrinkage, growth-­related
problems such as congestion and sprawl, energy efficiency, flood risk, poverty and social
exclusion, economic decline, contaminated brownfield sites, protection of cultural herit-
age, and so on) (Ramsden and Colini 2013). In some member states municipalities play
a very important role in the implementation of welfare state goals, and therefore are
responsible for social cohesion (that is, Sweden, Germany); in others they did so in the
past but today face severe budgetary problems; while in some member states municipali-
ties provide only residual welfare services. Following Kazepov (2005, 2008) and Sellers
422  Handbook on Cohesion policy in the EU

and Lidström (2007) we see the type of local government systems as an essential feature
of welfare regimes that also structures the role of cities in (European) urban policy.
However, due to welfare state and wider reforms (for example, as expressed in New Public
Management and decentralisation of social services without sufficient financing) central–
local relations are changing (Sellers and Lidström 2007; Kazepov 2008). Comparative
research on national welfare regimes has pointed out that the administrative and fiscal
capacity of local government as well as the level and degree of legal supervision differs
considerably between welfare regimes (Sellers and Lidström 2007). We argue that these
differences matter and that they impact on the capacities of local government to address
problems. At the moment the European Union is not able to support local authorities
significantly when it comes to important welfare policy fields such as housing. As a
consequence we cannot describe European urban Cohesion policy as a federated city
welfare programme (similar to the German Städtebauförderung or the French Politique
de la Ville; see Couch et al. 2011).
Fourthly, there is an ambivalence in the relationship between territory and institutions
in terms of a missing acknowledgement of territory or place. Governance is important
because by bringing together the different stakeholders in a place a strategic and action
dimension can be developed. However, many territorial and urban issues transcend tra-
ditional institutional and administrative boundaries and across Europe there remains a
profound mismatch between them. In various places across Europe attempts at develop-
ing ad hoc solutions to these problems have been put in place, but they have rarely been
successful or long-­lasting, often foundering on traditional rivalries and conflicts between
adjacent administrative areas in which the governing elites seem unable to transcend
or set aside these rivalries. At European level the Green Paper on Territorial Cohesion
(Commission of the European Communities 2008) represented a significant step forward
in the development of an approach that sought to bring together the territorial, social
and economic dimensions, recognising that they cannot be considered in isolation and
that, as a result, policies must be developed in an integrated manner and directed at
‘meaningful places of intervention’ (that is, not limited by administrative boundaries and
borders) (see Barca 2009: 93). However, this approach has been inadequately followed
through at European, national and subnational levels, leaving the dissonance between
territory and administrative unit largely intact (European Parliament 2014: 13–14; also
Servillo 2010; Atkinson 2012).
Fifthly, there are problems in terms of mainstreaming the urban dimension of European
Cohesion policy. The omens for the new programming period are not particularly encour-
aging; once again the update of the new instruments is likely to be very mixed (European
Parliament 2014). In part this is simply because they are new and those responsible within
member states are not familiar with them, and lack the knowledge and experience to
develop the more integrated and territorially fluid approaches required. Moreover, using
a new approach would also challenge long-­established sectoral approaches and the inter-
ests associated with them; it is never easy to bring about a reframing of how strategy and
action are conceived and implemented, and to create new institutional and organisational
forms to implement policy. Despite a growing awareness of the need to do so, progress
has remained painfully slow on the ground. Even where cities have apparently embraced
European notions of sustainable urban development, ‘this does not mean that they are
simply, or directly, translated into the organisational structures and practices of a country
 423
Cohesion policy and cities  ­

or city, in a sense they undergo a process of transmutation shaped by national (and local)
political structures, traditions and cultures’ (Atkinson and Walliser 2013: 146).
Sixthly, there has been a marginalisation of the anti-­poverty orientation. It is instruc-
tive to recall one of the most interesting European ‘urban initiatives’, ironically under the
umbrella of what was then known as ‘Directorate-­General V (Employment, Industrial
Relations and Social Affairs): Poverty 3’. This Community Initiative ran from 1989 to
1994 and its aim was to promote effective strategies to combat social exclusion in Europe;
its key principles were partnership, multidimensionality and participation. While this
initiative has largely been forgotten, its principles were central to much of the thinking
at European level and within member states when addressing urban issues. Thus during
the 1990s the debate was clearly focused on urban poverty and social exclusion (see
Atkinson 2000). However, as the emphasis began to switch to urban competitiveness,
and more recently to sustainable urban development, the poverty and social exclusion
dimension has become more marginal and the European urban agenda has, in a certain
sense, become more diffuse. Currently what we term ‘European urban policy’ has become
trapped in the ambivalence of linking competitiveness and social cohesion through a
place-­based approach. The place-­based approach, while entirely laudable, is in danger
of becoming a generic ‘cure-­all’ lacking the specificity originally intended in the Barca
Report (2009). In a similar manner the notion of sustainable urban development is a
broad theme and has a degree of plasticity, which means that it can be defined and rede-
fined in a multiplicity of (often conflicting) ways to suit a range of interests and situa-
tions. Given this fluid situation it remains to be seen whether a clear urban policy emerges
or whether sectoral policies will continue to dominate. Thus we are inclined to ask: is
there still a European urban question that needs to be addressed by new instruments (as
we experienced in the 1990s with social exclusion and area-­based initiatives)? Or are there
a series of European urban questions that constitute a ‘menu’ which member states can
select from according to their interests and priorities? If it is the latter, then the prospects
for a coherent ‘European urban policy’, building on the urban dimension in Cohesion
policy, remains remote.
To sum up, we have argued that over the period since the late 1980s and early 1990s a
range of urban initiatives have been developed and supported by the European Union
with the gradual emergence of an ‘urban agenda’. There is no question that the European
Commission, most notably what is today called DG Regional and Urban Policy, has
sought to include a stronger emphasis on urban issues in the Structural Funds and
Cohesion policy through the development of an explicit urban dimension, most notably
in the new programming period. However, we have also noted the continuing tensions
and ambivalence between urban competitiveness and social and territorial cohesion, with
a general tendency to favour the competitiveness dimension. Moreover, some member
states have tended to be reluctant to fully embrace new policy instruments provided by
the Commission that have the potential to create an integrated approach to sustainable
urban development (however defined). In combination with the range of local govern-
ment systems, and variations in central–local relations and the position of cities within
the European multilevel polity, the outcome is – perhaps predictably – a highly frag-
mented urban policy landscape across the EU, with the urban dimension as contained
in current Cohesion policy taking a multiplicity of national forms. More generally we
have suggested that while there have been attempts to define a ‘Community method’
424  Handbook on Cohesion policy in the EU

a­ ppropriate for sustainable urban development through the development of the acquis
urbain, the urban dimension remains a rather fuzzy and ill-­defined field of thinking and
action amenable to multiple, and conflicting, interpretations. Perhaps this is inevitable
as the Commission, lacking a treaty basis for action, attempts to develop a consensus
around what constitutes sustainable urban development and the urban dimension.

NOTES

  1. At the informal meeting of EU ministers responsible for territorial cohesion and urban matters in June
2015 in Riga, the ministers expressed their desire to support the EU Urban Agenda (Latvian Presidency
2015).
  2. This is demonstrated in the last report on economic, social and territorial cohesion that refers frequently
to urban areas (European Commission 2014a).
  3. These city networks emerged in recent decades mainly because cities had very limited access to the formal
sphere of European politics. Some of these networks are issue-­based (climate change, social exclusion) or
have a broader agenda (EUROCITIES). They all have in common that they want to facilitate exchange
of knowledge between cities, and they aim to make sure that urban issues are on the political agenda (lob-
bying). EUROCITIES represents larger European cities such as Barcelona and Stuttgart and is probably
one of the strongest city networks, with a strong presence in Brussels; in some ways it has gone beyond
being merely a ‘peak’ representative and lobbying organisation and has also become a source of technical
expertise on urban matters that is often consulted by the relevant sections of the European Commission
(notably DG REGIO). METREX was founded in the mid-­1990s and represents metropolitan areas and
city regions. Quartiers en Crise is also a network of cities; however, its focus is on developing an integrated
approach to the regeneration of deprived urban areas.
  4. The Covenant of Mayors is an initiative of thousands of political leaders of European municipalities,
counties, provinces, departements, and so on, that support actions against climate change. http://www.
covenantofmayors.eu.
  5. In contrast to EUROCITIES and METREX, CEMR represents a much larger number of local authori-
ties (150 000), also from non-­EU countries. It was founded in 1951. www.ccre.org.
  6. This refers at least in part to the European Charter of Local Self-­Government, a policy document pub-
lished by the Council of Europe in 1985.
  7. URBACT is a programme of the European Commission co-­financed by the Cohesion Funds and ERDF.
Its function is to support the exchange of knowledge and best practice on urban policy between cities.
Knowledge networks like URBACT are a further example of how the Commission has sought to construct
an ‘urban dimension’ despite lacking a formal (treaty-­based) competence in urban policy. www.urbact.eu.
  8. The Lisbon–Gothenburg agendas refer to two merged, overarching approaches developed by the EU. The
Lisbon Agenda aimed to make Europe the world’s most competitive and sustainable dynamic knowledge-­
based economy in combination with increased high-­quality job growth and enhanced social cohesion. The
Gothenburg Agenda supplemented the largely economic focus of the Lisbon Agenda by adding on the
sustainability (in the environmental sense) dimension.
  9. New Public Management represents an attempt to modernise the public sector and make it more efficient.
This involves the greater use of market mechanisms and treating public service users as customers. It may
involve privatisation of public services, the introduction of quasi-­market mechanisms into the public
sector, outsourcing of service provision (to private or voluntary delivery bodies) or some combination of
these. A good overview can be found in Lane (2000).
10. See for instance the Operational Programme of the German state of North Rhine-­Westfalia, which clearly
says that ITI will not be implemented (NRW 2014).
11. ‘Smart cities’ is one of the lead indicators for the measurement of impact of the Digital Agenda; https://
ec.europa.eu/dgs/connect/en/content/smart-­cities-­0 (accessed 7 May 2015).

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 PART V

CRITICAL PERSPECTIVES
AND DEBATES
27.  The ‘real’ principles of Cohesion policy
Robert Leonardi and Catalina Holguin

INTRODUCTION

In discussing the principles that underpin the Cohesion policy of the European
Union (EU), we need to establish some of the basic tenets or assumptions that have
always  characterised the policy but which have not always been understood within
or outside of the policy community. As discussed in Chapter 1 in this volume by
Brunazzo, Cohesion policy, as we know it today, began to operate in 1989 and its
treaty base was provided by the 1986 Single European Act (SEA) in Articles 130a, b
and c.1 The objectives of the policy were reconfirmed in the 1992 Maastricht Treaty
and have remained as an integral part of all subsequent revisions of the 1957 Rome
Treaty up to the last revision introduced by the 2009 Lisbon Treaty. This chapter will
discuss the underlying principles of Cohesion policy, that is, what was it supposed to
achieve, who is to benefit from the policy, how the policy is to be delivered and how
these principles have evolved over time in response to endogenous and exogenous
challenges.
From 1989 the management of this policy and its component Structural Funds (SFs)2
has been underpinned by a set of objectives that have been carried forward in support of
the restructuring of regional economies. Cohesion policy was put into place by its found-
ing fathers as an integral part of the single market and the single currency programmes
(Delors 1990; Leonardi 1995). For this purpose a set of five principles were defined in
the SEA and in the first 1988 regulations governing the policy which have been reiter-
ated in all subsequent drafts of the regulations. We will argue that while these principles
have basically remained the same, the means for incorporating them into the policy
process have changed over time. This has been due to, firstly, the endogenous factors
associated with the evolving composition of the EU that has grown from the original
12 member states that signed the SEA to the current 28 member states; secondly, the
impact or success of the policy on the economies where it has operated to spur invest-
ment and employment; and lastly, the response to the exogenous challenges posed by
socio-­economic and financial trends in the post-­2008 period.

THE SINGLE MARKET AND THE CREATION OF COHESION

POLICY

For many of the leading figures3 in the European Community the single market (SM)
represented the logical next step in building on the achievements of the Common Market
and the Customs Union, yet it also broke new ground in terms of European politics and
policies. The single market proposed to go beyond the elimination of customs duties
and tariffs on goods and to move on to the elimination of all of the non-­tariff barriers

429
430  Handbook on Cohesion policy in the EU

to the free flow of the factors of production: capital, labour and technology. While this
objective represented a bold step and a qualitative shift in the operation of European
institutions, it nonetheless seemed to represent the only response available to the
growing competition originating from economies outside of Europe that enjoyed larger
economies of scale and more integrated economic and financial structures; for example,
the United States and Japan. In 1985, Lord Cockfield, the Commissioner responsible for
guiding the proposal for the SM through the decision-­making bodies at the European
level and coordinator of the European Commission’s 1985 White Paper on Completing
the Internal Market, admitted that the SM programme represented ‘an act of faith –
confidence in the present and faith in the future – that we – the Community  – embarked
on this task’ (CEC 1985). In the Preface of the Cecchini Report, Lord Cockfield wrote
that:

we are able for the first time to see the precise measure of what we are going to achieve. Now
we have the hard evidence, the confirmation of what those who are engaged in building Europe
have always known: that the failure to achieve a single market has been costing European indus-
try millions in unnecessary costs and lost opportunities; that the completion of the Internal
Market will provide the economic context for the regeneration of European industry in both
goods and services; and that it will give a permanent boost to the prosperity of the people of
Europe and indeed of the world as a whole. (Cecchini 1988, xiii)

In his introduction to the same report, Jacques Delors, who was serving at the time as
President of the Commission, also stated that the objective of creating a large and truly
unified economic area in Europe by 1992 was formidable but it promised to provide sub-
stantial benefits:

This large market without frontiers, because of its size and because of the possibilities that it
offers for scientific, technical and commercial cooperation, gives a unique opportunity to our
industry to improve its competitivity. It will also increase growth and employment and contrib-
ute to a better balance in the world economy. (Cecchini 1988: xi)

Aside from the economic objectives, Delors argued that attention also had to be paid
to improving the Community’s economic and social dimension and in providing an
increase in resources to combat long-­term and youth unemployment (Nanetti 1996).
This concern had already been expressed in 1973 in the Thompson Report which pointed
to the necessity of making sure that further market integration was not achieved at the
expense of living and employment standards.
The Delors Report (1990) on Economic and Monetary Union (EMU) served to
provide the theoretical and political underpinning for the single market and single cur-
rency programmes. However, it also spelled out the rationale for the creation of Cohesion
policy. The Report pointed out both the positive as well as potentially negative impacts
of the single market on core versus peripheral areas:

Historical experience suggests . . . that in the absence of countervailing policies, the overall
impact on peripheral regions could be negative. Transport costs and economies of scale would
tend to favour a shift in economic activity away from less developed regions, especially if they
were at the periphery of the Community, to the highly developed areas at its centre. The eco-
nomic and monetary union would have to encourage and guide structural adjustment which
would help poorer regions to catch up with the wealthier ones. (Delors, 1990, 22)
 The ‘real’ principles of Cohesion policy  ­431

Thus the focus of the policy had to be directed toward the less-­developed areas of the
Community in their struggle to converge toward the levels of economic development
enjoyed by the more prosperous core areas and the policy instruments assigned the task
of guiding the economic adjustment of the economies of less-­developed regions were the
European Regional Development Fund (ERDF), European Social Fund (ESF) and, at
the time, the Guidance section of the European Agricultural Guidance and Guarantee
Fund (EAGGF-­Guidance). In 1993 the Cohesion Fund was added to assist in the financ-
ing of the transport infrastructure that was usually missing in peripheral areas, along with
significant projects to clean up the environment as the result of previously mishandled
industrialisation efforts or the lack of sensitivity to environmental issues.
It is historically significant to note that the Commission’s initial view of the impact on the
less-­developed areas on the part of the single market and single currency was not completely
optimistic. In fact, the prevailing view in the Commission was that the impact would be neg-
ative in nature. Paul Krugman (1987), in his contribution to the Padoa–Schioppa Report,
pointed out some of the negative consequences that could emerge from further market
integration: increases in unemployment, agglomeration effects in particular industries,
conflict over the rescue of national champions, uneven distribution of the gains from trade,
migration flows, and the lack of coordination of monetary policies. Thus, the expectation
was that through market integration there would be general overall positive effects, but that
it would also produce divergent economic performance and well-­being in the core versus
the peripheral regions. In other words, the fear was that the convergence of less-­developed
regional and national economies would be sacrificed to the strengthening of the core areas.
As a result, the Delors Report argued that the single market programme was not viable
from a political and social point of view without a parallel policy capable of absorbing the
expected negative shocks of market integration on peripheral underdeveloped areas, and
providing a proactive policy designed to rebuild regional economies in light of the economic
opportunities created.
From the beginning, Cohesion policy established six basic principles to guide the for-
mulation and implementation of this new European regional development policy. The
European regional policy would have the overall objective of promoting the economic
and social cohesion of the Community. The commitment at the basis of the policy was
that all areas – that is, both centre and periphery – of the Community would be able to
benefit from the creation of the single market.

FIRST PRINCIPLE: ECONOMIC GROWTH

The initial question posed by the insertion of Cohesion policy into the single market
programme was: would Cohesion policy assume the contours of a social policy designed
to alleviate the negative consequences of market integration in the form of subsidies
and social provisions, or was it to operate as a parallel economic policy for the purpose
of restructuring the regional economies in the less-­developed areas (that is, regions and
countries) in the European Community so that they could compete on an equal basis
with the core areas inside the single market? The debate on the exact nature of Cohesion
policy had divided both the policy community (that is, within the Commission and other
European institutions) and academia into two distinct camps. The first camp opted for
432  Handbook on Cohesion policy in the EU

the explanation of the Cohesion policy as a social policy aiming to alleviate the nega-
tive consequences of market integration and assuming the form of ‘side-­payments’ to
member states so that they could engage in the policy of social provisions and subsidies
to maintain as much and as long as possible the levels of consumption and well-­being
prior to the creation of the unified market (Hodges, 1981; Pollack, 1995; Allen, 2000).
The second camp argued that Cohesion policy was aimed at the restructuring of periph-
eral and less-­developed regional economies (Leonardi, 1993, 1995; Nanetti 1996) in order
to compete in the single market.
It is interesting to note that the latter interpretation was explicitly cited in the Articles
calling for the creation of Cohesion policy within the Single European Act. The SEA
stated that the ultimate objective of the policy was ‘the reduction of regional disparities’
through the stimulation of higher rates of growth in the less-­developed areas vis-­à-­vis
those of the core areas. Thus, it was the convergence of the less-­developed toward the
developed core countries and regions that represented the mechanism and ultimate
objective of Cohesion policy. To achieve this goal a proactive regional policy had to be
delivered by the European Community as part of its commitment to the implementation
of the single market. In this manner, the Community would help to promote the forces
of convergence against those pushing toward divergence. As observed by Mario Monti
(2010), this latter approach to cohesion has been consistently reconfirmed from 1989 to
the present in all of the treaties that have expanded and deepened the EU from a policy
and political point of view.
In the beginning, the investment programmes financed by the ERDF were targeted
toward the support of infrastructure projects in rail, road and sea transport, the trans-
formation of existing production facilities, the start-­up of new industries in response
to growing demand, and the upgrading of the telecommunications links. Following
this approach, the role of the ESF was to provide for the training of the unskilled and
upgrading the skills of those already in employment to meet the new exigencies of their
firms. The ESF, therefore, was not assigned the role of providing subsidies for the unem-
ployed or for the general public. It was decided at the beginning that, to receive ESF
support, a person had to be inserted in a training programme. According to this rule,
funds could not be allocated to individuals who were out of work and not participating
in a training programme.4 Thus, the social aspects of the policy were geared toward the
training of workers in order to increase their prospects for re-­entering the job market.
This focus was maintained through the 1990s and 2000s, and in 2010 the economic objec-
tives to be achieved by the policy were reiterated and reinforced in preparation for the
fifth programming cycle.
In 2014 the operation of the ESF began to incorporate another objective that had been
previously absent: social inclusion, in the attempt to integrate many communities hosting
immigrants and the long-­term unemployed into the mainstream of society. But also in
this case the focus was on training as a means to promoting social inclusion rather than
providing subsidies for the unemployed. In response to the economic and financial crisis
of 2008, the 2014–2020 programming period moved to focus on what were considered to
be the essential elements of economic growth: smart, sustainable and inclusive develop-
ment. In its 2010 Communication on a Strategy for Smart, Sustainable and Inclusive
Growth, the Commission clearly spelled out the challenge created by the economic
and financial crisis: ‘The crisis has wiped out years of economic and social progress
 The ‘real’ principles of Cohesion policy  ­433

and exposed structural weaknesses in Europe’s economy. In the meantime, the world is
moving fast and long-­term challenges – globalisation, pressure on resources, ageing –
intensify. The EU must now take charge of its future’ (European Commission 2010: 3).
The purpose spelled out in the Commission’s guidelines for the Policy in 2014–2020
was to concentrate investments in those areas with the potential of producing the
maximum economic and social impacts. It was felt that in the past the use of EU funds
was directed toward too many different types of interventions and projects with a low
capacity to produce a multiplier effect. As a result of the reshaping of the fifth cycle of
Cohesion policy to adhere to the Europe 2020 programme, ERDF interventions were tar-
geted toward four key areas associated with the concept of smart specialisation: research
and development and innovations in the production process, the digital agenda, support
for small and medium-­sized enterprises and investments in the low carbon economy
(European Commission 2014: 239). For the ESF the areas of intervention were defined
as measures to promote employment, education and social inclusion. For the latter, the
Commission stipulated that at least 20 per cent of the ESF budget of €80 billion had to
be set aside for programmes promoting social inclusion.

SECOND PRINCIPLE: MEASURABILITY

Prior to 1993 there was little enthusiasm in the Commission for measuring the impact
of Cohesion policy on regional disparities. In fact, the first round of the policy (1989–
1993) did not provide for the conduct of either mid-­term or ex post evaluation of the
programmes. The fear was that the impact of the single market on regional disparities
could be proven to have been negative. However, once the data on economic trends
came in for 1989 and the subsequent years, expectations began to change. In fact, the
Fifth Periodic Report issued by the Commission in 1994 (CEC 1994) came to a different
conclusion ­vis-­à-­vis the previous four periodic reports in reporting a higher than average
rate of growth in the peripheral countries (Nanetti 1996: 66). However, the major turning
point of the Commission’s expectation in relation to the decrease in disparities took
place in 1996 when it undertook its first evaluation of the impact of the single market
(CEC 1996). In the report the Commission wrote that the creation of the single market
had indeed furthered economic growth, increased employment, and caused the growth
and equalisation of incomes across the EU. Therefore, it now became possible for the
Commission to completely reassess its expectations in relation to the Cohesion policy.
The Commission’s reassessment of the role of Cohesion policy to reduce regional dis-
parities was also supported by the academic literature. A good number of studies found
evidence that Cohesion policy was having a positive effect on economic growth, while
others placed the overall impact of the policy per se in doubt. Much of the new conclu-
sions of these studies was based on whether the overall objectives of the policy could be
measured in terms of overall European or national effects. Leonardi (1998: 165–172) was
one of the first to point out that it is possible for initially poor countries, such as Ireland,
to converge dramatically toward the EU average while at the same time undergoing a
significant intrastate divergence process as one or more regions (for example, Dublin and
Cork) developed dramatically and thereby outstripped the increases made by the other
Irish regions. In other words, the northern and western regions in Ireland have not grown
434  Handbook on Cohesion policy in the EU

as fast as other Irish regions despite the overall growth of Ireland as a whole vis-­à-­vis the
European average. Therefore, the growth in Ireland has produced increased disparities or
divergence within the country while all of the Irish regions have converged toward, and in
the 2000s surpassed, the European average in gross domestic product (GDP) per capita.
The same has been the case in Portugal and Spain, to say nothing of what has happened
in the EU10–12 in the creation of the ‘doughnut’ phenomenon where national capitals
(for example, Warsaw, Prague, Bratislava, Bucharest and Sofia) have outstripped the
rest of their countries’ rate of growth and development. The empirical evidence is clear:
the convergence targeted by the SEA and the Cohesion policy has, in fact, taken place
(Cappelen et al. 2003; Leonardi 2005; European Commission 2009, 2014).
The Sapir Report (Sapir et al. 2004) noted that one of the expectations associated
with the original single market programme seems to have been confirmed: ‘European
regions do appear to have become more specialised in the aftermath of economic inte-
gration, reflecting both their comparative advantages (especially in terms of the popula-
tion’s skill endowment, a key regional characteristic in a low-­mobility environment) and
incipient agglomeration effects due to local economies of scale’. In analysing the six
macro-­regions targeted by the cohesion policy – Greece, Ireland, Portugal, Spain, the
Italian Mezzogiorno and the East German Länder – the report noted that they ‘displayed
annual growth of 3.3% between 1991 and 2000, while the rest of the EU produced annual
growth of 1.9%’. Convergence was definitely taking place between member states, but not
necessarily within member states. The Sapir Report also produced interesting data with
regard to the level of inequality across EU countries, which fell by half between 1970 and
2000. However, inequalities within countries climbed back to where they were in 1970
by the late 1990s. Sapir concluded that ‘inequalities within countries seem to be directly
linked to growth: inequality is reduced during periods of high growth but remains stag-
nant during periods of sluggish growth’.
The results reported by Mohl and Hagen (2010) find that the impact – whether or not
Structural Funds have had a significant impact on growth – depends on the nature of the
operational programmes. They found along with Leonardi (2005) that payments in the
Objective 1 regions have improved regional economic growth, but payments in Objective
2 and 3 regions have not had any appreciable effects on growth rates. This finding should
not be surprising given the different levels of financing for Objective 1 versus non-­
Objective 1 regions. Leonardi (2005) found that from 1988 to 1999 the beta convergence
rate in Objective 1 regions was 3.9 per cent per annum while in non-­Objective 1 regions
it was 0.2 per cent. Overall, the convergence rate for the 189 regions studied by Leonardi
was 1.4 per cent. In a previous study Armstrong and Taylor (2000) found that the general
rate of convergence in Europe had been 1.5 per cent.
Another finding discussed in the literature with regard to Cohesion policy is that the
impact of the policy on growth does not necessarily emerge immediately; it can take
more than three years to appear. The expectation of immediate results and the growing
economic and financial crisis have placed significant strain on regions and countries in
maintaining the original focus of the policy on growth and employment. According to
Mancha-­Navarro and Garrido-­Yserte (2008), there is a risk that future Cohesion policy
will begin to diverge from its original objectives of restructuring underdeveloped econo-
mies, due to the expansion of its overall objectives as a result of the emphasis on the
Lisbon and Gothenburg strategies.5 They suggest that since 2007 the main objective has
 The ‘real’ principles of Cohesion policy  ­435

become competitiveness rather than growth, given that the latter seems to be an auto-
matic by-­product of joining the EU and participating in the single market. According to
this view, joining the EU has had the effect of reducing the risk factor associated with
doing business in Central and Eastern European countries (CEECs), thereby increasing
the inflow of foreign direct investment and speeding up privatisation that has character-
ised the CEECs from the mid-­1990s to the first part of the 2000s. As a result, it was felt
that Cohesion policy in the CEECs should focus on other objectives – the environment
and clean energy – given that economic growth and job creation were being delivered
‘automatically’ by market forces.

THIRD PRINCIPLE: ADDITIONALITY

From its initial formulation Europe’s Cohesion policy was never conceived as a substitute
for national regional policies, financing national infrastructure programmes or national
economic development policies. Instead, the purpose of the policy was to augment
national efforts to promote economic development. The Commission has been careful
in making sure that Cohesion policy would not be used to crowd out or substitute for
national expenditures in these sectors. For this purpose it undertook periodic evaluations
of funded projects in order to verify whether the funding packages were in fact composite
in nature (that is, contained both national and Community funds in the proportions that
were stipulated in the regulations). The proportions that were spelled out by the EU rules
provided for overall co-­funding of the Cohesion policy programmes and projects at the
level of 50 per cent for the core countries or those countries with a gross national income
(GNI) above 90 per cent of the Community average. For those countries with a GNI
below that figure, the co-­financing required was set at 25 per cent.
As already noted, in 1993 with the signing of the Maastricht Treaty a new fund – the
Cohesion Fund – was created to support major transport and environmental infrastruc-
ture projects in the least-­developed countries (those with a per capita GDP lower than
90 per cent of the EU average). This was intended to help these countries to qualify for
the single currency, which required bringing their deficits in line with the convergence
levels required to qualify for the single currency (that is, 3 per cent annual deficit and
60 per cent of GDP in terms of overall government debt). In many cases this involved the
reduction of government spending whilst, at the same time, ensuring that the cuts to the
domestic budgets would not be made to the detriment of investments in infrastructure
or environmental programmes. The funding arrangements provided for Cohesion Fund
projects stipulated that the EU portion of the overall EU contribution could cover 85 per
cent of the total costs and thereby reduce the normal national co-­financing requirement
to 15 per cent.6 In addition, the co-­financing portion could not only be made up by gov-
ernment allocations, but also draw upon the private sector or European Investment Bank
(EIB) loans. Therefore the additionality principle was maintained but at a more reduced
level for projects financed by the Cohesion Fund.
An important watering-­down of the additionality principle was undertaken on the
heels of the post-­2008 economic crisis. As a result of the crisis, many member states
witnessed a dramatic fall in government revenues and rise in the resources needed to
support increasing numbers of unemployed workers. At the same time, banks became
436  Handbook on Cohesion policy in the EU

very reluctant to provide loans to national or local governments to engage in invest-

ment programmes. Therefore, between 2011 and 2013 a new level of co-­financing was
defined for Cohesion Policy programmes. For the less-­developed countries the level
of co-­financing was temporarily dropped to 10 per cent, while for the programmes in
more developed countries the required national co-­financing could drop to 25 per cent
(European Commission 2014). The rationale for this change in the co-­financing rules was
the expectation that the EU financial package was available in the Commission’s coffers,
while the national co-­financing portion remained subject to the vagaries of the recession.
The hopes were that by the end of the fourth Cohesion policy cycle (2013–2015) the
recession would be over. On this basis, the ability of the national government to cofinance
Cohesion policy programmes could return to normal and the additionality principle be
fully restored.
However, the regulations for the fifth Cohesion Policy programming period
(2014– 2020) negotiated in 2013 maintained the new co-­financing provisions introduced
as emergency measures in 2011. Member states were allowed to reduce the co-­financing
levels for programmes implemented in the Convergence Objective or their less-­developed
areas at 25 per cent, while those in the Regional Competitiveness and Employment
Objective or the more-­developed areas were maintained at 50 per cent. Stipulations were
also made requiring a greater presence of private capital and the availability of EIB loans
in financing the investment and job training programmes undertaken by the ERDF and
ESF (Leonardi 2014).

FOURTH PRINCIPLE: SUSTAINABILITY

The principle of sustainability is posited on the notion that to achieve the goals outlined
for the policy in the SEA the investment programmes financed by the Structural Funds
had to be sustainable over time; that is, once the investment is completed the resulting
infrastructure, production facility or skill base must be able to perpetuate itself without
requiring additional support from EU or national funds (CEC 1999). Thus, the EU
Cohesion policy is not conceived as a policy providing subsidies to less-­developed areas
but rather a policy that allows areas to emerge from a status of underdevelopment and
dependence on state subsidies to survive. In order to achieve sustainability the policy
foresaw the need to mobilise the productive forces in society – that is, the private sector –
in support of the policy, and this could be done only if these forces were involved in both
policy-­making and policy implementation.
The role of the private sector and non-­governmental organisations (NGOs) in the
management of Cohesion policy programmes has been emphasised from 1989 onward.
For this purpose the regulations have always stipulated that the monitoring committees
set up to oversee implementation needed to incorporate the participation of stakeholders,
NGOs and local governments. In the past, national and regional governments in some
cases tried to resist the need to sound out private interests and associations represent-
ing civil society (Polverari and Michie 2009; Bache 2010), but this requirement has been
confirmed and even reinforced for the 2014–2020 period, through the introduction of a
European code of conduct on partnership (European Union 2014). The definition of
non-­economic groups that need to be consulted includes not only those representing
 The ‘real’ principles of Cohesion policy  ­437

the majority cultural, linguistic or religious entities, but also those representing minority
population and marginalised sectors in civil society.
The rationale for the sustainability principle is not only to make Cohesion policy politi-
cally viable – that is, supported by a broad social consensus – but also to make the policy
economically sustainable over time. Economic sustainability requires that the private
sector be in a position to undertake accompanying private investments in order to take
advantage of the public goods created by the policy. Thus, Cohesion policy is based on
the expectation that the planned public investment will produce a multiplier effect in
stimulating private investment for the purpose of exploiting the existence of the public
goods produced by the policy itself. Only in this manner is the policy in a position to
produce sustainable levels of development and growth that will endure over time.

FIFTH PRINCIPLE: SOUND FINANCIAL MANAGEMENT

Given the initial uncertainty associated with what was going to happen with the imple-
mentation of Cohesion policy, the Commission emphasised the principle of the correct
use of the funds in order to protect the stated objectives of the policy. The focus on the
principle of the correct use of the funds – that is, not being diverted for the achievement
of other policy goals or frittered away as a result of corruption or ‘unattentive’ admin-
istrative procedures on the part of national governments or regional authorities – was
posited as a political imperative in making sure that the policy could continue over time.
This was even more the case given that the Cohesion policy budget represented a signifi-
cant part of EU spending and the expectations were that it would increase even more
during the following budgetary cycles. Once the periodic and systematic monitoring was
in place, it was possible to undertake an evaluation of the impact of the policy; in other
words, how the policy performed in reaching the goals outlined in the Single European
Act. Therefore, these two elements in the administration of the policy represented funda-
mental requirements for the verification of the objectives and keeping the implementation
of the policy on track in meeting the associated socio-­economic and political exigencies.
The control mechanisms applied to Cohesion policy were and continue to be formi-
dable, and they consist of four primary instruments. The first is the role of the bian-
nual monitoring committees organised by each managing authority responsible for the
implementation of individual operational programmes funded by the ERDF and ESF.
The operational programmes constitute the legal documents that spell out the contents
and budgets for the expenditure of the funds, but they also tie the managing authorities
to a series of obligations regarding the reporting of expenditures, defining the results
and identifying the problems encountered in the implementation of the programme
objectives.
The second control mechanism is the need to undertake systematic evaluation of what
the programmes are achieving in terms of the socio-­economic outputs produced by the
funded projects as well as the societal outcomes or the impact of the programme as a
whole on the regional and national economy. In 2000, the regulations for the ERDF and
ESF introduced the requirement to undertake a mid-­term evaluation of each operational
programme to understand what was being achieved, and what changes needed to be
made to improve the programme performance. In this manner the Commission built into
438  Handbook on Cohesion policy in the EU

the programmes the possibility of learning from past mistakes in order to improve future
performance (Mairate and Angelini 2007; Polverari, Bachtler and Michie 2003; CEC,
2001; Bachtler and Michie 1995).
For the 2000–2006 programming cycle, the regulations introduced a third control
mechanism that consisted of three levels of responsibilities in the management of the
operational programmes (Davies and Polverari, 2011). The first was the introduction of
a managing authority (MA) responsible for the conceptualisation and operationalisation
of the operational programme. The second was the creation of a certification authority
(CA) responsible for the verification of all invoices submitted for payments by the ben-
eficiaries of the programmes. And the third was the creation of an audit authority (AA)
whose responsibility it was to check the expenditures undertaken versus those foreseen by
the operational programme in order to eliminate the possibility of ‘policy drift’ between
the conceptualisation of the programme and its subsequent operationalisation. The
Commission describes this accounting system as a ‘single audit approach’ which provides
for ‘a multi-­level control system . . . on the basis of clearly defined responsibilities for the
various actors, established standards for the work required, and reporting systems and
feedback mechanisms so that each level of control builds on the preceding one, with a
view to reducing the burden, in particular, on beneficiaries’ (European Union 2009: 7; see
also Karakatsanis and Weber, Chapter 11, this volume). If the member state finds irregu-
larities in the use of the Structural Funds, it has the opportunity to reuse the funds within
the national allocations. However, if the irregularities are discovered by the Commission,
then the amount of the irregularities can be withdrawn from the allocations to the spe-
cific operational programme and the overall budgetary allocation for the member state.
Ultimate legal and financial responsibility for the misuse of allocated funds resides in
the hands of the member states, but it is also the Commission’s responsibility to carefully
oversee the use of the funds. The Commission was given the power to launch inspections
on the allocation and use of the funds whenever it had probable cause through articles
in the media or letters from potential beneficiaries. The power to undertake inspections
was explicitly given to the Commission in 1996 by Council Regulation (EC) No. 2185/96,
and three years later the power of inspection was further institutionalised through the
creation of the European Anti-­Fraud Office (OLAF) to ‘step up the fight against fraud,
corruption and any other illegal activity affecting the financial interests of the European
Community’ (Regulation (EC) No. 1073/1999).7 OLAF has operated effectively since
1999, in that by 2012 it had recovered more than €1.1 billion and had successfully con-
victed 335 individuals of fraud.
In addition to the European Commission (EC), other European institutions – that is,
the European Parliament (Hübner, Chapter 9, this volume) and the Court of Auditors
(Karakatsanis and Weber, Chapter 11, this volume) – are also authorised to undertake
investigations on the use of the funds and to follow up reports on their misuse, but these
oversight initiatives ultimately have to be reported to the Commission for action. In 2013,
to further strengthen the fight against fraud and corruption, the EC proposed the crea-
tion of a European Public Prosecutor’s Office (EPPO) to ‘investigate, prosecute and bring
to trial perpetrators of offences affecting the Union’s financial interests’.8
The fourth instrument for the control over the procedures carried out by the man-
agement authorities of the operational programmes is the introduction of the N12
rule for the 2000–2006 programming period (currently, N13). This rule stipulated that
 The ‘real’ principles of Cohesion policy  ­439

­ perational programmes have to spend their yearly EU tranches within two years of
o
receiving them (a limit now increased to three years). If the expenditure is not in place
within the allocated time, then the unspent portion is returned to the European budget
and the following year’s payment tranche to the operational programme is cut by an
equivalent amount. This rule makes it possible to closely monitor expenditures and to
highlight how the funds are being spent on a continuous and transparent basis.

SIXTH PRINCIPLE: RESULTS ORIENTATION

Through the four instruments described above, the Commission was provided with a
reasonable control over the expenditure of EU funds (the fraud rate has consistently
been below 1 per cent), but it does not provide any real assurance that the socio-­economic
objectives of Cohesion policy are being achieved. That requires a different approach,
which was not fully forthcoming until recently due to the economic and fiscal crisis and
the difficulties of national budgets in co-­financing their portions of Cohesion policy.
As a result of the financial and economic crisis there has been a tightening of the
approach adopted in the management of Cohesion policy. This shift was produced by the
realisation that in most of the less-­developed member states Cohesion policy represented
one of the few sources or the only source of financing for development programmes.
Therefore, there was the need to increase the targeting of the funds toward the realisa-
tion of significant growth and employment objectives. In addition, given the low level
of fraud and corruption associated with the policy in the past there was more room to
emphasise the achievement of empirical results rather than the formalistic management
of the policy. In other words, significant levels of administrative capacity and institu-
tional learning had already been generated during the previous policy cycles and there-
fore it was possible to shift the emphasis toward concrete economic results.
The new regulations issued by the Commission for 2014–2020 (see Brunazzo,
Chapter 1, this volume) change both the approach to the policy’s formulation as well as
the means for monitoring the policy implementation in order to obtain measurable socio-­
economic results. The new policy acknowledged the shift from the emphasis on formalis-
tic administrative procedures to a greater focus on quantifiable results, the achievements
of the objectives spelled out in the Europe 2020 strategy, and the reform priorities defined
for each member state by the European semester. The Sixth Cohesion Report published
by the Commission in 2014 (European Commission 2014: 243) observed that:

In the past, the implementation of Cohesion Policy support has focused in some places more
on spending and management than on performance in terms of reaching specific objectives.
Programmes have often not been sufficiently precise about the objectives they aimed to achieve
and the way in which they would do so, which made it difficult to monitor them and to evaluate
their performance.

Instead, the new policy is oriented more towards the empirical needs spelled out in
the ex ante evaluation that proceeded the finalisation of the operational programmes
at the regional and national levels. To do this, the programmes were required to: first,
supply empirical indicators of outputs and outcomes expected to be produced by the pro-
grammes; second, prepare to engage in the preparation of annual reports of the results
440  Handbook on Cohesion policy in the EU

on the basis of the ex ante targets for each indicator; and third, undertake an overall
evaluation of the results within three years after the start of the programmes in order to
verify their progress in meeting the targets.
Thus, for the new cycle the Commission engaged in the setting up of specific inter-
vention targets for the operational programmes, and it insisted that member states and
regions undertake to organise their operational programmes on the basis of declared
overall targets, on the basis of annual goals to be achieved and empirically verified. All
of the operational programmes were expected to incorporate the 11 priority areas iden-
tified by the Commission as necessary components for the achievement of the Europe
2020 strategy. But it also provided that the allocation of funds within these 11 objectives
be left to the member state and regions to decide the final allocation. As in the past, the
allocation of funds varied according to the level of development present in each region.
The largest portion of the €351.1 billion Cohesion policy budget would go to the least-­
developed regions, but provisions were also established to finance substantial operational
programmes for transition as well as developed regions.
The Commission stipulated in the regulations for Cohesion policy that in addition to
the annual reports on the progress in meeting the expected targets, overall evaluation of
the operational programmes would be undertaken in 2016 to decide whether to maintain
existing funding levels, or to transfer some of the allocated funds to better-­performing
operational programmes, or to provide additional funding (that is, up to 6 per cent) for
the programmes with the best performance. The reintroduction of an obligatory mid-­
term evaluation with funding consequences (it was absent in the 2007–2013 period)
is expected to concentrate the attention of the operational programme managers on
meeting the stipulations of the regulations on producing the empirical results mandated
by the policy. Thus, in the current cycle of Cohesion policy the principle of monitoring
and evaluation has been reaffirmed and provided with a series of additional sanctions to
guarantee its full applicability.

CONCLUSIONS

Cohesion policy has been able to survive as one of the EU’s premier policies due to the
fact that it has continued to incorporate the five basic principles that were present from
the very beginning of the policy in 1989: the economic nature of the policy, the focus on
the reduction of regional disparities, additionality, sustainability, and monitoring and
evaluation, and over time these principles have been reinterpreted in light of both endog-
enous as well as exogenous conditions impacting on the European Union. However, they
have remained intact as the principles which define the Cohesion policy in relation to
both its legal base as well as its political ambitions.
The three economic and social objectives outlined by the Commission in 2010 substan-
tially reiterated the long-­term objectives developed by the original Lisbon Agenda: firstly,
smart growth – developing an economy based on knowledge and innovation; secondly,
sustainable growth – promoting a more resource-­efficient, greener and more competitive
economy; and, thirdly, inclusive growth – fostering a high-­employment economy deliver-
ing social and territorial cohesion. In its launching of the 2014–2020 cycle the Commission
proceeded to re-­emphasise the principle of empirical results, sustainability and monitoring
 The ‘real’ principles of Cohesion policy  ­441

and evaluation while placing a lower emphasis on the principle of additionality. In doing so,
it continued to place in the forefront the principle of the Cohesion Policy as an economic
policy designed to stimulate growth, prosperity and a more cohesive European Union.

NOTES

1. Currently Art. 174-­178 TFEU.

2. The Structural Funds that currently provide the financial base for the Cohesion Policy are: the European
Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).
Each fund has its own specific purpose and regulation (that is, legal basis) to manage its operations.
3. The driving force behind the definition of the policy was provided by Jacques Delors as President of the
Commission. He was provided with technical support by the Commissioner for Regional Policy, Grigoris
Varfis, and his staff at DG XXII, which had been created for the purpose of coordinating the Structural
Funds and experimenting with the Integrated Mediterranean Programmes (IMPs) which were initiated in
1985 on an experimental basis and as a forerunner for the Cohesion policy (Bianchi 1993).
4. This has always been the basic objective of the ESF from the beginning and has been reiterated in all of the
regulations from 1988 onward.
5. The Lisbon Agenda was oriented mostly toward the overall restructuring of national economies rather than
focusing on the less-­developed areas. This fear was put to rest with the formulation of the regulation for the
fifth cohesion policy programming period of 2014–2020.
6. Infrastructure projects contributed to by the Cohesion Fund had to be a part of Trans-­European Networks
(TENs) – that is, be part of the European infrastructure grid – and not only serve a national or regional
purpose as could be the case for ERDF-­funded projects.
7. The power to undertake inspections was explicitly given to the Commission by Council Regulation
(Euratom, EC) 2185/96 of 11 November 1996 concerning on-­the-­spot checks and inspections carried out
by the Commission in order to protect the European Communities’ financial interest against fraud and
other irregularities, OJ L292.
8. The discussions on the creation of the EPPO was initiated in 2001 with the Commission’s Green Paper
(COM (2001) 715 final) and the follow-­up report issued after a series of public hearings and discussions
within the European institutions (COM (2003) 128 final). In 2013 the Commission presented an Impact
Assessment on the creation of the EPPO (COM (2013) 534 final).

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Policy-­Making in the European Union, Oxford: Oxford University Press, pp. 209–233.
Armstrong, Harvey and Jim Taylor (2000), Regional Economics and Policy, 3rd edn, Oxford: Blackwell.
Bache, Ian (2010), ‘Partnernship as an EU policy instrument: a political history’, West European Politics, 33 (1)
58–74.
Bachtler, John and Rona Michie (1995), ‘A new era in EU regional policy evaluation? The appraisal of the
Structural Funds’, Regional Studies, 29 (8) 745–751.
Bianchi, Giuliano (1993), ‘The IMPs: a missed opportunity? An appraisal of the design and implementation of the
Integrated Mediterranean Programmes’, in Robert Leonardi (ed.), The Regions and the European Community:
The Regional Response to the Single Market in the Underdeveloped Areas, London: Frank Cass, pp. 47–70.
Cappelen, Aadne, Fulvio Castellacci, Jan Fagerberg and Bart Verspagen (2003), ‘The impact of EU regional
support on growth and convergence in the European Union’, Journal of Common Market Studies, 41 (4),
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CEC (1985), Completing the Internal Market: White Paper from the Commission to the European Council,
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CEC (1994), Fifth Periodic Report on the Social and Economic Situation and Development of the Regions,
Brussels, 19 July, COM (94) 322 final.
CEC (1996), Communication from the Commission to the European Parliament and the Council ‘The Impact and
effectiveness of the Single Market’, Brussels, 30 October, COM (96) 520 final.
CEC (1999), The Socioeconomic Impact of Projects Financed by the Cohesion Fund. A Modelling Approach,
Volume I, Luxembourg: Office of the Official Publications of the European Community.
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CEC (2001), ‘The update of the mid-­term evaluation of Structural Fund interventions’, Working Paper No. 9
of the 2000–2006 Programming Period, Methodological Working Papers, Brussels.
Cecchini, Paolo (1988), 1992: The Benefits of the Single Market, Aldershot: Wildwood House.
Davies, Sara and Laura Polverari (2011), ‘Financial accountability and European Union Cohesion Policy’,
Regional Studies, 45 (5) 695–706.
Delors, Jacques (ed.) (1990), One Market, One Money: An Evaluation of the Potential Benefits and Costs of
Forming an Economic and Monetary Union, Brussels: Directorate-­General for Economic and Financial
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European Commission (2009), Sixth Progress Report on Economic and Social Cohesion. Commission Staff
Working Document Accompanying the Report, Brussels, 25 June, SEC (2009) 828 final.
European Commission (2010), Communication from the Commission ‘A Strategy for Smart, Sustainable and
Inclusive Growth’, Brussels, 3 March, COM(2010) 2020 final.
European Commission (2014), Investment for Jobs and Growth. Promoting Development and Good Governance
in EU Regions and Cities. Sixth Report on Economic, Social and Territorial Cohesion, Brussels: Luxembourg:
Publications Office of the European Union.
European Union (2009), The Control System for Cohesion Policy, Brussels: Office for Official Publications of
the European Union.
European Union (2014), Commission Delegated Regulation (EU) of 7 January 2014 on the European Code of
Conduct on Partnership in the Framework of the European Structural and Investment Funds, available at: http://
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Hodges, Michael (1981), ‘Liberty, equality, divergency: the legacy of the Treaty of Rome?’, in Martin Hodges
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Krugman, Paul (1987), ‘European economic integration: some conceptual issues’, in Tommaso ­Padoa-­Schioppa
with Michael Emerson et al. (eds), Efficiency, Stability and Equity, Oxford: Oxford University Press, pp.
117–140.
Leonardi, Robert (1993), The Regions and the European Community: The Response to the Single Market in the
Underdeveloped Areas, London: Frank Cass.
Leonardi, Robert (1995), Convergence, Cohesion and Integration in the European Union, London: Macmillan.
Leonardi, Robert (1998), Coesione, convergenza e integrazione nell’Unione Europea, Bologna: Il Mulino.
Leonardi, Robert (2005), Cohesion Policy in the European Union: The Building of Europe, New York: Palgrave.
Leonardi, R. (2014), ‘Fondi strutturali e declino economico, perche? L’anomalia del caso italiano’, Rivista
Giuridica del Mezzogiorno, 28 (4), 761–781.
Mairate, Andrea and Francesco Angelini (2007), ‘Cost–benefit analysis and EU cohesion policy’, in
Massimo  Florio (ed.), Cost–Benefit Analysis and Incentives in Evaluation: The Structural Funds in the
European Union, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, pp. 49–64.
Mancha-­Navarro, Tomás and Rubén Garrido-­Yserte (2008), ‘Regional policy in the European Union: the
cohesion–competitiveness dilemma’, Regional Science Policy and Practice, 1 (1), 47–66.
Mohl, Philipp and Tobias Hagen (2010), ‘Do EU Structural Funds promote regional employment? Evidence
from dynamic panel data models’, European Central Bank Working Paper Series, No. 1403, December.
Monti, Mario (2010), ‘A new strategy for the single market: at the service of Europe’s economy and society’,
Report to the President of the European Commission José Manuel Barroso, 9 May.
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(ed.), Cohesion Policy and European Integration, Oxford: Clarendon Press, pp. 55–88.
Pollack, Mark (1995), ‘Regional actors in an intergovernmental play: the making and implementation of EC
structural policy’, in Carolyn Rhodes and Sonia Mazey (eds), The State of the European Union, Vol. 3,
London: Longman, pp. 361–390.
Polverari, Laura, John Bachtler and Rona Michie (2003), ‘Taking stock of Structural Fund implementa-
tion: current challenges and future opportunities’, IQ-­ Net Thematic Papers 12(1), European Policy
Research Centre, available at http://www.eprc.strath.ac.uk/iqnet/downloads/IQ-­Net_Reports%28Public%29/
ThematicPaper25%282%29Final.pdf.
Polverari, Laura and Rona Michie (2009), ‘New partnership dynamics in a changing Cohesion Policy context’,
IQ-­net Thematic Paper no. 25(2), European Policy Research Centre.
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2013/8070, Universite Libre de Bruxelles.
Thomson Report (1973), Commission of the European Community, Report on the Regional Problems of the
Enlarged Community, Brussels, COM(73) 550 def.
28. Impact assessment of EU Cohesion policy:
theoretical and empirical issues*
Ugo Fratesi

INTRODUCTION

EU Cohesion policy as we know it goes back to the reform which took place prior
to the 1989–1993 programming period, following the introduction of the prin-
ciple of ‘economic and social cohesion’ in the Single European Act in 1986 (see
Brunazzo, Chapter 1, this volume). This policy is designed to fulfil the goal of
achieving greater social, economic and territorial cohesion (Treaty on European
Union, European  Union 2012: Art. 3) and is financed through the Structural Funds
(European Regional  Development Fund, ERDF; European Social Fund, ESF) and
the Cohesion Fund.
This policy allows for different types of intervention: a significant part consists of
financing for Regional Operational Programmes, while a large amount of funds is also
spent within National Operational Programmes, and other resources, notably those of
the Cohesion Fund, are allocated nationally to specific countries.1 A smaller amount
of funds is devoted to territorial cooperation and, in the past, to so-­called Community
Initiatives.
EU Cohesion policy is probably the most closely scrutinised regional development
policy in the world, thanks to the fact that it is highly visible, it concerns multiple
countries (all the countries of the European Union), and that data are easily available
notwithstanding some important persisting limitations. As a European policy, moreo-
ver, it needs to be continuously justified to the more sceptical European countries. This
has created requirements, and even a culture, of evaluation concerning EU Cohesion
policy that is more pronounced compared to the majority of nationally financed
policies, characterised by a system of appraisal, monitoring and evaluation covering
EU-­funded regional development interventions (Bachtler and Wren 2006). The last
Cohesion Report (European Commission 2014) counted 821 evaluations of ERDF
programmes and 721 evaluations of ESF programmes for the 2007–2013 programming
period.
One of the main goals of the evaluation activities undertaken has been to appraise the
effects of Cohesion policy, and its impact on regional economies and regional catching-
­up. At least three types of impact evaluation exist: (1) qualitative impact evaluation,
operating at the level of the single region, programme, measure or axis; (2) quantitative
impact evaluation, operating at the same level; and (3) evaluation at the level of the whole
Cohesion policy, generally with a quantitative methodology.
This chapter focuses on the latter, that is, on those studies in which the research ques-
tion can be paraphrased as: has Cohesion policy as a whole been effective? Has it delivered
higher growth and/or lower regional disparities? The focus of the chapter will be on those

443
444  Handbook on Cohesion policy in the EU

studies whose target variable is either gross domestic product (GDP) or ­employment, or
possibly a recomputation of these, such as productivity or regional disparities. Moreover,
the focus will be on studies covering the entire EU, or a subset of countries (for example,
the EU15 countries which were already members before 2004).
The scientific literature is replete with studies investigating the impact of Cohesion
policy, even without including the huge number of evaluation reports produced by
various institutions and bodies. A survey by Gripaios et al. (2008) counted 84 bib-
liographical references relating to studies of this sort, and a meta-­analysis had already
been produced by Dall’Erba and de Groot in 2006. Very recently, a new updated survey
(Pieńkowski and Berkowitz 2015) provided a very detailed and synthetic appraisal of the
methodologies, territorial scale and results obtained in papers econometrically studying
the impact of Cohesion policy.
Although much research has been carried out, the conclusions are far from unani-
mous: there have been studies denying that the policy has any impact at all (e.g. Boldrin
and Canova 2001), others which suggest it has a positive impact (e.g. Dall’Erba 2005;
Leonardi 2006), and yet others which produce mixed results dependent upon certain
conditions (e.g. Esposti and Bussoletti 2008).
Why are the results so different? The results only partly depend on the methodologies
used, and the fact that different periods are used is not enough to justify this variation,
although it seems to have become consolidated knowledge that the impact detected is
larger in the most recent programming periods (Pinho et al. 2015a; Rodríguez-­Pose and
Novak 2013).
This chapter focuses on those aspects which make the literature on the impact of EU
Cohesion policy inconsistent in terms of the extent to which the policy has been effective.
Rather than producing a new and updated survey of this rich literature, this chapter will
show that there are many underlying issues which prevent scholars from producing the
kind of unassailable analysis they would like to perform, an analysis which could provide
a single and final word on the aggregate impact of the policy.
Unfortunately, determining whether Cohesion policy has delivered its ambitious goals
is made difficult by a large number of issues, starting with its nature as a very complex
policy. As mentioned above, there are regional, national, multiregional, interregional and
European programmes. Each programme normally has numerous objectives, which are
to be achieved through a large number of measures, each of which finances a plethora of
projects, often of very different dimensions.
It is hence clear that providing a single assessment of such a multifaceted policy is a
very difficult task. As Cohesion policy has both clear peculiarities and aspects that are
common to other types of development policies (such as those implemented domestically
by national or regional bodies), some of the issues that render evaluation of the policy’s
impact so arduous are therefore specific to Cohesion policy, while others are common to
other policies.
This chapter will hence be organised according to these issues, illustrating first those
issues which arise from the characteristics of Cohesion policy, and then those that derive
from the data and methodologies available. It will conclude by illustrating one issue
which is very important conceptually and empirically but which has until now been
underinvestigated, namely the policy consequences that derive from the characteristics
of regions.
 445
Impact assessment of EU Cohesion policy  ­

ISSUES RELATED TO THE CHARACTERISTICS OF COHESION

POLICY

Geographical Scale and Spillovers

The first aspect that this chapter will focus on is the geographical scale of EU Cohesion
policy. This is far from a settled issue, since the policy is often deployed at the regional
scale, but not necessarily and not in all cases, nor can it be assumed that its impact
should be assessed at the level of individual regions. On the contrary, a large number of
policy documents (e.g. European Commission 2007, 2010a, 2014) point out that there
is an aggregate impact on the territorial cohesion of the entire Union and on European
growth.
Assessing the impact of this type of policy requires an understanding of specific
eligibility aspects, which have not been stable over time. While regions to be assisted
under the Objective 1 (thereafter named ‘Convergence’ and now ‘less-­developed regions’)
have always been decided at the NUTS 2 level (Nomenclature of Territorial Units for
Statistics, level 2) since the reform of 1989, other objectives applied at different spatial
scales at different moments in time. For instance, the Objective 2 used to be defined (selec-
tively) at a smaller spatial scale (NUTS 3; and Local Administrative Units 2, LAU 2) until
2007–2013 when all regions not belonging to the Convergence Objective become eligible
for funding (under the Regional Competitiveness and Employment Objective).
Different parts of the policy operate at different geographical scales. For example,
the Cohesion Fund is allocated at the level of member states, which are free to spend it
on environmental and transport projects with a geographical location anywhere in the
country. Crossborder cooperation programmes, on the other hand, are defined at the
NUTS 3 level, involving parts of regions and hence overlapping in most cases with other
programmes.2
Most empirical impact analyses take place at the NUTS 2 level, and this is only in part
due to the fact that this is the most meaningful scale for this policy, as regional opera-
tional programmes normally are at this level. On the contrary, the choice of NUTS 2 as
the level for the analysis in the literature is driven mostly by the availability of data. In
fact, NUTS  2 tends to be the smaller spatial scale for which most statistical data exist.
These data permit the use of control variables and therefore estimation of econometric
models which are meaningful and, at the same time, incorporate as many observations as
possible. Also, data on expenditure tend to be available at the NUTS 2 level and, increas-
ingly, also at the NUTS 3 level, but the latter data are normally not as detailed (and often
do not go as far back in time). So, while a number of studies have been ­conducted at the
national level (for example, those using models), and only a few studies adopt a smaller
scale, such as NUTS 3 (e.g. Fratesi and Perucca 2014), the majority adopt the NUTS 2
level of analysis.
The issue of the scale at which the policy should be assessed is frequently addressed
in the literature, but this is generally done very quickly. This chapter aims to address
this issue in more depth, asking: what should be the right scale, if any, for assessing the
impact of Cohesion policy? The answer certainly depends on the scale used for eligibility
which, as mentioned before, is not the same for all objectives and instruments, nor has
it been stable over time. In addition, it should also depend on which is the right spatial
446  Handbook on Cohesion policy in the EU

scale at which economic phenomena take place. In fact, if the national scale is particularly
meaningful for macroeconomic processes due to the fact that laws and fiscal and mon-
etary policies are generally homogeneous at the national level, other economic processes
which take place at a subnational scale need to be considered where they take place. For
these reasons, focus on the NUTS 2 level may make more or less sense depending on the
context and the type of policy. For example, in some countries, such as Italy, NUTS 2
units coincide with regions endowed with legislative powers; in other countries, such as
Slovakia, Hungary and Sweden, they coincide with regions with limited administrative
powers; and lastly, in a further group of countries, such as Germany, Ireland and the
United Kingdom, they are just artificial statistical units.
Even in those cases in which NUTS 2 regions are endowed with administrative powers,
such as Spain and Italy, however, it may be argued that economic processes take place
within functional regions, such as commuting zones or ‘functional urban areas’ (FUAs),
and so this should be a very relevant level for assessment. To the best of our knowledge,
however, the FUA level has not yet been used for Cohesion policy impact assessment.
NUTS 2 regions are also quite differentiated, some of them being very small in terms
of extension and/or population and others being very large. This is certainly not a
problem which applies only to the evaluation of Cohesion policy, but considering differ-
ently sized NUTS 2 regions as statistical units with the same weight in regressions can
result in overestimation or underestimation of the aggregate impact of the policy being
appraised.
There is also an issue which concerns the spatial extent to which the policy produces
results. Even when projects are clearly located within individual regions, their effects can
spread outside their permeable boundaries and in this way affect the economies of neigh-
bouring regions. Growth spillovers and externalities may be positive or negative depend-
ing on what types of project are financed with Cohesion policy funds, and depending
on the economic situation of the region and its neighbours. This is normally taken into
account in the literature through the use of spatial econometrics, in which spatial effects
are generally considered as a function of distance. If in the earlier studies the estimations
used to be a-­spatial, in almost all the most recent ones the spatial effects are corrected by
testing for spatial autocorrelation of residuals or by directly estimating more complex
spatial econometric models (e.g. Le Gallo et al. 2011). Unfortunately, this is not sufficient
from a theoretical point of view, since economic phenomena are not just happening at a
certain physical distance, but the level of interaction between one region and another is
due to distance as well as to the level of economic and social connections between them
(Thissen et al. 2013). Another related aspect which is increasingly taken into considera-
tion is spatial heterogeneity, implying for example that different convergence processes
are taking place in different groups of European countries, with the existence of different
spatial clusters in the Cohesion and non-­Cohesion countries (Ramajo et al. 2008).

A Multifaceted Policy

Assessing the impact of Cohesion policy is certainly more difficult than assessing the
impact of other, less wide-­ranging policies. Cohesion policy interacts with a large number
of other policies, both European and domestic. These other policies often have differ-
ent and conflicting objectives which can either facilitate or hinder the achievement of
 447
Impact assessment of EU Cohesion policy  ­

the intended results of Cohesion policy. For example, if Cohesion policy supports the
weakest regions of a country, but that country at the same time adopts policies which,
targeting national competitiveness, concentrate on regional ‘champions’, this may
produce an opposite impact and make the goals of Cohesion policy unattainable (Farole
et al. 2011).
It is also possible that a national government voluntarily concentrates its efforts on
other targets because it knows that some are already pursued by Cohesion policy. For
example, if a country knows that infrastructure in lagging regions will be built using
Structural Funds, national resources could be repositioned in other regions and infra-
structural investment with national funds concentrated there. In this way, Cohesion
policy would not be fully additional, as required by the additionality principle, which
requires Cohesion policy resources not to be used in substitution of national expendi-
ture; yet the rules to ensure this have not been able to fully prevent such mechanisms (this
theme is discussed in more detail later in the chapter).
Backwash and spread effects, which are possible for all policy initiatives, are also
present for EU Cohesion policy, whose impact can be positive for the targeted beneficiar-
ies but can hamper non-­beneficiaries due to unintentional negative effects on them, due
for example to stronger competition. At the same time, positive effects by which growth
in one place or sector pulls other places and sectors may be present, so that assessing the
full net impact of the policy becomes very difficult.
In general, the objectives of Cohesion policy have always been structural, that is, not
directly linked with the short-­term economic performance of places, but aimed at sus-
tainable long-­term growth. However, these objectives have not been exactly the same,
and a pattern of evolution can be detected from more cohesion (that is, basically, lower
disparities) to more competitiveness (that is, more growth for all the regions of Europe;
see also Begg 2010). This tendency has become even stronger with the economic crisis,
after which a large number of regions whose growth rate was endogenously and stead-
ily positive in the past also experienced difficulty in maintaining employment and gross
value added (GVA) levels.
To make things even more difficult, the objectives of Cohesion policy are not all eco-
nomic. Many objectives are in essence socio-­political and it is, hence, methodologically
incorrect to try to assess the economic impact of Cohesion policy by considering in the
same way funds which are primarily devoted to economic objectives and those devoted
to socio-­political objectives whose economic impact, if any, is indirect. Other policy goals
include improved quality of life, environmental protection and social inclusion; factors
whose impact on economic growth, if any, takes place only in the long run. All structural
interventions require time to be effective, and normally not the same amount of time. For
example, incentives for innovation may have their greatest impact after a few years, once
innovation has led to competitiveness of firms, while infrastructure investments deliver
an impact due to demand multipliers in the years during which the infrastructure is
built, and then an impact from the increased accessibility, and possibly competitiveness,
once the infrastructure has been built and is in use. As Cohesion policy is multifaceted,
its overall impact is the outcome of the sum and interactions of the different impacts in
the various policy fields it includes. Some of these normally have a greater impact on
economic variables, while others are expected to have an impact on other socio-­economic
aspects.
448  Handbook on Cohesion policy in the EU

Moreover, the delay after which policies become effective is not the same for all poli-
cies. The first demonstration of this goes back to Rodríguez-­Pose and Fratesi (2004),
who analysed the impact of Cohesion policy over the period 1989–1999 divided into
four different broadly defined priorities: rural development, business support, human
capital and infrastructure. The result was that the economic impact of rural develop-
ment commitments was present only immediately afterwards, which is typical of a sup-
porting policy; while the impact of business support commitments was not detected
statistically, and neither was the impact of infrastructure investment. The impact of
investment in human capital, on the contrary, was persistent after a few years, signal-
ling that it was bringing the largest and most durable development. After this study,
however, the impact of EU Cohesion policy has normally continued to be analysed
without dividing it into thematic priorities, with only a few exceptions. One reason for
this could be the availability of data, since regional-­level Cohesion policy expenditure
data divided into thematic policy fields were not officially available until 2008 (SWECO
2008).3
Finding the right policy mix is a difficult task, but one that is well worth pursuing for
the policy-­makers, and any impact assessment should take this problem into account.
This is made more difficult by the emerging evidence that the growth of different regions
depends on different territorial assets, and that policy impacts may therefore be expected
to be heterogeneous, depending on the characteristics of the receiving regions (Barca
et al. 2012; Fratesi 2015; Garcilazo and Oliveira Martins 2015).

Effects of Economic Geography and Other Theoretical Aspects

Conceptually, one of the problems which can limit the possibility of reliably assessing the
impact of Cohesion policy is in the nature of economic geography, and the existence of
multiple equilibria and self-­reinforcing mechanisms. These aspects were already revealed
in the works of Myrdal (1957) and Kaldor (1970), but have received a huge amount of
attention in more recent years with the affirmation of the New Economic Geography.
As Rodríguez-­Pose and Fratesi (2007) show, the insights of New Economic Geography
(NEG) theories and models – based on agglomeration frameworks – may help to explain
the low returns of Structural Funds commitments in general, and of investment in
transport infrastructure in particular (see also Faiña et al., Chapter 21, this volume). An
economy cannot move out of a stable equilibrium in an NEG model unless the shock
is sizeable enough (Ottaviano 2003), and one may question whether Structural Funds
investments, however sizeable, are large enough to shift a lagging region out of a stable
equilibrium of underdevelopment. And even when successful, the funds’ effects may be
expected to be non-­linear, implying that the effect is not proportional to the effort and
can even take place all of sudden, so that it is difficult to capture in normal regression
analyses where linear or linearised forms are assumed.
Moreover, until recently Cohesion policy investments have traditionally been primar-
ily devoted to infrastructure-­building, and infrastructure provision, according to NEG
models, can in many cases lead to greater agglomeration rather than greater dispersion,
so that Cohesion policy might even, unintentionally, further disparities. Infrastructure
sometimes just runs through territories, and effects are hence hard to correctly attribute
spatially (Vickerman 1991). Measuring accessibility is difficult (Vickerman et al. 1999),
 449
Impact assessment of EU Cohesion policy  ­

and the impact of transport infrastructure on improving connections within regions or

between regions can differ significantly (Martin 1999).
Due to their complexity, impact assessments using NEG agglomeration frameworks are
rare, since they are difficult to implement econometrically. This is more feasible (though
no easier) when models are used, such as in the GMR (Geographic Macro and Regional)
model (A. Varga 2015). The importance to understand the causal chain between the
policy and its impact is more encompassing than the mere existence of agglomeration­/
economic geography effects. This is something that theory-­based evaluation aims to
achieve (Leeuw 2003). However, this is seldom done in the quantitative literature, in
which the impact of a policy on the variables is assumed, but the channels through
which this impact takes place are not normally discussed, or are merely mentioned as
possible explanations for the estimation results. There is a plurality of channels through
which Cohesion policy could have an impact on regional growth. For example, the most
traditional and easiest is the set-­up of multiplicative effects on the demand side, giving
rise to second-­and third-­order effects which increase demand for local firms. However,
the previous channel would not be structural and dynamic, while other channels, such
as the stimulus to innovation which would allow firms to become more competitive on
markets, are dynamic in nature. Cohesion policy could also act through the creation of
public capital, for example infrastructure, which helps to reduce the production costs of
local firms and in this way makes them more competitive. Or, a channel could go through
the creation of private capital whose accumulation can be stimulated by investment
incentives or by the improvement of attraction factors. Softer channels could act too;
for example, Cohesion policy invests large sums in measures related to individual human
capital (for example, training and capacity building measures), and once this is improved,
the whole economic system stands to benefit from it. All these different channels should
not be considered mutually exclusive, since, as already mentioned, the policy is broad and
includes a large number of different interventions even within the same region. When
assessing the aggregate impact of Cohesion policy, a researcher de facto averages out all
these factors, looking for a global effect which is in actual fact the outcome of various
interventions whose effects influence each other.

Eligibility

One key issue specific to assessment of the impact of Cohesion policy is eligibility. In
fact, while all policies suffer from the fact that the eligibility to them is correlated to the
outcomes, and hence potentially econometrically endogenous, this issue is especially
important in the case of Cohesion policy, since territorial eligibility and the regional
attribution of funds goes through a very complex process which has changed over time
but is deeply influenced by regional performance.
The clearest issue, although not politically unbiased, concerns the classification of
regions within the various policy objectives. These have generally been stated in terms
of per capita GDP in purchasing power parity (PPP), but with exceptions. After regions
have been attributed to the objectives and the total EU-­wide budget by objective has
been agreed upon at the Community level, funds are allocated to countries on the basis
of criteria set at the European level (agreed during negotiations between the member
states and the EU institutions). After this, operational programmes are set up in agree-
450  Handbook on Cohesion policy in the EU

ment between member countries and the European Commission, and then the available
funds are allocated to the regions belonging to the same objective within each country in
a non-­automatic manner. This implies that regions may be assigned different amounts of
funds for political reasons (Bouvet and Dall’Erba 2010) and that levels of support may
change in different programming periods, even when regions remain in the same objective
(Dotti 2012). This may create a discrepancy between economic disadvantage and spatial
distribution of Structural Funds, the concentration of the former being larger than that
of the latter (Crescenzi 2009) so that the most disadvantaged regions do not necessarily
receive the most assistance.
There also are incentives for regions not to overcome the threshold of 75 per cent,
as this would normally imply exclusion from Objective 1 funding. In fact, most regions
which crossed the threshold did so only because of the ‘statistical effect’ of the 2004
enlargement, which significantly reduced the per capita GDP of the Union and suggested
the reframing of ‘phasing-­in’ and ‘phasing-­out’ categories so as not to suddenly cut assis-
tance to regions which suddenly found themselves richer – but only in statistical terms.

Additionality and Implementation

The assessment of the impact of Cohesion policy is also complicated by the principles of
additionality. Additionality implies that national governments cannot use EU resources
in substitution of their own investments, that is, that they have to maintain a certain
level of public expenditure in the areas of interventions of Cohesion policy, to ensure
that Cohesion policy investments are additional to, and do not replace, domestic funds.
However, this is not really sufficient to ensure that member states continue pursuing the
same objectives as they would without EU intervention. The incentive to divert national
resources to other places or other initiatives is in fact very strong. For example, Italy
is clearly a case in which ‘special intervention’ for the lagging southern regions of the
country (the “Mezzogiorno”) has been de facto replaced by European Structural Funds,
as national resources for both regional policy and wider public capital expenditure in the
southern regions have become increasingly scarce (Polverari 2013; Viesti 2009).
Recently, Del Bo and Sirtori (forthcoming) demonstrated in an empirical analysis that
in Italy, between 1997 and 2010, EU Structural Funds have mostly had a substitution
effect on national public finances. The countries which benefit from the Cohesion Fund
have historically tended to spend it primarily in the strongest areas of their countries,
for example in order to provide state-­of-­the-­art infrastructure in the largest cities. The
European Union itself implements policies aimed at enhancing the competitiveness of the
Union as a whole, such as competition policy and the Europe 2020 strategy (European
Commission 2010b); these policies de facto tend to favour the strongest c­ ountries and
regions, so that regional convergence is unintentionally hampered as a consequence
(Midelfart-­Knarvik and Overman 2002). Not until the 2014–2020 programming period
was Cohesion policy fully integrated in the Europe 2020 strategy, and Cohesion policy
is not the largest item in the European Union budget (roughly representing one-­third): it
is exceeded by the sum of the European Agricultural Guarantee Fund (EAGF) and the
European Agricultural Fund for Rural Development (EAFRD).
One issue which is highly relevant to Cohesion policy is implementation. As Structural
Funds are organised over seven-­year programming periods, there is also normally a gap
 451
Impact assessment of EU Cohesion policy  ­

between commitments and expenditure; those funds which are committed at the begin-
ning of the programming period may be very different from those which are actually
spent on projects. In the most recent programming periods, the difference between the
commitments and the actual expenditure has on average decreased, but important differ-
ences between regions and countries still exist, linked to institutional factors (European
Commission 2014).
Nor is spending everything a guarantee that Cohesion policy resources will truly be
spent on achieving its objectives. As programming periods near their end, the managing
authorities may certify as Cohesion policy projects expenditure which had previously
been funded with domestic resources, in order to be able to claim all the funds assigned
to them. It is clear that such a mechanism strongly reduces the additional character of
the funding, since the EU ends up financing initiatives which had already been imple-
mented with domestic funds in the first place. The difference between commitments and
expenditures represents a real issue for the researcher, as data on commitments are widely
available, while data on actual expenditures are normally not available.

DATA AND METHODOLOGY-­RELATED ISSUES

Which Data Should Be Used as Impact Output?

The first issue which the researcher must address when conducting an impact assessment
is identification of the dependent variable, that is, the variable that the policy – in this
case EU Cohesion policy – is expected to affect. This is not easily determined for EU
Cohesion policy, since it is true that, for the most part, the assisted regions are basically
selected on the basis of regional per capita GDP; but it is also true that the policy objec-
tives, as already noted, are very complex, being related to economic, social and territorial
cohesion.
One basic goal is economic convergence, that is, the reduction of disparities between
richer and poorer regions in the Union. However, to use only this indicator would be
limiting. The literature adopts many dependent variables, according to context and
data availability. Many of the earlier analyses adopted a framework of sigma or beta
­convergence,4 or both (e.g. Leonardi 2006). The effectiveness of Cohesion policy was
assessed on the basis of its ability to change the statistical variance of GDP levels per
capita, or to allow, ceteris paribus, lagging regions to grow more than others.
However, convergence analyses, especially sigma convergence ones, have become
outmoded since the introduction of concepts such as ‘club-­convergence’ and new, more
sophisticated methodologies such as ‘transition matrices’ and Markov chains.5 Most
recent analyses no longer investigate convergence at all, concentrating on the direct
impact of Cohesion policy on regional growth. Although most studies look at GDP per
capita in real terms or PPP, some also look at job creation (Giua 2014), industrial loca-
tion patterns (e.g. Midelfart-­Knarvik and Overman 2002) and productivity (e.g. Esposti
and Bussoletti 2008). Another possibility is to look at how likely it is for a heavily assisted
region (for example, a less-­developed region) to be able to make the transition out of the
group of the poorest regions. All these variables fail to consider the fact that Cohesion
policy is mostly about long-­term development and competitiveness, and hence short-­term
452  Handbook on Cohesion policy in the EU

economic performance per se is not the only useful indicator, since the ability of regions
to sustain a strong development pattern over time, due for example to increased human
capital and innovativeness, is probably more important. Moreover, Cohesion policy is
not about economic performance alone: as already noted, socio-­political aspects are also
crucial, and they cannot normally be assessed through statistical economic variables.

The Time Dimension

The time dimension is crucial when appraising the impact of Cohesion policy, more so
than for other policies. In particular, the researcher should ask after how much time the
policy is expected to have an impact. Any policy operates with a certain time lag, but this
lag is larger for policies with structural effects. As discussed above, the time lag for most
Cohesion policy interventions to pan out is large, especially in the case of infrastructure
investments, but also for human capital and innovation measures. What is especially dif-
ficult is to identify a single time lag that should apply to all policy aspects, since the policy
is so composite.
When testing econometrically (Rodríguez-­Pose and Fratesi 2004, 2007), different time
lags provide different results, as different policy fields need different delays to become
effective. Recent panel estimations use averages over a few years, in order to investigate
long-­term effects and achieve greater stability (Mohl and Hagen 2010). This is certainly
enough to account for these problems, but it neglects another issue which arises when
taking long periods of time into consideration: since Cohesion policy has evolved con-
tinuously over time, averaging over the years inevitably encompasses years belonging to
different programming periods, with different mechanisms and objectives. This method
also neglects possible improvements in the working of the policy, given the subsequent
reforms aimed at improving the rules for policy design and delivery, with the aim of
improving policy design and implementation.
The presence of anticipatory mechanisms can make it difficult to spot the impact of
Cohesion policy expenditure. For example, if there is a three-­year research project, partly
financed by the policy, it is likely that the firm hires a researcher in year 1 who works with
the company (at least) until the end of the project. For this reason, one job is created in
year 1 even if the payments span years 1, 2 and 3, which makes it very hard to establish
the econometric impact of the policy on job creation. In the same example, the impact
on the firm’s competitiveness, and hence on GVA, may start at the end of year 3 and
continue over years 4, 5 and 6, which is what makes the choice of the target variable so
important and influential. Assessment of the impact of the single policy measures is less
prone to these issues, since these mechanisms are at least similar for all the firms assisted;
whereas when assessing the global impact of the policy the different effects are averaged
out, with all the imprecisions and risks that this entails. Finally, in the specific case of EU
Cohesion policy, the time dimension is also influenced by the fact that different program-
ming periods have a different composition and spatial coverage, as already discussed.

Disturbance Factors and Threshold Effects

One important cause of concern is the presence of disturbance factors, meaning all other
factors which could have an impact on the same variable, the target of the policy. All
 453
Impact assessment of EU Cohesion policy  ­

regression analyses include control variables to avoid omitted variable bias, but this tech-
nique does not necessarily ensure that all concurrent effects are considered.
In particular, Cohesion policy should also be assessed in relation to other policies and
not only in relation to those structural factors linked to the socio-­economic structure
of the region and conjunctural factors linked to the specific situation of the country.
However, the interaction between different policies is still underinvestigated (Crescenzi
and Giua 2014 being an exception). The disturbance factors can potentially be as broad
as the policy itself, and can be very different in different contexts. Moreover, as already
recalled, threshold effects can take place such that Cohesion policy has an impact only
when it is able to achieve a certain size, allowing it to overcome other forces pulling in
the opposite direction. Among the disturbance factors which until very recently had not
been considered in macroeconomic assessments (but which had only been considered in
more targeted analyses whose scope is spatially limited to a region or thematically linked
to specific measures), is the quality of government. As recently evidenced, the quality of
local governments in Europe differs strongly between regions (Charron et al. 2014), and
this influences the innovative performance of regions (Rodriguez-­Pose and Di Cataldo
2014). This is also expected to influence the way in which different regions implement
Cohesion policy. Recently, with an analysis over the period 1996–2007, Rodriguez-­Pose
and Garcilazo (2015) looked at this issue empirically and found that quality of gov-
ernment is not only a determinant of growth, but also a moderator for the impact of
Structural Funds expenditure, and that without better local governments, the impact of
additional support from the Structural Funds is very limited over a certain threshold.
The impact of investment in Structural Funds, investigated in relation to the charac-
teristics of the countries (e.g. Bähr 2008; Ederveen et al. 2006), has recently also been
assessed in relation to the characteristics of the receiving regions. Becker et al. (2013)
show that the human capital endowment of the workforce and the quality of govern-
ment, used as indicators of absorptive capacity, are important determinants of the
ability of regions to benefit from Structural Funds expenditure, as the treatment (in a
regression discontinuity design) is not significant for regions with a very low level of
absorptive capacity. This evidence is somehow in contrast with the findings by Pinho
et al. (2015b) that Cohesion policy expenditure only has an impact on regions with
low levels of human capital and innovation, meaning that there is clearly a relationship
between regional characteristics and the impact of Cohesion policy, but there is a need
for further study.
Adopting a more complex theoretical framework, the interplay between policies and
regions has also been analysed in relation to the concept of ‘territorial capital’, that is,
the system of territorial assets of an economic, cultural, social and environmental nature
that ensure the development potential of places (Camagni 2009; OECD 2001). In this
framework, it has been shown that the amount of territorial capital possessed by regions
matters in explaining their capability to be good users of Structural Funds, and hence the
economic impact of the latter. Moreover, it is not only the quantity of territorial capital
which is relevant, but also its characteristics, since different territorial capital combina-
tions are relevant for different axes of Cohesion policy expenditure (Fratesi and Perucca
2014, 2015).
454  Handbook on Cohesion policy in the EU

Econometric Aspects

One important issue which cannot be addressed in sufficient depth in this chapter,
due to insufficient space, concerns the econometric model to be used. Many different
approaches have been used in the literature, sometimes on the basis of a theoretical justi-
fication, and sometimes simply due to data availability.
First of all, there is a significant conceptual difference between multi-­equation models
and reduced-­form estimations. The first approach offers the advantage of taking dif-
ferent policy aspects into account simultaneously, but is much more complex to imple-
ment. Models are normally produced by large teams of researchers over a long period
of time. For instance, the Quest (J. Varga and in 't Veld 2011) and HERMIN (Bradley
and Untiedt 2012; Bradley 2006) models have been used for Cohesion policy assessment.
However, they have an important limitation: they are national models, in which different
regions are not included, and therefore their estimations of aggregate impact cannot take
into account the fact that Cohesion policy is mostly applied at the regional level and that
regional specificities play a very important role.
More recently, models which fully implement a regional dimension have progressed
(Capello et al. 2015) and have therefore also been applied to assessment of Cohesion
policy. Two important examples are the GMR model, already mentioned – which inte-
grates three blocks: a macro block, a regional total factor productivity (TFP) block
and a spatial computable general equilibrium (SCGE) block (A. Varga 2015) – and the
RHOMOLO model, the regional structure of which is intended to allow better handling
of the impact of investment in research and development (R&D) and infrastructure and
the spillover of these investments for the capacity of regions to innovate (Brandsma and
Kancs 2015).
It has to be said that in most cases models are used for ex ante impact assessment
rather than ex post appraisal. In fact, models are characterised by the need to introduce
a number of assumptions, so that models are never fully ex post even when they are used
for that purpose, since relations are assumed to work in a certain way and there is no real
possibility to check ex post whether they worked as expected in the real world during the
period under analysis.
This might also explain why the estimated impacts obtained through full models
often tend to be higher than those produced by reduced econometric forms. One reason
depends on the limits of the models, as they require at least some assumptions. For
example, a model in which the impact of infrastructure on regional growth is estimated
normally assumes that investment in infrastructure produces new infrastructure (which
should be the case, if corruption is limited and construction work progresses as planned)
and that new infrastructure increases accessibility (which is the case only if the new infra-
structure is working well and is really used by the economic agents). A model constructed
in this way tends to obtain higher results than an analysis through a reduced model which
looks at impacts directly.
Another reason for the different impact obtained by the models compared to reduced
forms derives, on the contrary, from one of their strengths: the fact that models are able
to take into account second-­and third-­order effects much better than reduced forms,
through interactions between different parts of the economic system and between
regions. Reduced forms, on the other hand, have the advantage of being easier to produce
 455
Impact assessment of EU Cohesion policy  ­

and more transparent (because of the reduced reliance on assumptions). Whilst they are
often underpinned by a theoretical model, they are also designed on the basis of the avail-
able data, which significantly lowers the need for assumptions.
A large number of econometric approaches have been used, including panel models
(Bouayad-­Agha et al. 2013; Esposti and Bussoletti 2008; Mohl and Hagen 2010), cross-­
sections, non-­parametric estimations (Gómez-­García et al. 2012), and regression discon-
tinuity approaches (Becker et al. 2010; Pellegrini et al. 2013). The choice of a panel or
a cross-­section is in most cases data-­driven, even if the panel is superior in terms of the
possibility of correcting endogeneity, which according to Hagen and Mohl (2009) can be
due to reverse causality, unobserved variables, omitted variables, measurement errors and
the Nickell bias.
To overcome problems linked to the potential endogeneity of the policy outcome with
the policy decision, many recent analyses adopt an instrumental variable approach. The
choice between using a panel or a Barro-­like convergence model (of the type used in
Barro and Sala-­i-­Martin 1991), however, is not neutral, as it depends on how long-­run are
the effects to be estimated. Cohesion policy, as already noted, is by nature structural and
expected to impact in the long run, so that estimating its impact over a short (1–2 years)
delay is not really correct. One solution, used for example by Bouayad-­Agha et al. (2013),
who assess the effect of Structural Funds on long-­term growth, is to build aggregate time
periods (in this case 1980–1984, 1985–1989, 1990–1994, 1995–1999 and 2000–2005) in
order to avoid short-­run variations in growth due to business cycles. However, this choice
is also far from perfect, since different programming periods with different objectives,
rules and funding can overlap over a single five-­year time span.
Cohesion policy objectives are in fact not only differentiated, but also change over
time. Each programming period has its own eligibility measures and its own priorities.
The creation of infrastructure in lagging regions was at the core of most operational
plans in 1989–1993 and 1994–1999, but has since reduced its importance, to the advan-
tage of innovation and smart growth. Moreover, the focus on convergence – that is, the
relative performance of lagging regions with respect to the advanced ones – has also been
significantly reduced over time, and also plays a less important role in the most recent
Cohesion Reports.
As already mentioned, most recent econometric estimations test for spatial effects, but
spatial econometric techniques cannot be fully trusted to represent the real spatial effects
of Structural Funds because they have to simplify very complex phenomena in distance
matrices. Notable attempts have been made to build spatial matrixes which do not rely
on traditional geometrical distance (Basile et al. 2012; Thissen et al. 2013), but these have
not yet been applied to Cohesion policy assessment. One interesting opportunity offered
by econometric models is the search for counterfactuals, which is an important issue
characterising policy impact assessment. Recently, regression discontinuity designs have
been applied to the impact of Cohesion policy. These methods allow the estimation of the
impact over a certain threshold by looking at the difference that a threshold produces (for
instance, in the case of Cohesion policy, the 75 per cent of EU GDP average which deter-
mines eligibility for the significantly more funded ‘less-­developed regions’, previously
called ‘convergence regions’ and ‘objective  1 regions’). One recent promising attempt
has introduced regression discontinuity design at the spatial level, by looking at small
comparable spatial units on different sides of a border between assisted and non-­assisted
456  Handbook on Cohesion policy in the EU

regions (Giua 2014). As such, these methods are able to test whether Cohesion policy has
been effective, but can have less to say about how large these effects are the further they
go from the threshold. Interestingly, these techniques have been extended to test for the
presence of heterogeneous treatment effects (Becker et al. 2013).
Econometrically, one problem which is often neglected is the statistical distribution of
the data on Cohesion policy support. This is far from a normal distribution, with some
regions having a lot of funds and others having very little or, in many cases, nothing. As
a result, and especially when looking at the distribution of funds along different policy
fields, many observations are actually nil. One fairly common option adopted in the lit-
erature is to analyse the less-­developed regions, which are significantly funded, separately
from the others; but this can also create problems as in some cases only one of them is
present in a country (for example, Burgenland in Austria), and because in this way they
are spatially dispersed, which rules out testing of spatial effects.
Lastly, there is one very important issue: even if Cohesion policy is very extensive, it is
large in terms of GDP only for less-­developed regions. This means that in the majority of
European regions, the impact of Cohesion policy is almost negligible, and this can denote
no significant role in the economic growth of the region. Even when the policy is effec-
tive, its impact is most likely of a comparable scale of magnitude to the policy. Regional
data being very ‘noisy’ – that is, having a very high variance due to random errors in
statistical measurements – the noise existing in the data can be higher than the impact.
This is especially true for those regions where assistance levels are not substantial; in these
cases the impact can become almost impossible to be detected.

CONCLUSIONS

This chapter has discussed several aspects of assessment of the impact of Cohesion
policy. As demonstrated, the appraisal of the impact of Cohesion policy presents a large
number of difficulties, some of which are standard to policy assessment, while others are
due to the specific characteristics of Cohesion policy. Having seen how complicated it is
to obtain reliable results, one should not however conclude that assessment of the impact
of Cohesion policy is a worthless exercise; on the contrary, it is a very useful exercise if
undertaken with the right purpose.
Most studies try and gauge whether Cohesion policy has been effective. While in the
past many studies concluded that the policy was basically ineffective, more recently a
certain degree of effectiveness has generally been detected. However, this is a somewhat
limited question, from both the theoretical and the policy-­maker’s perspective. From a
theoretical point of view, there is not much interest in seeing that a policy that costs €50
billion per year is ‘somehow effective’. It would be very surprising if all Cohesion policy
money produced no effect, for if nothing else, at least some of this money should produce
an impact by inducing demand loops in the weakest areas. It would be more interesting
to see the results of a study proving that Cohesion policy has been fully ineffective (which
was the thesis of Boldrin and Canova 2001, but has no longer been supported more
recently).
From a policy perspective, knowing that some effectiveness exists is encouraging but
not really useful. It may only serve to keep at bay those who say that Cohesion policy
 457
Impact assessment of EU Cohesion policy  ­

should be discontinued altogether. However, terminating Cohesion policy may be con-

sidered a risky and politically non-­viable option, as the literature suggests that integra-
tion tends to favour the strongest countries and regions of Europe (Giannetti 2002;
Midelfart-­Knarvik and Overman 2002), and dropping Cohesion policy would eliminate
the only real, significant redistributive mechanism in the European Union. Measuring
the degree to which Cohesion policy has been effective is not really useful either. It may
provide support for the Commission to advocate more funds, or for redistribution within
the Union’s budget, but nothing more.
The purpose of assessing the impact of Cohesion policy, therefore, should not be to
measure effectiveness per se, but rather to identify ways to improve the policy itself. As
seen in this chapter, the results are differentiated when different policy fields are consid-
ered. Quantitative assessments could therefore be used to produce evidence on how to
shift resources internally within the policy in order to improve its efficiency. Even more
importantly, as discussed above, evidence is beginning to emerge that the impact of
Cohesion policy is differentiated depending upon the way in which it is applied and the
context to which it is applied. Quantitative assessments should therefore provide a helpful
tool which the Commission and the national and regional implementation bodies could
use to better target their policy measures. In this way, measures would be more respond-
ent to the socio-­economic situation and needs of places, and consequently more effective
in achieving their targets. It is, hence, also time for econometric researchers to embark
with conviction on an analysis of how to improve effectiveness, and they might do so by
investigating not whether Cohesion policy has been effective, but when, where and how it
has been so.

NOTES

* The chapter benefited from feedback from a number of colleagues, particularly Simona Piattoni and
Laura Polverari (the editors of this book), and Mara Giua, Giovanni Perucca and Nicola Pontarollo,
who read and commented upon earlier versions of the text. The chapter also benefited from comments by
Peter Berkovitz (European Commission). All errors and omissions are mine alone.
1. Those with a per capita GDP lower than 90 per cent of the EU GNI mean in PPP.
2. See Chapter 6 and p. 183 of the 2014 Cohesion Report (European Commission 2014) for a schematic evolu-
tion of the different Cohesion policy objectives.
3. The situation will certainly improve following EU Regulation No 1303/2013 (European Parliament and
Council 2013: Art. 115 (b)), which requires member states and managing authorities to establish ‘a single
website or a single website portal providing information on, and access to, all operational programmes in
that Member State, including information about the timing of implementation of programming and any
related public consultation processes’, even though it is still not clear how easily such micro-­data will also
translate into regional macro-­data.
4. In many cases replicating the methodology used in Barro and Sala-­i-­Martin (1991).
5. The reader not familiar with these concepts can refer to Magrini (2004).

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Farole, T., A. Rodríguez-­Pose and M. Storper (2011), ‘Cohesion policy in the European Union: growth, geog-
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29. Does Cohesion policy lead to economic
convergence?
Ton Notermans

INTRODUCTION

European Union (EU) cohesion spending has three main objectives. The Cohesion
Fund, which compensates countries for the loss of macroeconomic policy instruments
under Economic and Monetary Union (EMU), seeks to promote income convergence
between the member states. The main aim of the European Social Fund (ESF) is
to improve employability (Article 162 TFEU) and in so doing reduce disparities in
unemployment. The European Regional Development Fund (ERDF), finally, targets
­territorial ­cohesion. Although the EU has never clarified what exactly is meant by
this (Molle 2007: 83 ff), given that Article 174 of the Treaty on the Functioning of the
European Union (TFEU) establishes the aim of ‘reducing disparities between the levels
of development of the various regions’ it would seem reasonable to interpret territorial
cohesion in terms of convergence or regional per capita gross domestic product (GDP).
Since the onset of the 2008 crisis, it has become clear that Cohesion policy has failed
to reach its objectives. Economic cohesion has deteriorated as income convergence has
given way to economic polarisation between the north-­western core and the southern and
eastern periphery. The Southern European Troika programme countries are experiencing
rapid divergence while most eastern EU states are stuck in a middle-­income trap. Social
cohesion is undermined by skyrocketing unemployment and growing income inequality.
And in terms of territorial cohesion, the trend towards divergence of per capita GDP at
the regional level, that had already emerged in the 1980s (Farole et al. 2011: 1090), has
continued.
This lack of convergence must primarily be attributed to policy incoherence, with
monetary, fiscal, exchange rate, financial and trade policies frequently operating at
cross-­purposes, thus swamping any positive effects Cohesion policies may have had.
As a result, EU Cohesion policy suffers from the micro–macro paradox so typical of
development aid policies, in which a high percentage of successfully completed projects
proves very well compatible with the macro-­level absence of convergence (e.g., European
Commission 2014a: iii).
The immediate reason for the exacerbation of regional divergence is the North Atlantic
financial crisis and the policies implemented to overcome it. The decision by the creditor
countries and the European Central Bank (ECB) to eschew default and debt restructur-
ing (Blustein 2015), and instead turn the private debt that threatened the survival of
many EU financial institutions into public debt, set the scene for the eurozone’s sovereign
debt crisis in which the north-­western creditor countries sought to ensure continued debt
service through means of harsh austerity, with strongly negative effects on economic and
social cohesion.

461
462  Handbook on Cohesion policy in the EU

But the failure to sustain regional convergence has deeper roots. In the EU15,
incomes started to diverge in the early 1980s when a regime of monetary disinflation
was embraced by most countries. While a policy of rooting out inflation by dear money
reduced growth, the use of a fixed exchange rate as a disinflation tool meant that
­countries whose wage-­bargaining systems could not deliver low nominal wage increases
were subject to continuous real appreciation. This implied that the Exchange Rate
Mechanism (ERM), and subsequently the euro, had a built-­in break on regional con-
vergence. That for the first nine years of its existence the common currency nevertheless
could be hailed as a great success (Issing 2008: 1–2) was not only due to the blindness
of central banks to asset inflation, but also reflected the fact that the growing structural
weaknesses of many peripheral countries were masked by real estate and consumption
booms, largely financed from North-­Western Europe and made possible by the removal
of exchange rate and jurisdictional risk by EMU and ERM membership and the single
market in financial services. Finally, the European approach to transition of Eastern
European market economies proved inimical to convergence. While the shock therapy
of rapid liberalisation caused a massive crisis in the early 1990s, the hope that the free
movement of capital, goods, services and labour in the EU would lead to a rapid closing
of the income gap proved illusory. The terms of EU membership instead helped to push
much of Eastern Europe into the role of manufacturing low-­to mid-­tech goods for the
core countries, with the result that lower wage cost came to be their main comparative
advantage and the middle-­income trap was sprung.
Whether the EU will be able to reach its stated objectives of regional income and
employment convergence will critically depend on its ability to design and implement a
coherent model of development. By means of a comparison to East Asian cases of rapid
convergence, this chapter tries to outline the economic and political contours of such a
model. It concludes by speculating on the prospects for a coherent Cohesion policy.

PREVIOUS RESEARCH ON COHESION POLICY AND

CONVERGENCE

Research on the effectiveness of cohesion spending falls into two categories: studies
examining the policies’ impact on income and employment, and studies examining
whether income has converged in the EU. However, as is quite common for econometric
studies, no consensus has emerged.
Concerning the effectiveness of Cohesion policy, unsurprisingly, the EU Commission
consistently issues a positive assessment in its Cohesion Reports (e.g. European
Commission 2014a). Leonardi (2005: Ch. 4) also finds that Cohesion policy has made a
significant contribution to reducing disparities, while Maynou et al. (2014) support this
conclusion for the eurozone countries. According to Mohl and Hagen (2010), Objective
1 funds did promote growth during the 1995–2005 period, although Structural Fund
spending in other areas did not, a conclusion that is also shared by Bouayad-­Agha et al.
(2013). Becker (2012) concludes that a positive effect of Structural Funds on growth is
conditional upon good governance. In terms of employment, Mohl and Hagen (2011)
also find only conditional effectiveness. During 1990–2007 Structural Funds overall did
not affect regional employment but had a negative employment impact in regions with a
 Does Cohesion policy lead to economic convergence?  ­463

high share of low-­skilled workers and a positive impact where the workforce was more
highly skilled.
On the other hand, many studies have concluded that Cohesion policies are not effec-
tive at all, or even counterproductive. The list of criticisms includes allocation of funds
according to pork barrel politics (Bachtler et al. 2013), financing of projects that only
minimally contribute to growth (Borgloh et al. 2012), overly bureaucratic procedures that
overwhelm regional administrations (Martin 1999: 164), a focus on horizontal instead
of vertical measures (Simonazzi et al. 2013), and insufficient concentration on the most
needy regions (Crescenzi 2009). Boldrin and Canova (2003) argue that Cohesion poli-
cies are counterproductive because they promote the perverse incentives typical of aid
dependence, while creating dead-­weight costs of bureaucracy and taxation. Rodríguez-­
Pose and Fratesi (2004) and Crescenzi and Rodríguez-­Pose (2012) find that EU infra-
structure investment had a negative impact on convergence, and that only spending
on education and human capital produced significant effects. Finally, González Alegre
(2012) finds that cohesion spending largely crowds out national spending.
Concerning the overall effect of Cohesion policies, older studies tend to conclude
that there has been a significant degree of income convergence in the EU (Molle 2007:
27–30; Yin et al. 2003). The most enthusiastic assessment, however, is contained in the
World Bank’s recent evaluation of the European economic model (Gill and Raiser 2012).
According to the Bank, the EU is a veritable convergence machine. However, that conclu-
sion is based on arbitrary start and end dates (1970–2009) and a non-­standard measure
of convergence: annual growth of purchasing power parity (PPP) consumption. As
discussed in the next section, an analysis of the development of per capita GDP since
the 1980s for the full set of member countries shows that no convergence has occurred;
a conclusion also reached by a recent Bundesbank study (Tamas Borsi and Metiu 2013).

A HOME-­MADE CRISIS

Convergence is commonly considered a microeconomic issue that involves improving

infrastructure, raising the educational level of the workforce, and boosting the produc-
tivity of the manufacturing and service sectors. Though the EU model of development
has raised microeconomic obstacles, the primary reason for the lack of convergence is
rooted in macroeconomic choices, some of which date back to the early 1980s. Three
main mechanisms were at work. Firstly, the use of fixed exchange rates in the service of
disinflation has engendered a regional pattern of depreciation and appreciation to the
detriment of the poorer countries. Secondly, convergence requires a rapid increase in the
stock of physical capital, but monetary disinflation has served to discourage investment.
Indeed periods of high growth tend to strongly promote convergence (Martin 1999: 164).
Thirdly, the EU model of financial integration has provoked regional imbalances and
speculative finance that destabilised the peripheral economies in particular.
Though monetary union was agreed upon in the early 1970s, the Werner Plan (EC
1970) eventually came to naught as few countries were willing to give up macroeconomic
policy autonomy in the turbulent times that followed the first oil price shock ­(1973–1974).
Before the decade was over, however, the Great Inflation of the 1970s engendered a
fundamental reappraisal of policy assignments that eventually made ­ agreement on
464  Handbook on Cohesion policy in the EU

­ onetary union possible by the early 1990s. Safeguarding price stability now became the
m
prime concern of policy-­makers. Doctrinally, the new priorities were justified by what
amounted to a resurrection of the pre-­Great Depression ‘neutrality of money’ doctrine,
although in a more mathematical garb (Screpanti and Zamagni 2005: 335–345). Its core
tenet held that monetary policy had only nominal effects, implying that it could not be
used to promote growth and employment and that its conduct therefore could be del-
egated to technocratic rather than to democratically legitimated central banks. Since the
1980s, governments’ attempts to boost employment by macroeconomic means came to be
identified as the main cause of inflation (Lucas 1976).
As the 1980s progressed, this doctrine became the cornerstone of policy-­making that
the design of all other policies had to respect or at least not challenge openly. In practice
this meant that whatever the nature of the economic problems that might emerge, their
solution by definition had to be found in microeconomic policies to improve market flex-
ibility, thus leaving macroeconomic policies free to continue their single-­minded pursuit
of low inflation.
In terms of convergence, the implication was that any contradiction between nominal
and real convergence was now denied. During the trente glorieuses most West European
countries had employed diverse tools to promote growth such as industrial policy,
financial repression, exchange rate adjustment and trade restrictions (Shonfield 1965).
Yet they all conflicted, to a greater or lesser extent, with a policy regime that sought to
provide a rigid macroeconomic framework to which economic actors had to adjust by
means of greater wage and price flexibility. Accordingly, the EMU convergence criteria
were designed in keeping with the conviction that discretionary macroeconomic policies
were the sole systematic source of economic disturbances, and that real convergence
would follow from nominal convergence.
But the outcome of the new policy course was disappointing. Firstly, contrary to what
the theory predicted, the monetary disinflation in Western Europe between the late 1970s
and mid-­1980s provoked a deep crisis and permanently lower growth and higher unem-
ployment. Secondly, and most important for the present purpose, the process of income
convergence that had characterised the post-­war decades of high growth now gave way
to divergence, a trend that has continued until today. As new technology enters the pro-
duction process through investment, the lower growth rates of the new regime tended to
depress productivity growth. Moreover, by using a fixed exchange rate as an inflation
anchor, differences in wage-­setting dynamics now became crucial for export competitive-
ness. For the Southern European countries with their more fragmented and conflictual
wage bargaining systems the result was real appreciation vis-­à-­vis the core countries.
During the ERM crisis of 1992–1993, financial markets tried to pry countries out
of this straitjacket as low growth, high unemployment and mounting current account
and budget deficits came to be seen as neither politically nor economically sustainable.
Although the devaluation of the southern countries (plus the UK) forced by the ERM
crisis did boost growth, the political lesson learned from this episode was that exchange
rates had to be fixed irrevocably in order to avoid other embarrassing instances of
markets double-­guessing the wisdom of politicians. But with the common currency,
real appreciation became a permanent reality for Southern Europe, with the result of an
escalation of intra-­European current account imbalances, a further weakening of their
industrial structure and growing divergence.
 Does Cohesion policy lead to economic convergence?  ­465

Monetary Union contributed to European imbalances also in a second, and possibly

more important, way. Even after intra-­EU capital controls were abolished between 1986
and 1994, cross-­border capital flows were constrained by exchange rate risk and, for the
case of Eastern Europe, by jurisdictional risk as well. As EMU, ERM and EU member-
ship removed both, a veritable avalanche of capital from North-­Western Europe to the
periphery was set off. Such capital inflows, and in particular foreign direct investment
(FDI), can make a crucial contribution to convergence. Indeed some Eastern European
countries in the proximity of Germany drew substantial benefits from FDI. However,
most of the capital inflows went to finance real estate and consumption booms. Though
in retrospect many have argued that the (inevitable) ‘one size fits all’ policy of the ECB
was bound to destabilise the periphery (Enderlein et al. 2012: 15–16), this argument
appears flawed. If anything, less-­developed countries require low interest rates to stimu-
late investment in their capital stock. Rather, the problem was that the capital inflows
from North-­Western Europe had been largely channelled into unproductive ventures
since the late 1990s, which made their impressive growth rates completely unsustainable.
But this dynamic was stimulated by a monetary regime which reduced the incentives
for investing in productive ventures by keeping growth low, while being blind to asset
inflation.
Moreover, the EU aggravated the problem of European imbalances by creating a
single market in financial services (SMFS). The SMFS was an attempt to catch up with
United States (US) financial institutions, but proved instrumental to the hypertrophy of
EU financial markets, which in terms of total balance sheet relative to GDP are by now
about twice the size of their US counterparts. In retrospect, a particularly damaging
decision was the creation of bankruptcy exemptions and the outlawing of cross-­default
clauses for securitised assets, which greatly stimulated the growth of the shadow banking
and the trade in toxic derivatives (Perotti 2011).1
That unchecked international financial markets and a fixed exchange rate serve to
destabilise peripheral countries was already known from the pre-­1914 gold standard. But
at least in those times it was possible to leave the gold standard and devalue in a period of
crisis, while debt default was also commonly used when debt had become unsustainable.
Indeed, because the debt of peripheral countries was generally denominated in foreign
currencies, devaluation frequently made default unavoidable. After receiving harsh criti-
cisms of its lending policies in the 1990s, the International Monetary Fund (IMF) pro-
posed but failed to obtain acceptance for a sovereign debt restructuring mechanism that
would have regulated such defaults. Simultaneously it revised its lending rules: extending
large loans now would be conditional upon ‘A rigorous and systematic analysis [indicat-
ing] that there is a high probability that the debt will remain sustainable’ (IMF 2004: 4).
Indeed, Iceland pursued a strategy of default and devaluation when faced with unsus-
tainable debt in 2008. That policy proved much less costly in terms of output and employ-
ment and was held by the IMF to contain lessons for other countries as well (IMF 2012).
Initially the IMF also concluded that the debt was not sustainable in either Greece,
Spain or Ireland, thus suggesting the need for substantial debt restructuring. However,
under strong pressure from the EU, the condition of debt sustainability was waived.
Moreover, in 2008 the Swedish government had already worked successfully to persuade
the EU to block the IMF’s recommendation for Latvia to devalue, because it feared that
default would follow in its wake (Lütz and Kranke 2010). Apart from a very modest debt
466  Handbook on Cohesion policy in the EU

restructuring in Greece (2012) and Cyprus (2013), and the Austrian refusal to honour its
guarantees for the debts of the Hypo Alpe Adria Bank, the European strategy has centred
on socialising private creditor risks. Private debts of the financial system in ­countries such
as Spain and Ireland were first turned into sovereign debt, and subsequently sovereign
debt was ‘Europeanised’ through European Financial Stability Facility (EFSF) and
European Stability Mechanism (ESM) assistance. The decision to avoid default and
devaluation and instead pursue austerity and structural adjustment not only had dire
economic consequences for the highly indebted EU countries, but it also created a deep
political rift between creditor and debtor countries that may well prove fatal for the EU.
In North-­Western EU countries Eurosceptic parties frequently played on the theme that
domestic taxpayers were asked to shoulder the burden for economic mismanagement
in Southern Europe, whereas in fact taxpayers were asked to protect financial investors
from the consequences of lending into what should have been recognised as highly risky
situations, such as Greek sovereign debt or Spanish and Irish real estate. In Southern
Europe, instead, a growing number of voters became convinced that the EU had engaged
in a policy of economic destruction in order to protect north-­western creditors.
Table 29.1 summarises the outcome of such policies in terms of income convergence
since 1985, the year in which economic and social cohesion was formulated as the
objective of Structural Fund spending. As the coefficient of variation shows, per capita
incomes in the 28 countries diverged until the late 1990s when the introduction of the
euro and the certainty of EU membership in Eastern Europe set off a speculative boom.
In the EU15, instead, income levels have diverged since the 1980s, with the trend acceler-
ating after the outbreak of the North Atlantic financial crisis. Much of this accelerated
divergence is due to the Southern European countries which, together with Ireland, have
significantly lost ground relative to the EU28 average since 2008. The shock transition
together with the EU boom and bust has resulted in Eastern European countries making
very little headway or even regressing since the last years of communism, with the notable
exceptions of Poland and the Slovak Republic. Much the same holds true for the Baltic
countries where only Estonia has made significant progress in closing the gap to the EU
average since the early 1990s.

LESSONS FROM EAST ASIA

Apart from its offshoots in North America and Oceania, the only countries outside
of Western Europe that have successfully closed the development gap are located in
East Asia. In 1950, per capita GDP levels in Japan, Singapore and Hong Kong were at
or slightly below the level of Poland, whereas South Korea and Taiwan ranked amongst
the poorest countries in the world. By 2013 the income level in all five countries was sub-
stantially above the EU average. It thus may be considered surprising that the designers
of EU Cohesion policy have not made any efforts to learn from such success cases, nor
indeed to learn from Western Europe’s own post-­war experience.
In the current crisis, the EU’s developmental paradigm has increasingly come to focus
on institutional deficiencies. In the view of the EU and ECB, the absence of a central-
ised fiscal policy (Pasimeni 2014), lack of good governance in many cohesion countries
(European Commission 2014a) and ubiquitous market rigidities (ECB 2015) are the main
 Does Cohesion policy lead to economic convergence?  ­467

Table 29.1  PPP per capita GDP relative to EU28 average in 2014 EKS dollars (%)

1985 1990 1995 2000 2005 2010 2014

Southern Europe and Ireland
Cyprus 73.7 87.4 96.8 90.7 87.1 86.6 72.2
Greece 96.2 92.3 92.9 92.8 98.3 92.4 74.5
Ireland 86.3 97.9 116.4 146.4 149.7 131.5 132.5
Italy 128.6 133.0 137.1 126.2 114.7 105.4 97.4
Malta 61.0 71.0 86.2 89.9 86.3 89.8 96.7
Portugal 74.8 87.1 91.3 91.2 82.5 80.5 74.0
Spain 90.9 100.6 107.1 107.7 104.7 99.6 92.7
Baltic countries
Estonia 59.9 55.8 43.8 53.5 69.2 67.7 80.0
Latvia 63.7 63.0 35.2 39.5 54.4 53.3 62.9
Lithuania 71.5 66.4 38.5 40.9 53.5 55.3 64.2
Eastern Europe
Bulgaria 58.2 46.7 43.1 35.6 42.7 49.2 52.5
Croatia 93.6 77.0 54.6 55.4 59.9 59.1 55.9
Czech Republic 86.8 85.5 80.2 74.1 79.6 83.9 83.6
Hungary 84.2 74.0 64.7 63.8 70.1 67.4 70.2
Poland 54.1 43.7 46.9 50.9 52.7 63.9 70.3
Romania 66.6 50.2 42.8 35.9 42.5 47.7 51.0
Slovak Republic 63.9 59.8 56.2 55.1 62.0 74.2 78.5
Slovenia 101.4 79.3 77.1 79.6 84.1 88.4 86.8
Western Europe
Austria 131.4 134.4 140.6 136.0 130.1 132.7 135.8
Belgium 130.0 133.3 138.3 132.8 126.9 129.2 130.1
Denmark 149.9 142.1 153.1 146.3 136.2 129.1 126.6
Finland 119.3 123.7 115.5 122.8 122.3 121.7 118.5
France 126.1 127.9 129.7 122.9 114.8 111.3 110.2
Germany 136.0 137.2 144.0 132.2 120.1 123.9 129.4
Luxembourg 207.2 242.3 268.5 283.7 274.1 277.1 275.9
Netherlands 139.2 140.4 148.6 148.1 136.1 138.8 133.8
Sweden 135.5 134.1 131.5 131.1 129.9 130.0 130.8
United Kingdom 110.1 114.0 119.3 115.1 115.2 110.3 113.1
Coefficient of variation of PPP per capita GDP
EU28 0.36 0.42 0.51 0.52 0.47 0.45 0.44
EU15 0.26 0.28 0.30 0.33 0.33 0.35 0.37

Source:  The Conference Board Total Economy Database, own calculations.

culprits for the current malaise. In this, the EU seems to be travelling down a well-­trodden
road. When the monetary disinflations of the 1970s and 1980s proved very costly this was
not taken as an indication of the inadequacy of the policies. Rather, insufficient flexibility
of labour and product markets was held responsible, thus placing the issue of structural
reform on the European agenda. Similarly, in the 1980s and 1990s, the disappointing
468  Handbook on Cohesion policy in the EU

outcomes of the Washington Consensus policies pursued by the international financial

institutions (IFIs) gave rise to the ‘good governance’ agenda.2
Yet, this emphasis on institutional fixes seems misguided. As the experience of
East  Asia suggests, political will and adequate development strategies were far more
important than the specific institutional framework, and the institutions that did matter
were not those promoting wage or price flexibility or the observance of a rigid macro-
economic framework, but rather those that allowed for the identification, measurement
and enforcement of clearly defined performance indicators in vertical industrialisation
policies.
It is striking that in all Asian cases of successful catch-­up the governing elites had come
to see rapid growth as vital for the preservation of the nation. Though a renewed military
invasion was considered unlikely by the early 1960s, defeat in the ideological competition
with North Korea was a real threat in South Korea (Kim and Chang 2011). Taiwan faced
a similar ideological competition with mainland China (Breznitz 2007: 10), while Japan’s
elites required rapid industrialisation to fend off encroaching colonial powers since the
1860s, and came to focus on growth after 1945 to regain its standing (Francks 1992).
Singapore’s People’s Action Party was acutely aware of the precariousness of a tiny and
poor multi-­ethnic and multi-­religious nation surrounded by large and predominantly
Muslim countries (Huff 1994).
Given the political will for growth, the political skill decided the success of develop-
ment strategies. The skill factor, in turn, consisted of adequate economic strategies and
the political ability to implement them. Given the urgency of development, economic
policies focused on promoting the core characteristics of a developed economy: namely,
a rapid accumulation of capital and the acquisition of foreign know-­how and technology
in order to create sizeable and internationally competitive industries, rather than target-
ing horizontal measures such as infrastructure and education in the hope that a more
favourable environment by itself would ignite a market-­driven process of development.
Vertical, industrial policies constituted the main microeconomic element in Asian
convergence strategies. Invariably, strategic sectors were identified to which the state
would channel resources such as subsidised credit, foreign currency, trade protection and
tariff exemption for inputs, research facilities, assistance in technology transfer through
joint ventures or purchase of foreign technology and employment of foreign experts for
what were to become national champions (Lin 2009). This did not mean that horizontal
policies played no role. Indeed no modern economy can function without an up-­to-­date
infrastructure and an educated workforce, but such horizontal policies were an integral
part of an industrial policy strategy rather than just aiming to creating a favourable
environment.
On the macroeconomic side, such growth strategies required that monetary and
exchange rate policies be made subservient to the rapid accumulation of capital. Credit
creation by the central bank and the commercial banks was controlled to fit the investment
targets. In addition, strict financial repression was called for to ensure that credit flowed to
the desired projects instead of speculative finance. Continuous rapid growth also required
a significantly higher tolerance for inflation than the 2 per cent the ECB is willing to toler-
ate, as well as non-­monetary policies of price stability such as control of wages.
The third decisive factor in East Asian developmental strategies was the political ability
to implement a policy of rapid industrialisation. This required clearly defined and meas-
 Does Cohesion policy lead to economic convergence?  ­469

urable performance indicators, the ability of the state to enforce these indicators, as well
as the ability not to dilute its singular focus on development.
Because of the urgency of catch-­up the evaluation of developmental strategies focused
on the crucial macroeconomic variables of investments rate and credit, while making
support to individual firms conditional on adherence to well-­defined micro-­level indica-
tors such as export performance, production targets and new products. The need for close
government–business relations in order to identify feasible goals and procedures, however,
involved a balancing act as the government simultaneously required sufficient autonomy
to terminate its support to underperforming firms. Success also depended on the ability
to ward off demands for social programmes that would channel resources away from the
industrialisation drive (Kohli 2004). Whether the country was operating under a demo-
cratic constitution as such was not decisive in this context. The post-­1948 South Korean
democracy proved unable to steer the ramshackle Korean economy towards a growth
path, while the young Japanese democracy booked remarkable success. Rather, what
proved decisive was the ability to counteract fragmentation and create broad societal
support for the development strategy, whether by democratic means or not.
When comparing East Asia to the EU model, it would seem that the latter has served
to weaken instead of strengthen the elements that are crucial for convergence. Firstly,
EU membership has tended to weaken the incentives of national political elites to force
growth. In post-­1945 Western Europe the main threat appeared to be a growing popular-
ity of Communism if the economic turbulences of the interwar period were to return. For
geopolitical reasons, the US shared the same urgency for economically prosperous allies.
But this constellation had fundamentally changed by the 1970s. The Great Inflation
of the 1970s marked a growing inability to reconcile claims on the national GDP. EU,
European Monetary System (EMS) and euro membership provided a partial solution
to this ‘political overload’ as it simultaneously created an external constraint on fiscal
and monetary policies and ‘a protected sphere in which policy-­making [could] evade the
constraints imposed by representative democracy’ (Mair 2013: 154). The free movement
of labour within the EU provided an additional safety valve for the failure to achieve
convergence. Indeed, the European Social Fund was originally set up, in 1957, to provide
assistance to migrant workers, mainly from southern Italy. Lastly, EU membership held
out the prospect of substantial Cohesion policy funds whose control would be largely in
the hands of national governments, and which could be used to ease political pressures
resulting from disappointing economic performance, the intensification of competition
under the Single European Act, and the fiscal pressures of the Stability and Growth Pact.
Secondly, EU Cohesion policy has focused overwhelmingly on horizontal measures
promoting infrastructure education and innovation. Underlying this approach is the neo-
classical assumption that technology is identical throughout the world and that its higher
marginal productivity will automatically ensure an ample flow of capital to the periphery.
An insufficient supply of public goods thus comes to be identified as the main bottle-
neck to convergence. Though in particular some East European countries in proximity
to Germany drew substantial benefits from FDI, foreign capital as such never allowed a
country to catch up. Without forced policies for technology transfer, such as joint ven-
tures, FDI easily created an enclave economy that would fail to set in train cumulative
development but instead made the attractiveness of the location dependent on continu-
ously lower wage costs, thus springing a middle-­income trap. In most cases, however, FDI
470  Handbook on Cohesion policy in the EU

was of minimal proportions to start with, meaning that investment in infrastructure and
education rather served to promote economic polarisation. In the absence of demand for
highly qualified labour, improving the educational level and employability of the periph-
ery will promote brain drain. Similarly, in the absence of demand by a growing domestic
industry, infrastructural improvements may just as easily damage regional development
prospects by making it easier for more advanced competitors to bring products to
market and for the local labour force to commute to better-­remunerated jobs elsewhere
(Martin  1999: 141–145). In short, to ensure that horizontal support generates conver-
gence it needs to form part of a sectoral and place-­based industrial policy.
Thirdly, though Cohesion policy has been criticised for insufficient evaluation of its
effectiveness, the main issue is that its horizontal nature does not yield indicators to
successfully measure and steer convergence. The EU in practice does not evaluate the
effectiveness of its approach towards reaching the stated goal of income convergence, but
instead assumes that successful provision of public goods must necessarily contribute to
convergence.
Nevertheless, the widespread criticism of insufficient evaluation (Allen 2005; Boldrin
and Canova 2003; Chalmers and Dellmuth 2015; Mendez and Bachtler 2011: 756 ff) sug-
gests that the EU might not be able to sufficiently enforce the performance criteria of a
vertical Cohesion policy. Designed as a compensation mechanism, member states have
remained in control of setting the priorities for cohesion spending, despite Commission
efforts in the 1980s and 1990s to gain a greater role. And the 2014–2020 framework will
not bring a change in this respect (European Commission 2014a: XXI) Nor indeed would
the Commission have an incentive to override national priorities for fear of being further
curtailed in its room of manoeuvre by a majority of dissatisfied clients. Instead, the EU
has engineered an ‘audit explosion’ to reduce the incidence of financial irregularities.
But apart from having met with little success (Mendez and Bachtler 2011), absence of
financial irregularities in no way ensures the achievement of strategic policy goals, as the
Commission admits (European Commission 2014a: XX).
Finally, on the macroeconomic side, monetary union and the capital controls direc-
tive of 1986 – outlawing any obstacles to the free movement of capital within the
EU  – are part of the acquis communautaire such that new members were required to
adopt them irrespective of their level of development. The pill was sweetened by linking
entitlement to the newly established Cohesion Fund to the implementation of a pro-
gramme to fulfil the EMU convergence criteria (Protocol 28 TFEU). But in fact this
meant that the Cohesion policy funds were used to compensate for adopting a policy
that would contribute to economic destabilisation and dim the longer-­term convergence
prospects. The new Cohesion policy framework further strengthens this tendency as
disbursements may be suspended in case of failure to adhere to the economic policy
guidelines under the European Semester, which de facto creates an additional incentive
to pursue the demonstrably counterproductive strategy of internal devaluation. Though
also instrumental in the build-­up of European imbalances, the EU’s single market in
financial services programme did still leave national government with sufficient tools
to ward off speculative excesses, as shown for example by the relative stability of the
Polish and Italian financial systems throughout the crisis, though it did create incentives
for some governments to attempt a short-­cut to convergence by aspiring to become a
financial hub.
 Does Cohesion policy lead to economic convergence?  ­471

PROSPECTS FOR POLICY COHERENCE

The future of the EU may depend upon its ability to implement an effective model
of development. Though previous crises often were a spur to strengthened integra-
tion, this time is different, not only because in some cases the extent of the crisis has
come to parallel the Great Depression of the 1930s, but primarily because the crisis is
EU-­made (Martin 2015). The EU’s standard argument that integration enhances the
ability to manage the economy, because it restores the policy autonomy that the indi-
vidual member states have irretrievably lost because of globalisation, sounds cynical
to more and more people. Shrinking economies, escalating unemployment and rising
inequalities have convinced the rapidly growing camp of Eurosceptics that the EU
is the problem and not the solution. The issue is compounded by the technocratic
construction of the EU which impedes proper political contestation and thus places
most of the burden of legitimacy on policy output, while pushing its critics into an
anti-­systemic position. An escape into more technocratic policy-­making, while pos-
sibly providing a temporary respite from political pressures, will ultimately serve only
to promote extremism or exit, especially from voters in the EU’s stagnating periphery.
Yet, the prospects for establishing policy coherence in Cohesion policy would appear
rather dim as the current developmental model is the outcome of a historical process
that was set in motion more than 30 years ago, and by now is woven into the fabric of
European integration.
The core conviction the EU would need to shed is that monetary policies do not
contribute to long-­term growth and convergence, and instead need to be entrusted to
an independent central bank dedicated single-­mindedly to keeping inflation low. The
East  Asian experience strongly suggests that a high rate of capital accumulation can
only be achieved by making monetary policy subservient to growth, such that politically
responsible government agencies gain control over the credit expansion of the central
bank as well as the commercial banking system. Though hyperinflation is no doubt
destructive of any economic system, the conviction that anything in excess of 2 per cent
will harm the economy bears no empirical scrutiny, nor is it supported by the ‘neutrality
of money’ doctrine that central banks so gladly employ to justify their position outside
the democratic process. Containing inflation via a fixed exchange rate, moreover, has
proven inimical to convergence in a continent with significant and deeply rooted differ-
ences in wage-­setting systems.
But the influence of the reigning monetary doctrine goes far beyond macroeconomic
policies. From the dogma that macroeconomic management by definition cannot be held
responsible for Europe’s disappointing growth performance followed that the cause must
lie in microeconomic rigidities. And one of the main consequences of that conviction
was the enthronement of the principle of a level playing field, and the clamp-­down on
state aid as the guiding principle of the EU’s microeconomic model. Yet, due to first-­
mover advantages resulting from economies of scale and learning curves, enforcing a
level playing field on economies with vastly different levels of development is a recipe for
divergence.
It is not only the memories of the Great Inflation, the fear of a politicisation of wage-­
setting, and irreconcilable domestic demands on fiscal policies that cement the adher-
ence to a counterproductive monetary regime. The set-­up of EMU has proven rather
472  Handbook on Cohesion policy in the EU

­ eneficial for Northern European countries as it allowed them to pursue tight money
b
policies without risking the currency appreciation that would undermine their trade
surpluses (Notermans 2012), while the level playing field principle has shielded the core
countries from the EU periphery engaging in the strategy of non-­reciprocal integra-
tion which Western Europe and East Asia pursued with respect to the USA after 1945.3
Finally, the interests of the political elite in a number of peripheral countries also speak
against an effective Cohesion policy. EU membership has reduced the urgency of growth,
while democratic shock therapy in Eastern Europe in several cases has resulted in corpo-
rate capture of the state (Innes 2014) that would make any consistent enforcement of the
performance criteria of a developmental state illusory.
The post-­1945 US administration had the foresight to realise that enforcing the
original design of a level playing field for the international economic order would
destabilise its less-­developed allies. The north-­western creditor countries that have
gained control of EU economic policies instead display a decidedly mercantilist
outlook. Maybe the only way in which convergence cohesion can gain a reasonable
chance of success in the EU lies in the development of peripheral areas gaining the
same urgency as it did in East Asia or in Western Europe after 1945. Though the
country fails to satisfy even a minimalist definition of good governance, Ukraine was
awarded, albeit modest, sums without much of the conditionality that has proven so
destructive in Southern Europe, in its present conflict with Russia. Chinese support to
Iceland, Spain and Greece, and Prime Minster Tsipras’s visit to Moscow in the spring
of 2015, has created tangible unease in Brussels. The route to an alternative EU may
require an alternative to the EU.

NOTES

1. The relevant EU directives were: Financial Collateral Directive of 6 June 2002, EU Settlement Finality
Directive of 19 May 1998, Directive 2009/44/EC of 6 May 2009 amending Directive 98/26/EC, and
Directive 2002/47/EC.
2. In response to the disappointing outcomes of the Washington Consensus policies of market liberalisation,
fiscal austerity and sound money, during the 1990s the IMF came to emphasise that economic development
required good governance, which referred to an efficient civil service, a competent and impartial judiciary,
respect for the rule of law, and transparency and accountability in public sector transactions.
3. Though the EU Commission has recently advocated an integrated industrial policy (European Commission
2014b), currently this appears to be more of an instance of paying lip-­service to a new buzzword than a new
policy departure.

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30.  The social dimension of Cohesion policy
Valeria Fargion and Stefania Profeti

INTRODUCTION

Since the launch of European Union (EU) Cohesion policy, there has been a lively politi-
cal and academic debate on what cohesion is, and how it should be promoted at the EU
level (see Leonardi and Holguin, Chapter 27, this volume). The policy’s core principles
have shifted across time, being threatened by competing interests, ideas and ideologies
(Mendez 2013), with a continuous tension between competitiveness and equity goals
(Begg 2010).
Originally conceived as an instrument to promote territorial cohesion through eco-
nomic convergence by assisting less-­favoured regions in the context of the common
market, Cohesion policy has always had a more vaguely defined role in countering social
exclusion (Begg 2010: 78): on the one hand, social exclusion is intrinsically a slippery
notion (Koikkalainen 2011), which may call for very different policy solutions according
to how it is framed (for example, inequalities in income, differences in living standards,
material deprivation, social marginality). On the other hand, it is well known that the
social dimension of cohesion has never reached the same status as the economic dimen-
sion within the EU (Saraceno 2013). Since the ‘EU system-­building could not proceed
to establish supranational sharing arrangements based on interpersonal transfers and
individual social entitlements’ (Ferrera 2005: 177), which remain a peculiarity of indi-
vidual nation-­states, the EU action toward social cohesion has favoured mechanisms
of territorial redistribution of financial resources for local development and employ-
ment policies, somehow following the neoliberal assumption that more growth would
automatically lead to greater equity and social prosperity. In this perspective, the goal
of social cohesion has progressively become secondary to the growth and jobs priori-
ties, ‘with competitiveness gaining ascendancy over solidarity or equity considerations’
(Begg 2010: 80).
Yet, in parallel to the formulation of the Europe 2020 strategy (European
Commission 2010), and following the recent global economic downturn, the new
regulation of the EU Cohesion policy (European Parliament and Council 2013) has
experienced some changes which – at least on paper – seem to rejuvenate the policy’s
solidarity profile, bringing the aims of fighting poverty and promoting inclusive
growth among the core priorities of the EU. In order to understand how and to what
extent such changes in policy discourse correspond to concrete change in policy prac-
tices, in this chapter we try to assess the nature and relevance of the social dimension in
both the regulations of Cohesion policy and the operational programmes co-­financed
by the EU Structural Funds, with a specific focus on the 2007–2013 and 2014–2020
programming periods.
In so doing, we make a distinction between measures oriented at increasing employ-
ment, such as services for employment, active labour market policies, human resources

475
476  Handbook on Cohesion policy in the EU

development and training activities; and measures which are more explicitly ‘social’ in
nature, such as those for the reduction of poverty, fighting discrimination and the crea-
tion of social infrastructures. Using this distinction, we can more easily understand: (1)
whether the balance between the two rival rationales behind Cohesion policy (that is,
increasing competitiveness and promoting solidarity) has actually changed in favour of
equity and social inclusion in the programming periods under observation, as it seems to
be in official documents and policy discourse; and (2) whether (and by how much) EU
institutions – and in particular the European Commission – are able to steer the national
processes of funds allocation among the various types of intervention and to preserve a
coherent policy strategy.

THE SOCIAL DIMENSION OF COHESION POLICY UNTIL

LISBON II: TRACING THE PROCESS

The objective of achieving economic and social cohesion at the EU level becomes explicit
for the first time in the formulation of the Single European Act in 1985,1 with cohesion
being defined as a matter of ‘reducing disparities between the various regions and the
backwardness of the least-­favoured regions’ (Art. 130a). A more specific definition is
provided in the 1993 White Paper on Growth, Competitiveness and Employment, aimed
at stimulating European cooperation in order to catch up with a world-­leading US
economy, which called for a new model of European society based on ‘less passive and
more active solidarity’ in response to unavoidable market failures (European Commission
1993: 15–16). Solidarity, however, is not conceived here in terms of assistance and redis-
tribution of income among individuals (two aims which remain in the hands of national
governments); rather, it is a matter of creating equal opportunities for people living in
the newly created common market. The focus is in particular on reducing unemployment
and improving the quality of human capital (in terms of health and skills), in order to
preserve the competitiveness of the European economy. The mechanism for doing so
is a territorial (rather than personal) redistribution of financial resources, which aims
at providing less-­developed regions and member states with additional funds (namely
the Structural and Cohesion Funds) for their development policies, in line with the
‘Smith abroad, Keynes at home’ compromise which inspired the early architects of the
European Communities (Ferrera 2005: 92).
This approach fully characterises the first two programming periods (1989–1993
and 1994–1999): looking at the funding priorities listed in the regulations of the two
Structural Funds, and selecting those priorities which can be associated with social
cohesion, a clear orientation emerges towards interventions related to the improve-
ment of social infrastructures, on the one hand, and fighting unemployment, on the
other. ‘Owing to the seriousness of the unemployment situation’ and ‘given the limited
funding available’, EU action related predominantly to the objective of ‘combating long-­
term unemployment and facilitating the integration into working life of young people’
(Council of the European Communities 1993: Preamble). More precisely, the European
Regional Development Fund (ERDF) could finance in the Objective 1 regions invest-
ments in health and education infrastructures (Council of the European Communities
1988: Art. 3 (1)), while the European Social Fund (ESF) could contribute to measures for
 The social dimension of Cohesion policy  ­477

the integration into the labour market of ‘persons exposed to exclusion’. Objective 3 and
4 programmes, which were developed at the national level, focused therefore on measures
related to vocational training, temporary employment aid, employment support struc-
tures and equal opportunities promotion (ibid.: Art. 1 (1) and (2)). Vocational training
and improvements in the education systems were also central in the programmes for the
Objectives 1, 2 and 5, especially in relation to workers in small and medium-­sized enter-
prises (SMEs) (Council of the European Communities 1988: Art. 2 (3) and (4)).
An almost exclusive focus on work-­related measures can also be found in the program-
ming period 2000–2006. The formulation of the new regulations was in fact strongly
influenced by the parallel definition of the European Employment Strategy (EES)
through the Luxembourg process set up in 1997. The new Structural Funds regulations
for 2000–2006 define the ESF as an instrument to ‘support the EU Employment Strategy
and the national action plans for employment linked to it’ (European Parliament and
Council 1999b: Preamble, point 5). Eligible activities under the ESF were listed in greater
detail than in the past, and covered a variety of interventions ranging from education and
vocational training to the modernisation of employment services, from the development
of education–work paths to reconciliation of family and working life. The ERDF con-
tinued to finance education and health infrastructures in Objective 1 regions, but could
also be used to invest in local structures providing neighbourhood services to create new
jobs, and to promote equality between men and women in the labour market (European
Parliament and Council 1999a: Art. 2). By contrast, no explicit reference was made to
measures placed outside labour market policies, nor to social inclusion at large, in spite of
the 2000 Lisbon Agenda’s strong emphasis on fighting poverty in the context of a strat-
egy aimed at promoting positive reciprocal feedbacks between economic, occupational
and social policies.2
The first concrete attempt to link the objectives of the Lisbon Agenda with the for-
mulation and implementation of Cohesion policy was put into place only with the revi-
sion of  the Lisbon Strategy in 2005 (Commission of the European Communities 2005).
Against the backdrop of a worsening economic situation and changing political envi-
ronment, the social pillar of the Lisbon I ‘virtuous cycle’ was significantly downplayed:
although the European Council repeatedly maintained that greater social cohesion and
the fight against poverty and social exclusion remained core objectives of the Lisbon
Strategy, in the so-­called Lisbon II the quality of employment and the more genuine
social objectives became secondary to growth and jobs priorities (Saraceno 2013; Begg
2010), and new paradigms such as ‘flexicurity’3 gained ground in the EU definition of
benchmarks. It was in this context that the Commission envisaged a reorientation of
Cohesion policy, ‘from an instrument for pursuing the EU treaty objective of strength-
ened economic and social cohesion to one that would also support the Union’s new stra-
tegic economic priorities’ (Baun and Marek 2014: 49).
Indeed, in the new Community Strategic Guidelines for Cohesion Policy (CSG) and
Regulations for the 2007–2013 programming cycle, the Structural Funds were explicitly
related to the Lisbon objectives – including social inclusion priorities and measures –
through the ‘earmarking’ mechanism, a practice aimed at assuring that the Cohesion
policy funds would be ‘dedicated for investments that directly strengthen competitive-
ness and job creation’.4 Among the 86 earmarked categories of expenditure, 16 were
explicitly related to social cohesion, and touched upon four macro-­areas of intervention:
478  Handbook on Cohesion policy in the EU

labour market, human capital, social infrastructure and social inclusion. All four issues
had directly to do with the social dimension, although the former two were more closely
related to active labour market policies, whilst the second two related to social citizenship
in general (for example, specific actions for disadvantaged people, as well as public infra-
structures or direct services to individuals in need).
Looking at the funding priorities listed in the regulations for 2007–2013, a widening
of eligible measures associated with the goal of social cohesion can be observed. The
ESF was explicitly aimed at contributing to the priorities of the Community ‘as regards
strengthening economic and social cohesion by improving employment and job oppor-
tunities, encouraging a high level of employment and more and better jobs’ (European
Parliament and Council 2006: Art. 2). It did so by financing a variety of actions such as
increasing adaptability of workers, promoting preventive measures to avoid (long-­term)
unemployment, reinforcing the inclusion of disadvantaged people (including migrants)
into the labour market, and enhancing human capital through reforms in education and
training systems. The scope of the ERDF was widened as well, since this fund can now
be used for housing projects,5 to increase the quality of life (in Convergence regions), as
well as (in all regions) to finance all generic measures aimed at promoting employment.
In addition, since 2007 the Cohesion Fund no longer operates outside the objectives of
Cohesion policy but is classed together with the ERDF and ESF, thus being subject to
the same programming, management and control rules. The Fund continues to promote
Trans-­European Transport Networks and the protection of the environment, but has
been assigned new priorities such as sustainable development and renewable energy,
which may have indirect effects on the social inclusion and quality of life of EU citizens
(for example, through improving the quality of water, promoting better access to public
services and so on).
In spite of its paramount ambitions, the so called ‘Lisbonisation’ of Cohesion policy
has encountered several criticisms. First, the broadening of the objectives associated
with the Structural Funds has led to goal congestion and confusion (Begg 2010; Mendez
2013). In the absence of clear indications on how to distinguish and reconcile the two
goals of economic growth and of equity and cohesion, the Lisbonisation of Cohesion
policy risked overshadowing the solidarity principle (albeit mostly territorial in nature)
which has defined the EU regional policy since its origin. Second, the EU-­level capacity
to steer and coordinate the new architecture of Cohesion policy appears quite poor, and
the final list of earmarked categories resembled more a ‘shopping list of actions’ than a
set of strategic priorities (Mendez 2011: 527). Such an openness of EU goals – coupled
with the voluntary nature of earmarking reporting for the new member states – may pave
the way to national cherry-­picking practices and strategic accommodation, especially in
the absence of enforceable commitments and effective tools to assess (and possibly sanc-
tion) the capacity of national programmes to attain EU-­defined policy goals.

THE CONTRIBUTION OF THE STRUCTURAL FUNDS TO

SOCIAL COHESION: A FOCUS ON 2007–2013 PROGRAMMES

The Commission’s Strategic Report delivered in 2013, based on member states’ annual
implementation reports and data from the earmarking exercise (European Commission
 The social dimension of Cohesion policy  ­479

2013a, 2013b), provides us with some data which may help in assessing the financial rel-
evance of the social dimension in the 2007–2013 programming period, and the types of
intervention which have been favoured by member states. The main target group of the
ESF in 2007–2013, that is, the most important fund in the domain of social cohesion,
were women, who represent more than half of the final recipients (52 per cent), with
higher peaks in eastern countries and the Baltic republics (well over 55 per cent) and
lower percentages in the Netherlands and the United Kingdom (less than 40 per cent).
Youth received far more attention than older people (30 per cent compared to 6 per cent
across EU28) in almost all EU member states, whilst the balance between employed,
unemployed and inactive people varied a lot: the programmes of the Scandinavian
countries had a clear focus on already employed people (which account for more than
70 per cent of beneficiaries), France and Spain favoured the unemployed (more than 55
per cent), and Greece, Italy and most of the EU10 focused more on inactive people
(European Commission 2014a).
On the whole, 24.3 per cent of EU funds (corresponding to approximately €85 billion)
were dedicated to the four social cohesion priorities (labour market, human capital, social
inclusion and social infrastructures), slightly declining in relative terms compared to the
previous periods (European Commission 2014b: xix). Employment issues clearly domi-
nated over the social ones: in fact, only 13 per cent of funds devoted to social cohesion
(3.3 per cent of total Structural Funds) were allocated to measures for the inclusion of
migrants and disadvantaged people, and 22 per cent (5.5 per cent of total) to the modern-
isation or creation of social infrastructures; the remaining 65 per cent being devoted to
active labour market policies and, in particular, training activities. It is also worth noting
that among social priorities the most innovative fields of action for EU funds, such as
support for migrants as well as childcare and housing infrastructure, received far less
attention than education and health infrastructure. In general, ‘the range of co-­financed
activities [had] covered the whole spectrum of active inclusion, except income support.
Supportive activation services to groups at a larger distance from the labour market [had]
been the main focus of the programmes’ (European Commission 2013a).
However, the cross-­national analysis of funds allocation suggests that EU objectives
(and earmarking requests) ‘have been translated very differently and a “one size fits
all” approach has not prevailed’ (Mendez 2011: 527). First, the percentage of EU funds
devoted to social cohesion varies significantly between EU15 countries and the member
states of more recent accession, and within the EU15, between the Mediterranean
­countries and the others (with the exception of Portugal) (Figure 30.1). These differences
are quite easy to explain: on the one hand, the need for funding and investment in other
Lisbon priorities related to competitiveness (for example, research and development,
transport, energy and economic development) is probably higher in the EU13 member
states; on the other hand, in countries where social cohesion priorities receive more
resources (that is, France, Sweden, Austria, the United Kingdom, Ireland, Denmark,
Luxembourg, the Netherlands and Belgium) the ESF represents more than 40 per cent of
total funds, while in all EU10–13 countries it remains below 20 per cent.6
In addition to that, Figure 30.2 shows that there are significant differences in the
national recipes for attaining social cohesion, that is, different mixes in the allocation of
EU funds across the two macro-­areas of employment and social interventions. A detailed
analysis of individual cases exceeds the aims of this chapter; thus, we shall provide only
480  Handbook on Cohesion policy in the EU

60.0%

50%
EU15

50%
48%
48%
44%
50.0%

43%
42%
41%
41%
40%
40.0%

34%
33%
25%
25%
30.0%

23%
23%
22%
22%
22%
22%
21%
21%
20%
17%
17%
16%
20.0%

14%
13%
10.0%

0.0%
NL IE DK BE UK LU AT SE FR PT FI DE GR IT ES EE MT LT LV HU SK RO CY BG CZ PL SI HR

Source:  Based on data from DG Regional Policy, ‘Data for research’, available at http://ec.europa.eu/
regional_policy/it/policy/evaluations/data-­for-­research/.

Figure 30.1 Percentage of Structural Funds (ESF 1 ERDF) and Cohesion Fund 2007–
2013 devoted to social cohesion priorities (Labour market 1 Human capital
1 Social inclusion 1 Social infrastructures)

some general comments. Interestingly, the clusters of countries do not correspond closely
to the five usual welfare state groupings (that is, the Scandinavian, the Continental, the
Anglo-­ Saxon, the Southern and the Central-­ Eastern welfare grouping). Rather, the
rationale underpinning the allocation of funds seems to depend on the specific domestic
legacy and on the policy strategies concerning poverty and social exclusion.
All the countries in the upper sections of the diagram – that is, those devoting a
larger percentage of Structural Funds to the social dimension strictu sensu – are in fact
characterised by stronger national assistance policies against poverty than those located
in the lower quadrants. For instance, among the 13 member states of recent accession
(section on the left) the Baltic republics, and in particular Latvia and Lithuania, intro-
duced public schemes against poverty which are far more generous and robust than those
envisaged by the other new member states (Jessoula et al. 2015). Looking at the central
section of the diagram, a clear-­cut distinction emerges between countries such as Italy
and Greece – where a guaranteed minimum income programme does not exist7 – and
others, such as France, Germany and Portugal, which all have relatively strong dedicated
national schemes (Busilacchi 2014). On the other hand, the surprisingly low percentage
of resources dedicated to social measures by countries with generous and universalist
welfare schemes (such as Sweden, Denmark and, to a lesser extent, the Netherlands) can
be explained by considering that over the last decades their policies on social inclusion
and income support have been progressively connected to active labour market policies
(ibid.). Of course, to be adequately validated, our interpretation calls for further empiri-
cal research; however, the above cross-­national differences support the conclusion that
‘the openness of the CSG . . . has facilitated the accommodation of the new objectives
with domestic policy priorities’ (Mendez 2011: 530).
The trend toward cross-­national differentiation of funds allocation has been exac-
erbated by the economic downturn of 2008–2009, which impacted early on upon the
 The social dimension of Cohesion policy  ­481

18.0

16.0 HU
Social inclusion + social infrastructures (%)

EE FR
MT BE
14.0
LT
LV

DE
12.0 SK UK

HU AT

10.0 NL

8.0 RO GR
IT FI
CZ
6.0 PL
ES
BG
LU
4.0 SI
HR
CY

IE
2.0 SE

0.0 DK

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Employment + Human resources (%)

Note:  Bubble size is proportional to the total amount of Structural and Cohesion Funds available to each
country (per capita).

Source:  Based on data from DG Regional Policy, ‘Data for research’, available at http://ec.europa.eu/
regional_policy/it/policy/evaluations/data-­for-­research/.

Figure 30.2 Allocation of funding to social priorities in EU member states (% of total

Structural and Cohesion Funds)

2007–2013 operational programmes. On the one hand, national co-­financing rates have
been reduced for many member states, especially those most affected by the crisis (such
as Italy, Spain, Greece and all member states of more recent accession); on the other
hand, ‘almost 13 percent of the total EU Funds has been shifted from one policy area
to another since 2009 to meet the most pressing needs’ (Mendez 2011: 530), such as to
mitigate growing unemployment in a landscape of increasing austerity and constraints
to national budgets. In particular, evidence demonstrates a generalised trend of shifting
ESF resources from human capital and social inclusion categories towards employment
measures, albeit with some cross-­national differences: ‘a number of Member States
have relied on the ESF as the key instrument to support Active Labour Market Policies
(ALMP) . . . This is the case particularly for the EU-­12 where ALMP budgets are signifi-
cantly lower, mostly below 0.5% of GDP’ (European Commission 2013b). In other cases,
such as in Italy, national and regional governments have reprogrammed their Operational
Programmes (OPs) co-­financed by the ESF to increase financial resources for temporary
wage subsides (Camera dei Deputati 2014). Instead, member states with a (relatively)
small share of the ESF budget, such as the Scandinavian ones, ‘either did not amend
the ESF OPs or used the ESF as a supplementary instrument to focus on immediate
­concerns’ (European Commission 2013b: 2).
482  Handbook on Cohesion policy in the EU

To sum up, then, in both their formulation and subsequent adjustments to the crisis,
2007–2013 OPs are generally biased toward employment measures at the expenses of
social inclusion. Moreover, although at first sight this seems to be consistent with the
pro-­growth rationale behind the reformulation of the Lisbon Agenda in 2005, wide
cross-­national variation in funds allocation and reprogramming strategies suggests that
the capacity of EU institutions – in particular the Commission – to steer Cohesion policy
has been quite weak, in spite of the new instrument introduced to fix common priorities
(namely the CSG and the earmarking mechanism).

EUROPE 2020 AND THE PRIORITY OF INCLUSIVE GROWTH:

WHICH EFFECTS ON COHESION POLICY?

Indeed, increasing attention to inclusive growth and stronger EU oversight mechanisms

are the two key recommendations which have inspired the reformulation of Cohesion
policy for 2014–2020, in order to make it fit with the new Europe 2020 strategy (European
Commission 2010). Both recommendations are at the centre of the famous Barca Report,
an independent study prepared by Fabrizio Barca at the request of Danuta Hübner, then
Commissioner for Regional Policy, to offer a critical appraisal of Cohesion policy at the
eve of the drafting of new 2014–2020 regulations (Barca 2009). The Barca Report pro-
vides, for the first time, an ad hoc definition of social inclusion, conceived as ‘the extent
to which, with reference to multidimensional outcomes, all individuals (and groups) can
enjoy essential standards and the disparities between individuals (and groups) are socially
acceptable, the process through which these results are achieved being participatory and
fair’ (Barca 2009: 29). Putting the issue of social cohesion at the centre of the debate,
the report invokes ‘a political mission that had been lost over time’ (Mendez 2013: 648),
that is, rescuing solidarity. In practical terms, the main policy prescription for 2014–2020
is that Cohesion policy programmes should clearly distinguish between efficiency and
equity goals, by taking into account a smaller number of thematic priorities, namely a
six-­point agenda focused on innovation and climate change (related to the economic and
efficiency objective), migration and children (with a predominantly social and equity
objective), and skills and ageing (where the two objectives are of similar importance)
(Barca 2009: 8). Furthermore, the Barca Report calls for addressing social issues from
a place-­based perspective, proposing a ‘territorialised social agenda’ which avoids the
‘one-­size-­fits-­all’ syndrome and provides public goods and policies tailored to local needs
(Jouen 2010: 166). Top-­down steering at the EU level was thus intended to leave room to
‘greater local experimentalism, innovation and actors mobilization’ (Mendez 2013: 646).
Meanwhile, facing the persistent economic downturn and the pressure of EU stability
rules on national budgets, Europe 2020 also brings back social equity and territorial cohe-
sion to the EU core priorities, considering them essential to the achievement of its newly
defined ‘inclusive growth’ goal (European Commission 2010: 21). Moreover, signals
of increasing attention toward social inclusion and solidarity may be found in several
programmes launched by the EU Commission in the same period: the 2010 European
platform against poverty and social exclusion; the EU Framework for National Roma
Integration Strategies, approved by the Commission on 5 April 2011; the so-­called Social
Investment Package promoted by the Commission in 2013; and the creation, in January
 The social dimension of Cohesion policy  ­483

2014, of the Fund for European Aid to the Most Deprived (FEAD) with the aim of
providing non-­financial assistance to some of the EU’s most vulnerable citizens.8 The
formulation of post-­2013 Cohesion policy regulations is thus embedded in a narrative
which is very different from the Lisbon II one.
If it is true that narratives make sense of policy issues and underpin policy solutions
(Roe 1994), then it should not come as a surprise that in the 2014–2020 programming
period the social dimension receives (at least nominally) far more explicit emphasis than
in the previous ones. The way European Structural and Investment Funds (ESIF) are
expected to contribute to the Europe 2020 strategy for smart, sustainable and inclusive
growth is illustrated in the Common Provisions Regulation 1303/2013, and in particular
in its Annex 1 (European Parliament and Council 2013: Annex 1). According to that
Regulation (Art. 9), in writing their Operational Programmes (OPs) all member states
must allocate EU funds among 11 pre-­established Thematic Objectives (TOs) related
to Europe 2020 priorities, three of which are explicitly linked to inclusive growth:
TO8 Employment; TO9 Social Inclusion; and TO10 Education. For each TO, the new
regulation also identifies specific investment priorities which, as far as social cohesion is
concerned, include not only employment-­related measures but also social and cultural
investments, as well as interventions for the integration of migrants, combating poverty
and providing access to quality services of general interest. Social measures may be
financed through both the ERDF and ESF, but it is the latter which is more relevant for
their realisation. In particular, it is provided that at least 20 per cent of ESF funding must
be devoted to the social inclusion priority, in order to help people in difficulty and those
from disadvantaged groups to get appropriate skills and find a job. Moreover, the ESF
will contribute at least €3 billion to the realisation of the Youth Employment Initiative,
proposed in 2013 by the European Council with a budget of €6 billion.9 Parallel to the
increasing relevance attributed to the social dimension, the new ESIF regulations also
significantly enhance the oversight role of the Commission, thanks to new instruments
such as Country Specific Recommendations, the contractualisation of governance rela-
tions (through Partnership Agreements stipulated between the member states and the
Commission before preparing their OPs) and the use of ex ante conditionality clauses
related to each Thematic Objective.10 As to social inclusion, conditionalities include,
among other things, the existence and the implementation of a national strategic policy
framework for poverty reduction, a national Roma inclusion strategic policy framework,
and a national or regional strategic policy framework for health.
Although many observers are cautious about the true extent of the innovation (Mendez
et al. 2015: 59), and although several of Barca’s recommendations had been lost during
the formulation process (for example, the concentration on only six thematic objectives
and the special focus on children and migrants), a significant change with respect to
previous periods seems undeniable, at least on paper. But how much does this change in
policy discourse correspond to sound changes in policy practices? At the time of writing
this chapter, in June 2015, it is too early to make a rigorous assessment, since several
OPs have not been formally approved yet, and no significant oversight action by the
Commission has been carried out. However, an analysis of the Partnership Agreements
signed by member states and of the available national ESF OPs’ factsheets provided by
the European Commission may help to shed some light on the point, providing a general
overview of the allocation of resources across the various thematic priorities.11
484  Handbook on Cohesion policy in the EU

Looking at the Partnership Agreements, according to the European Commission,

the three TOs explicitly related to social cohesion (that is, employment, social inclusion
and education) absorb overall about €98 billion, corresponding to 30 per cent of the
total budget, which mostly comes from the ESF. The relevance of the social dimension
is thus on the rise in both absolute value and relative terms with respect to 2007–2013.
Moreover, at least at a first sight, member states seem to have complied with EU obliga-
tions, allocating on average more than 25 per cent of ESF funding to social inclusion and
the fight against poverty, while the minimum share was 20 per cent. More than 37 per
cent has been devoted to employment, and a little more than 32 per cent to education
and training.
Cross-­national differences in the allocation of funds remain, albeit in a more nuanced
fashion than in the past period. As to the overall amount of funds devoted to the three
‘social’ TOs, the polarisation between the richest Scandinavian and continental countries
and the southern and eastern ones which had been observed in 2007–2013 seems to persist,
but the distribution among the three areas of employment, education and social inclu-
sion is much more balanced, the only exception being the Netherlands, which completely
neglects the education priority (Figure 30.3). The apparent exceptionalism of the Dutch
case is even more evident when we look at the ESF only, and the amount devoted to TO9,
Social Inclusion (Figure 30.4). In fact, while most countries limit that share to near 20
per cent, showing minimal compliance to the requirements of the CSF, the Netherlands
devote to the social inclusion priority no less than 71 per cent of ESF funding.
A closer look at the Dutch national ESF OP, and in particular at its sections dealing
with TO9, suggests however that any attempt to assess the relevance of social inclusion in
Cohesion policy programmes must consider the way in which the problem of ­‘exclusion’
is framed. After all, the Commission itself allows member states to choose among three
different indicators to show their progress toward the Europe 2020 headline target on
poverty (‘at risk of poverty’, the classic poverty measure based on disposable income;
‘severe material deprivation’, the inability to pay for essential goods;12 and ‘joblessness’,
people living in households with very low work intensity), with the result that most of
them have used the indicators which made it easier for them to reach the target (Jessoula
et al. 2014: 14).
In the Netherlands, as well as in other northern member states (such as Denmark and
Finland), in the new cohesion policy programmes social exclusion has been framed first
of all as a matter of unemployment, and tackling labour market exclusion is thus the
priority. Indeed, the Dutch ESF OP 2014–2020 focuses on ‘inclusion through educa-
tion   and employment’, and envisages measures such as labour integration pathways,
training and individual coaching to integrate or reintegrate excluded people (mostly
older workers and youth) into the labour market as the most suitable policy tools to
reduce poverty and foster social cohesion. In this sense, although they receive more than
70 per cent of ESF funding, social inclusion measures promoted through the Dutch OP
have little to do with the distribution or redistribution of material resources and services-­
in-­kind (which are already guaranteed by the national welfare), but somewhat maintain
the Lisbon II welfare-­to-­work orientation.
A very different strategy characterises the Italian case. In fact, somehow breaking
with the national legacy, the social inclusion OP concentrates ESF resources on the basic
objective of meeting EU and national targets on poverty reduction, mostly ­focusing
 The social dimension of Cohesion policy  ­485

NL 23.1% 23.1%

LU 15.4% 15.4% 15.4%

AT 16.7% 11.1% 16.7%

FI 13.3% 13.3% 13.3%

DK 13.3% 13.3% 13.3%

BE 14.3% 9.5% 14.3%

SE 15.0% 10.0% 10.0%

DE 15.0% 10.0% 10.0%

ES 10.7% 10.7% 10.7%

FR 10.7% 10.7% 10.7%

UK 12.0% 8.0% 12.0%

IE 10.5% 10.5% 10.5%

HU 10.0% 10.0% 10.0%

EE 10.0% 10.0% 10.0%

MT 11.1% 11.1% 7.4%

BG 11.1% 11.1% 7.4%

SK 9.7% 9.7% 9.7%

IT 10.7% 10.7% 7.1%

RO 9.4% 9.4% 9.4%

LT 9.4% 9.4% 9.4%

HR 10.3% 10.3% 6.9%

PT 9.1% 9.1% 9.1%

PL 9.1% 9.1% 9.1%

GR 10.0% 10.0% 6.7%

EU28 8.8% 8.8% 8.8%

CZ 8.8% 8.8% 8.8% Social inclusion

LV 9.7% 9.7% 6.5%
Education and training
SI 9.4% 9.4% 6.3%
Employment and labour market
CY 10.0% 6.7% 6.7%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Source:  Based on data from https://cohesiondata.ec.europa.eu.

Figure 30.3 Funds allocation to social cohesion priorities, TOs 8, 9 and 10, in the
Partnership Agreements (% of total funds)

on the creation of an experimental (and conditional on the recipient’s willingness to

participate in activation policies) minimum income support scheme and other measures
oriented at reducing monetary poverty. Since the ESIF cannot be devoted to measures for
direct income support, the ESF would finance conditionality measures (that is, activation
policies), while national or regional resources would finance cash transfers.
Finally, another perspective again can be found in the ESF human capital OP for-
mulated by Romania, where the national public expenditure on social protection is half
of the EU28 average (15 per cent compared to 29 per cent of GDP, respectively),13 the
486  Handbook on Cohesion policy in the EU

80.0%

71%
70.0%

60.0%

44%
50.0%

36%
35%
40.0%

32%
32%
32%
31%
30%
30%
27%
26%
24%
30.0%

23%
22%
22%
22%
22%
22%
21%
21%
21%
20%
20%
20%
20%
20%
19%

20.0%

10.0%

0.0%
FI
LT
LU
SE
SK
SI
CY
PL
GR
PT
HR
IT
UK
HU
EE
RO
ES
BG
BE
MT
AT
FR
DE
DK
LV
IE
CZ
NL
Source:  Based on data from https://cohesiondata.ec.europa.eu.

Figure 30.4 Percentage of ESF allocated to social inclusion, TO9, in the Partnership

Agreements

impact of domestic redistributive policies is significantly lower than in the rest of Europe,
and severe material deprivation is seen as the most relevant source of social exclusion
(European Commission 2011: 119). The programme, in its Priority 4 addressing the TO9,
social inclusion, focuses in fact not only on the inclusion of disadvantaged and deprived
groups (Roma in particular) into the labour market, but also on the improvement of basic
social assistance and health services, including support to the development of the social
economy and the so-­called ‘de-­institutionalisation’ of welfare functions through the direct
involvement of non-­governmental organisations (NGOs) and voluntary associations.
This short overview, albeit partial, suggests how much the practical definition of the
EU inclusive growth priority may vary across member states; and how much Cohesion
policy objectives – in this case social inclusion – may be reframed according to domestic
priorities and needs, possibly in an attempt to strategically circumvent difficulties in the
attainment of Europe 2020 targets. Although the social dimension has been strengthened
in the narrative behind Cohesion policy, and new rules have been set to compel member
states to allocate at least a minimum share of funds to social inclusion, it is still too early
to consider Cohesion policy as a tool which may help the EU to stipulate a sort of ‘social
contract’ with all EU citizens. Rather, as happened in the past programming periods,
the ESIF seem to act as a sort of litmus test which reveals the perceived determinants
of social exclusion in each member state and emphasises the inherent characteristics of
domestic welfare systems.

CONCLUSIONS

Since its launch in the late 1980s, Cohesion policy had been balancing between competi-
tiveness and equity goals, somewhat mirroring the ‘schizophrenic attitude and behaviour
of the EU’ (Saraceno 2013: 1) which, on the one hand, emphasises social cohesion and
 The social dimension of Cohesion policy  ­487

growth and, on the other, through the Stability and Growth Pact ‘compels the member
states to reduce their budget, ignoring the plight of the poor, of the unemployed, of those
needing social services that instead are being reduced’ (ibid.).
With the revision of the Lisbon Strategy in 2005, along with their traditional role
of promoting territorial cohesion through the assistance to less developed regions,
Structural and Cohesion Funds had been explicitly linked to the pursuit of the Union’s
economic priorities, the result being a broadening of the original policy goals which
led to increasing confusion as to the policy mission and priorities. In such a context,
the social dimension has been addressed primarily with reference to labour market
issues (Barca 2009): the analysis of funds allocation in national (and regional) OPs for
the 2007–2013 programming period shows that in fact social inclusion has received
far less attention than increasing employment or – to a lesser extent, and especially in
recently acceded countries – modernising domestic education and health infrastructure.
Paradoxically, the economic crisis of 2008–2009 even emphasised this tendency, leading
to increasing cross-­national differences in a framework of further downsizing of funds
devoted to social interventions.
More recently, with the realignment of Cohesion policy with Europe 2020 priorities,
the social dimension has gained increased visibility (and legitimacy) in the narrative which
has accompanied the formulation of the new ESIF regulation for 2014–2020. The Barca
Report of 2009, as well as other Commission reports on poverty and social exclusion
published around 2010, showed that the risk of poverty had been increasing in several
member states, often affecting people in work, with income inequalities rising indepen-
dently of the level of economic growth. In such a situation, exacerbated by the economic
downturn and by the EU stability rules which limit the spending capacity of member
states, the division of labour according to which the EU has sovereignty over markets,
and member states take care of welfare, is under increasing pressure. If Cohesion policy is
to contribute to the Europe 2020 strategy, it needs to contribute to the new EU inclusive
growth priority, with a further broadening of its goals and related expectations. This is
all the more important for EU institutions and their perceived legitimacy, given the fact
that sometimes European citizens are encouraged by national politicians to attribute the
worsening of their social condition to the European level.
Although several of Barca’s recommendations have been somewhat neglected in the
final formulation of the new regulatory framework for 2014–2020, the changes illus-
trated above show a strengthening of the social dimension. However, a first analysis
of some national OPs has revealed that the problem of social exclusion may be the
object of very different formulations and policy recipes, which depend on domestic
legacies and peculiar needs. This is not necessarily a weakness in itself; after all, both
the place-­based philosophy promoted by the Barca Report and the Europe 2020 targets
acknowledge the necessity of a multidimensional approach to tackle poverty and social
exclusion in order to reconcile territorial diversity and the priorities that prevail in
the EU. However, two key questions remain unanswered: on the one hand, one may
wonder whether and to what extent the increasing relevance of the social dimension in
the EU discourse is consistent with European overall economic strategies. Although
after 2012 EU institutions have taken several initiatives aimed at reinforcing the Europe
2020 social and anti-­poverty dimension (such as country-­specific recommendations on
poverty and the new guidelines on the use of Structural Funds) their effective impact
488  Handbook on Cohesion policy in the EU

remains unclear. For instance, Italy received a specific recommendation on poverty

and social inclusion in 2014, which was not reiterated in 2015, despite the lack of any
relevant measures by the national government during the period.14 In other terms, the
problem of social inclusion is still apparently caught between the entrepreneurial role
of socially oriented EU bodies (for example the Social Protection Committee within
the EU Council and Directorate-­Gereral for Employment, Social Affairs and Inclusion
within the Commission) and the ordinary political bargaining between EU institutions
and national governments.
Against the backdrop of these considerations, a second question arises: whether
(and to what extent) the new governance mechanisms introduced by the 2014–2020
regulatory framework, particularly the ex ante conditionality clauses, will allow EU
institutions – especially the Commission – to coordinate national policy strategies with
EU-­defined goals on social citizenship. It is still too early to provide a definite answer.
The ESIF can certainly be a powerful incentive that encourages member states to pursue
domestic policies aimed at fostering social inclusion and reducing income unbalances;
and yet, the concrete steering capacity of EU institutions should be carefully assessed
in light of the political landscape that will prevail over the next European semesters, and
the overall developments of Europe 2020. Future avenues of research on EU Cohesion
policy should undoubtedly consider these aspects while trying to assess its contribution
to greater cross-­European solidarity.

NOTES

  1. http://eur-­lex.europa.eu/legal-­content/EN/TXT/HTML/?uri5URISERV:xy0027&from5EN.
  2. As is well known, the Lisbon Strategy was an action plan developed in 2000 to improve the economy of
the European Union between 2000 and 2010. Its general objective was to make the EU ‘the most com-
petitive and dynamic knowledge-­based economy in the world capable of sustainable economic growth
with more and better jobs and greater social cohesion’ by 2010. To attain the main EU goals, a new Open
Method of Coordination was designed to help member states in developing their own policies in the fields
of social protection and social inclusion. Such a method focuses on: (a) EU guidelines and timetables
for achieving goals in the short, medium and long terms; (b) quantitative and qualitative indicators and
benchmarks as a means of comparing national practices; and (c) periodic monitoring, evaluation and
peer review organised as mutual learning processes. For more details see http://www.europarl.europa.eu/
summits/lis1_en.htm (accessed 8 November 2015).
  3. Taking inspiration from the original Danish model developed in the 1990s, the EU proposed a ‘flexicurity’
approach in its Employment Strategy in order to find a balance between flexible job arrangements and
secure transitions between jobs, so that more and better jobs could be created. See Zeitlin and Pochet (2005).
  4. Danuta Hubner’s speech to the Committee of the Regions, ‘Delivering Lisbon through Cohesion Policy’,
1 March 2006.
  5. The member states which had acceded to the EU in 2004 or after were able to use the ERDF to fund
housing-­related projects, and all EU member states have been able to do so since 2009 for investments
related to energy efficiency or renewable energy.
  6. See European Commission data on ‘Breakdown by member state and by fund 2007–2013’, https://cohe-
siondata.ec.europa.eu/.
 7. In Italy a ‘Minimum insertion income’ pilot scheme was launched by the centre-­left government in
­1998–2001, but the programme was brusquely stopped after the victory of the centre-­right coalition in
the general elections of 2001. In Greece a ‘Guaranteed Social Income’ pilot programme (i.e. a cash trans-
fer aimed at tackling extreme hardship) had been introduced in late 2014 and implemented in 13 pilot
Municipalities throughout the country for a six-­month period.
  8. The FEAD is worth €3.8 billion in real terms in the 2014 to 2020 period.
 9. The Youth Employment Initiative supports young people not in education, employment or training
(NEET) through measures aimed at integrating them into the labour market.
 The social dimension of Cohesion policy  ­489

10. For an overview of conditionality clauses, see Annex X to Regulation 1303/2013.

11. The analysis of National OPs draws upon the information made available by the European Commission
on the ESF website (http://ec.europa.eu/esf/main.jsp?catId5576&langId5en).
12. Severe material deprivation rate is defined as the ‘enforced inability to pay’ for at least four of the fol-
lowing items: rent/mortgage/utility bills; heating to keep the home adequately warm; to face unexpected
expenses; to eat meat or proteins regularly; to go on holiday; a television set; a washing machine; a car;
a telephone (Eurostat glossary, accessed 8 November 2015 at http://ec.europa.eu/eurostat/statistics-­
explained/index.php/Glossary:Material_deprivation).
13. Eusostat, EU-­SILC (EU Statistics on Income and Living Conditions), 2012.
14. See ‘Overview recommendations by member state 2014 and 2015’, accessed 8 November 2015 at http://
ec.europa.eu/europe2020/making-­it-­happen/country-­specific-­recommendations/index_en.htm.

REFERENCES

Barca, Fabrizio (2009), An Agenda for a Reformed Cohesion Policy. A Place-­based Approach to meeting
European Union Challenges and Expectations, Brussels: European Commission.
Baun, Michael and Dan Marek (2014), Cohesion Policy in the European Union, London: Palgrave.
Begg, I. (2010), ‘Cohesion or confusion: a policy searching for objectives’, European Integration, 32 (1), 77–96.
Busilacchi, Gianluca (2014), Welfare e diritto al reddito. Le politiche di reddito minimo nell’ Europa a 27,
Milano: FrancoAngeli.
Camera dei Deputati (2014), ‘Schema di D.M. in materia di ammortizzatori sociali. Atto del Governo 74’,
dossier no. 71 – Elementi per l’istruttoria normativa, 15 January.
Commission of the European Communities (2005), Communication to the Spring European Council. Working
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Council of the European Communities (1988), Regulation (EEC) No 2052/1988 of 24 June 1988 on the tasks
of the Structural Funds and their effectiveness and on coordination of their activities between themselves and
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185/9.
Council of the European Communities (1993), Regulation (EEC) No 2084/1993 amending Regulation (EEC)
4255/88 laying down provisions for implementing Regulation (EEC) No. 2052/1988 as regards the European
Social Fund, OJEC L 193/39.
European Commission (1993), White Paper on Growth, Competitiveness and Employment, COM(93) 700,
5 December.
European Commission (2010), Communication from the Commission Europe 2020. A Strategy for Smart,
Sustainable, Inclusive Growth, COM(2010) 2020 final.
European Commission (2011), Employment and Social Developments in Europe 2011, Luxembourg: Publications
Office of the European Union.
European Commission (2013a), ‘Cohesion Policy: Strategic Report 2013. Factsheet: Social inclusion and social
infrastructure’, accessed 8 November 2015 at http://ec.europa.eu/regional_policy/sources/how/policy/doc/
strategic_report/2013/factsheet11_social_inclusion_infra.pdf.
European Commission (2013b), ‘Cohesion Policy: Strategic Report 2013. Factsheet: Labour market’, accessed
8 November 2015 at http://ec.europa.eu/regional_policy/sources/how/policy/doc/strategic_report/2013/
factsheet10_labour_market.pdf.
European Commission (2014a), ESF Expert Evaluation Network. Final Synthesis Report: Main ESF
Achievements, 2007–2013, March.
European Commission (2014b), Investment for Jobs and Growth. Promoting Development and Good Governance
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Publications Office of the European Union.
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the Council of 12 June 1999 on the European Regional Development Fund, OJEC L 213/1.
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the Council of 12 July 1999 on the European Social Fund, OJEC L 213/5.
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the Council of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999, OJEU
L 201/12.
European Parliament and Council (2013), Regulation of the European Parliament and of the Council (EU) No
1303/2013 laying down common provisions on the European Regional Development Fund, the European Social
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Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime
and Fisheries Fund, OJEU L 347/320.
Ferrera, Maurizio (2005), The Boundaries of Welfare: European Integration and the New Spatial Politics of
Social Protection, Oxford: Oxford University Press.
Koikkalainen, Petri (2011), ‘Social inclusion’, in Mark Bevir (ed.), Governance, London: Sage, pp. 454–468.
Jessoula, M., M. Matsaganis and M. Natili (2015), ‘Strengthening minimum income protection in Southern
and Eastern Europe? Pressures from within and from beyond’, Paper prepared for the 22nd International
Conference of Europeanists, Paris, 8–10 July.
Jessoula, M., S. Sabato, C. Agostini and I. Madama (2014), ‘The Europe 2020 anti-­poverty arena’, Deliverable
D 4.7 of the FP7 project on Combating Poverty in Europe: Re-­ organising Active Inclusion through
Participatory and Integrated Modes of Multilevel Governance.
Jouen, Marjorie (2010), ‘A territorialised social agenda to guide Europe 2020 and the future EU Cohesion
Policy’, in Erik Marlier and David Natali (eds), Europe 2020: Towards a More Social EU?, Work and Society
Series, Vol. 69, Brussels: P.I.E. Peter Lang, pp. 163–180.
Mendez, C. (2011), ‘The Lisbonization of EU Cohesion Policy: a successful case of experimentalist govern-
ance?’, European Planning Studies, 19 (3), 519–537.
Mendez, C. (2013), ‘The post-­2013 reform of EU Cohesion Policy and the place-­based narrative’, Journal of
European Public Policy, 20 (5), 639–659.
Mendez C., F. Wishlade and J. Bachtler (2015), ‘A new dawn for Cohesion policy? The emerging budgetary and
policy directions for 2014–20’, EoRPA Paper, no. 13/4.
Roe, Emery (1994), Narrative Policy Analysis, Durham, NC: Duke University Press.
Saraceno, C. (2013), ‘The undercutting of the European social dimension’, LIEPP Working Paper no. 7,
accessed 7 November 2015 at http://www.sciencespo.fr/liepp/sites/sciencespo.fr.liepp/files/WP7-­ Saraceno.
pdf.
Zeitlin, Jonathan and Philippe Pochet (eds) (2005), The Open Method of Coordination in Action: The
European Employment and Social Inclusion Strategies, Brussels: PIE-­Peter Lang.
31.  The territoriality of Cohesion policy
Andreas Faludi

INTRODUCTION

On a battle ground called Cohesion policy, member states claiming democratic

­legitimacy confront European Union (EU) institutions articulating common concerns.
They struggle over, first, regulations which member states are subject to; second, target
areas; third, responsibility for implementation. Territoriality – according to Sack
(1986: 19), ‘the attempt . . . to affect, influence, or control people, phenomena, and
relationships, by delimiting and asserting control over a geographical area’ – helps in
explaining why. With their frontiers demarcating the political scope of their rule, states
consider themselves as fully bundled polities (Burgess and Vollaard 2006: 7). Based on
the consent, reaffirmed in periodic elections, of their constituencies, state territoriality
in particular is considered as being absolute. Impacting upon the territories of member
states as it does, it is thus understandable that Cohesion policy gives rise to the above
issues.
Murphy says that the prevailing ‘institutional-­ cum-­political-­
economic emphasis’
in such discussions needs to be augmented by an appreciation of the specific chal-
lenges to the territorial logic of the modern state system. That logic ‘can no longer be
understood in terms of the sovereignty norms . . . because governmental competencies
are no longer concentrated in discrete political spaces organized at a single scale or
level’ (Murphy 2008: 7). Spatial networks cast new light on state territoriality: Taylor
(2005: 704) says, for instance, that globalisation where they dominate ‘heralds a dif-
ferent world spatiality to replace the Westphalia mosaic’, the reference being to the
Peace of Westphalia, the source of thinking in terms of territoriality. Painter (2008:
353) quotes the same author, Taylor, as saying that the state as a territorial container
is ‘­increasingly leaky’.
Dealing with the EU as of then, the European Spatial Development Perspective (ESDP)
intended to pursue what it called ‘spatial cohesion’ (CEC 1999: 56), but member states
assumed control during the drafting process, so that the ESDP in the end respected their
territoriality, the consequence being that spatial cohesion at the scale of the EU remained
a dead letter. Cohesion policy is much more consequential than the ESDP: it distributes
a share of the EU budget to the member states. Net contributors wish to recoup at least
part of their money, and the financial imperative is even greater for net recipients, but
both must observe rules concerning projects to be funded. Although not massive, such
interference from the EU impinges upon state territoriality. For instance, writing about
the draft regulations at the time for 2014–2020, Mendez (2013: 249) indicated Cohesion
policy as implying ‘the reassertion of Commission control over programming’. In refer-
ring also to a place-­based narrative in the same regulations and pointing to its anteced-
ents (OECD 2001; Barca 2009), Mendez broached the issue (which Murphy has also been
shown to have articulated) of the conceptualisation of space. The p ­ lace-­based narrative

491
492  Handbook on Cohesion policy in the EU

implied, after all, ‘spatial balance, integrated development and inclusive governance’,
not necessarily within territories, but in looser, ad hoc spatial configurations. At the
same time, Mendez warned that the proposals still fell short of a coherent place-­based
approach. This also holds for the final version of the regulations, where this approach
comes through most clearly only in ‘territorial instruments’ like Integrated Territorial
Investments (ITIs) and Community-­Led Local Development (CLLD).
Even before ‘place’ became the term of good currency in the literature that it is now,
Cohesion policy targeted areas straddling administrative territories under European
Territorial Cooperation (ETC), among others. Referring also to Chilla et al. (2012: 961)
who questioned whether cross-­border regions have territoriality at all, Varró (2014:
2237) discusses the resistance from nation-­states to such ‘rescaling’. The concern here
is that no single administration is accountable: these cross-­border regions may be no-­
man’s lands. As such they are prone to raise issues of democratic legitimacy (Faludi
2015).
Mendez does not address this problem, but, at least implicitly, Barca (2009) does.
He challenges ‘rent-­seeking local elites’, including elected representatives where they
are more concerned with retaining control than with the promotion of innovation and
growth, and especially so where this implies ceding initiatives to others.
Ryngaert (2008) discusses the development of thinking in terms of territoriality from
the seventeenth century to the French Revolution. According to this author, cross-­border
offences erode territoriality (Ryngaert 2009). So does international environmental law
and litigation (Ryngaert 2014), not to mention copyright law where ‘geo-­blocking’ –
encasing copyright within state borders – is a hot issue (EurActive 2015). The ‘geography
of problems’ (Eichenberger and Frey 2006: 156) requires rethinking territoriality.
The same is true for the selection of areas, projects and partners under Cohesion
policy. It implies the (albeit selective) transfer of competences to the EU level: the
unbundling of territoriality (Burgess and Vollaard 2006). Public discourse continues
nonetheless as if fully bundled state territoriality were the norm. I call this ‘absolutistic
territorialism’, ‘territorialism’ being a term invoked by Scholte (2000: 47). It stands for
macro social space, like that of the EU, being seen as wholly organised into units such as
districts, towns, provinces, countries and regions. ‘Absolutistic’ is meant to indicate that
in principle state territoriality allows for no compromise. This vision stands in contrast
with academic theorising, which sees spaces as being constructed and reconstructed by
actors engaging with them. This mutual engagement of actors implies a negotiated ter-
ritoriality. So outcomes depend upon who is involved. In this chapter, I call this ‘relativ-
istic  constructivism’. Some nation-­states having emerged within living memory remind
us that there is no inevitability attached to the existence of particular states, nor to their
territories. Hopefully by peaceful means, both can become negotiable again, but states
that have emerged recently tend to pursue absolutistic territorialism with great vigour.
The chapter unfolds as follows. The section below, ‘Territoriality Unravelled’, expands
on territoriality. ‘Revisiting EU Cohesion Policy in Terms of Territoriality’ looks at
episodes where absolutistic territorialism and/or relativistic constructivism have been
operating principles. ‘Multilevel Governance and Territoriality’ – the former a term
often invoked in relation to Cohesion policy – considers the conjunction between these
two concepts. ‘Territoriality and Representative Democracy’ raises a point that tends to
be ignored: much as territoriality, constituencies too may have to be unbundled. In the
 493
The territoriality of Cohesion policy  ­

‘Conclusions: Cohesion Policy beyond State Territoriality’, I discuss what this means for
the topic of this Handbook.

TERRITORIALITY UNRAVELLED

Any location may be at the cross-­point of several territorial and/or single-­purpose admin-
istrations, like water boards and school districts each controlling one or more aspects.
This makes for a complex picture. Before his book on territoriality, Sack had already
come to the view that ‘the spatial manifestations of decisions are fragmented’ (Sack
1984:   46). Fragmentation has consequences for state territoriality: short of assuming
that all this complexity can be fitted into some administrative hierarchy, with the national
territory being the largest container, absolutistic territorialism becomes untenable.
The jumble of overlapping spatial configurations of various shapes and sizes also puts
into perspective international relations theory, which is the source of thinking in terms
of territoriality, in particular that of the states. International relations theory makes the
assumption that states have a permanent population encapsulated within their territo-
ries. If it has ever been true, this assumption of states being capable of independently
managing their people and territory in relation to others is no longer tenable (Shaw
2003: 178).
However, state territoriality is entrenched. The ‘Marseillaise’ reminds French citizens
of their forebears defending French territory at the Battle of Valmy. Historical events
are celebrated, such as the 300 Spartans taking a stand against the invading Persians
at the Battle of Thermopylae. Nonetheless, in La fin des territories, Badie (1995) noted
that globalisation, the end of the Cold War and the crisis of the welfare state had raised
issues about the sovereign state and about its territory. He talked also about a market of
identities, with individuals defining themselves as belonging to several spaces, from time
to time prioritising their allegiances (Badie 1996). So the state’s exclusive responsibility
for its territory and population, what here I call state territoriality, is not self-­evident.
Lascoumes and Le Galès (2012) point to the recomposition also of spatial scales, with
the national one losing in importance, and so do other authors. Rejecting wholesale
end-­of-­territory type reasoning, Keating also recognises that such ‘rescaling’ demysti-
fies the nation-­state. The doctrine at its core – self-­determination – is being ‘recast as
the right to self-­government within an interdependent political order’ (Keating 2013:
11–12). With his abiding interest in regionalism, associated for a while as regionalism
has been with a ‘Europe of the Regions’ scenario, he reformulates the argument for
regional statehood in terms of the right to autonomy; but only a relative autonomy, as
one can only be autonomous in relation to other actors. Keating ends his book with
conclusions that could be couched in terms of relativist constructivism: ‘Territory,
as a constitutive element of political order, is always, more or less, contested and in
flux. There is no definitive spatial fix, but territory remains central to the distribution
of power, resources, citizenship, and representation’ (Keating 2013: 194). In terms of
this chapter: the absolutistic territorialism underlying state territoriality is an illusion.
Below, an implication will be discussed which Keating does not draw, one in terms of
democratic legitimacy.
494  Handbook on Cohesion policy in the EU

REVISITING EU COHESION POLICY IN TERMS OF

TERRITORIALITY

Reviewing the development of Cohesion policy, Bachtler et al. (2013) refer to terri-
tory and, where they identify spatial aspects of economic and social activity as one
of its defining features, also to territoriality. Spatial aspects of Cohesion policy which
now figure under the heading of territorial cohesion have concerned me in studying
European spatial planning (e.g. Faludi 2010). Taken seriously, European spatial plan-
ning would mean integrating policies as they impact upon European space, similarly to
what the ESDP meant with ‘spatial cohesion’ and what Waterhout (2008) identifies as
the ­‘coherent EU policy’ storyline of territorial cohesion. However, Bachtler et al. (2013)
point out that there is no appetite for an EU planning competence. They see Cohesion
policy moving from the ‘Europe in balance’ towards what Waterhout labels as the ‘com-
petitive Europe’ storyline reflecting modern regional development theory (see also Barca
et al. 2012; McCann 2015). The aim is ‘to raise the welfare and well-­being of the territo-
ries and people of the EU through growth-­enhancing investment strategies and projects’
(Bachtler et al. 2013: 12).
Now, if this were based on some overall strategy under the ‘coherent EU policy’
­storyline, this would surely improve performance, but it would also enhance the European
Commission’s territoriality. At the same time, ‘dealing with a wide range of different
issues and also operating at different spatial scales . . . ranging from very local to nation-
wide and even cross-­border spatial scales’ (McCann 2015: 52), Cohesion policy affects
state territoriality. Member states would prefer that Cohesion policy provide them with
the opportunity – which otherwise competition policy and the EU presumption against
State aid have foreclosed – for targeting policies within their own territory, according to
their own preferences. What follows are episodes in the ensuing conflict.

Territoriality and Budgetary Politics

The ring-­fencing of the national budget is most important for state territoriality. So, EU
budget contributions – a significant part of which goes to Cohesion policy – represent a
challenge. Cohesion policy also pits net contributors against net recipients. As indicated,
both must submit to a measure of Commission control, but net recipients stand to gain,
whereas net contributors lose: whatever little they get, they can only spend following
common rules and guidelines. Net recipients, albeit under conditions set for them in the
regulations and subsequent negotiations, can do more for their territories than would
otherwise be the case, so they are generally less concerned about the territoriality of
Cohesion policy.
Territoriality in terms of budget control has been an issue since representatives of
the six prospective members of the European Economic Community (EEC) proposed a
common regional policy. Italy with its Mezzogiorno would have been the main benefi-
ciary (Drevet 2008). In the end, governments did not favour this, so the Treaty of Rome
merely referred to the promotion of the ‘harmonious development’ of the Community
territory in the Preamble but foresaw no positive measures. Other than this abortive
attempt to introduce regional policy, the Customs Union, being a major step towards a
Common Market, did of course have implications for territoriality. Although operated
 495
The territoriality of Cohesion policy  ­

by member states, customs control was now performed on behalf of the EU administer-
ing common rules and tariffs. Apparently, this was acceptable as inherent to the pursuit
of a Common Market, but not so the creation of a common regional fund.
Budgetary policy may have played a role then, but it came really to the fore only when
the United Kingdom (UK), together with Ireland and Denmark, joined the Community
and the European Regional Development Fund (ERDF) was created. Not that at this
occasion member states embraced a really joint regional policy; rather, this was the
outcome of bargaining over contributions to the joint budget at the first summit meeting
in Paris in 1972 (Bachtler et al. 2013: 13–14; McCann 2015: 47). It was then that it became
clear that the UK could not benefit much from the Common Agricultural Policy (CAP)
and that it needed to be compensated. An additional expenditure line dealing with indus-
trial decline served this purpose.
Summits, now restyled as European Councils, continue to be occasions for thrash-
ing out the EU budget, with battle lines remaining the same. The member states – the
net contributors more so than the net recipients – wishing to retain control, and the
Commission, now being flanked by the European Parliament wishing to hold more sway
over a larger budget to strengthen common policies, including Cohesion policy (of which
in fact the European Parliament regularly makes an issue). Albeit indirectly, territoriality
is at stake, with final decisions over the Multiannual Financial Frameworks (MFF) being
taken by sometimes blurry-­eyed heads of state and government negotiating into the early
hours of the morning.

Territoriality and the Scale of Intervention

The European Regional Development Fund was to be administered following common

criteria invoked by the Commission which, if taken seriously, would have given the
Commission a form of territoriality. However, what ensued was an incessant strug-
gle between the Commission, trying to insist on the observation of agreed rules, and
member states flouting them where it suited their domestic agendas. Bachtler et al. (2013)
point to more difficulties inherent in the technocratic approach of the Commission,
based amongst others on the NUTS system intended to allow for the comparability of
regions across different EU countries, and in the political approach of government rep-
resentatives pursuing domestic agendas. Like when the French revolutionary government
divided the country into more or less uniform départments (Loriaux 2008), the commis-
sion introduced the NUTS system as an attempt to ease the administration of common
policies. Of course ‘the Cohesion Policy funding allocations are not entirely dependent
on the NUTS [Nomenclature of Territorial Units] regions’ level of development, but also
on institutional and political economy influences’ (McCann 2015: 58).
More pointedly, Bachtler et al. (2013) invoke a metaphor, drawn from Halstead (1982),
of EU Cohesion policy as the tip of the iceberg under which sit the domestic political cli-
mates in the member states. They refer to the example of the UK Prime Minister Edward
Heath, who negotiated UK accession, seeing a Regional Fund as a provider of good press
at home. For opposite reasons, German ministers were, and continue to be, sensitive to
potential reactions in their country to yet more German taxpayers’ money being spent
in other member states. So Drevet (2008) mocked Community regional policy as being
neither regional nor ‘communitarian’. He gave a glaring example where, given the fact
496  Handbook on Cohesion policy in the EU

that France was a net contributor, allocations from the state budget already promised to
Brittany were reduced by the amount earmarked to it from the new European Regional
Development Fund. So the French government treated European regional funds as a
payback to the national budget and not as an incentive to develop a regional policy
according to agreed Community criteria. State territoriality thus trumped the (albeit
implicit) territoriality of Cohesion policy. More coolly, Bachtler et al. (2013: 15) say that
‘the Fund was not an instrument of “Community” regional policy per se, but rather
aimed to support “national” regional policies targeting domestically determined areas’.
There have been reforms, with academic debate raging over whether they meant radical
or modest increments of Community influence. Of more effect was an experimental
Integrated Mediterranean Programme (IMP) introduced under an Italian regional com-
missioner experimenting with bottom-­up and stakeholder participation. An idea must
have been to mobilise local stakeholders and assets against – as another Italian, Barca,
would have it later – entrenched local elites. This was to the liking of Jacques Delors,
Commission President from 1985 to 1995, favouring the involvement of what he called
the forces vives.
Delors took the European Community out of the doldrums at a time when it expanded
to include, after Greece, also Spain and Portugal. A socialist steeped in Roman Catholic
personalism, Delors was a federalist of sorts and also an advocate of subsidiarity. Suffice
to say, his views sometimes put him at loggerheads with member states and with state
territoriality:

Prior to the 1988 reforms, the annual budget procedure and national quotas . . . had led to a
system of re-­funding projects which were selected and introduced by member states. To over-
come this ‘just retour’ logic, the Commission began to develop and finance regional projects on
a more autonomous and experimental basis which became the blueprint of Cohesion Policy’s
method of implementation. (McCann 2015: 48–49)

This not only involved shifts in regional planning thinking but also helped to gener-
ate more awareness of the importance of integrated, ‘bottom-­ up’ approaches and
‘soft’ investments alongside those in infrastructure and enterprises preferred by state
governments.

Territoriality and the Interinstitutional Struggle over European Integration

The conflict over the territoriality of Cohesion policy, although never articulated in such
terms, finally came to a head, as the following episode will illustrate. In his pursuance of
a ‘European model of society’ (Ross 1995), Cohesion policy was one of Delors’s vehicles
of choice for redressing imbalances, enhanced as they were by market integration. So the
first revision of the European treaties, the Single European Act (SEA), recognised eco-
nomic and social cohesion as a core objective. This involved the doubling of the Cohesion
policy budget, a new approach to targeting spending, and an overhaul of its governance
(Bachtler et al. 2013: 19; McCann 2015: 48–49). Through this, the European Community
took another stab at asserting its territoriality, amongst other things by seeking coalitions
beyond the member states. From then on, Cohesion policy would involve not only sub-
state administrations but also private stakeholders, so member states had to share their
territoriality not only with the EU but also with these new actors.
 497
The territoriality of Cohesion policy  ­

Bachtler et al. (2013) discuss intergovernmental versus neofunctionalist explanations

in terms of whether Cohesion policy was a ‘side-­payment’ to Greece, Spain, Ireland and
Portugal for agreeing to the single market with its expected negative consequences for
their economies, or a spillover, that is, a breakthrough in one arena – the single market  –
creating pressure for innovation in others. Certainly, and this relates to the territorial-
ity of Cohesion policy, its governance suggested a supranational explanation. On this,
Bachtler et al. (2013: 20) quote Hooghe, noting that the regulations had been drafted by a
small Commission team isolated from national administrations and taking member states
by surprise, giving the Commission the opportunity to pursue its own agenda. Being able
to draw on high-­calibre expertise had put the Commission at an advantage.
The episode to be discussed – which illustrates the conflict over the territoriality of
Cohesion policy – occurred in the context of a rather minor, and in the end unsuccess-
ful, initiative to strengthen the hand of the Commission by formulating a spatial vision
of Cohesion policy. For this, Commission officials reached out to French and Dutch
national planners. Together, they engineered an informal meeting of planning and
regional development ministers at Nantes, which would eventually lead to the making of
the ESDP.
Presumably at the invitation of his friend, the French minister responsible for regional
policy who was chairing the meeting, Delors attended. Faludi and Waterhout (2002:
36–37) quote from a transcript of what he said. Denying that the Community was a
super-­institution, Delors emphasised the partnership principle and the role of local
knowledge and endogenous development. He also talked about going beyond the classic
approach to regional policy, which focused on disparities, and about a new geography
that was emerging due to globalisation. The conflict over territoriality became evident
when Delors took the Council of Ministers to task for insisting on rigid eligibility
rules for distributing Cohesion policy funds. Gross domestic product (GDP) per capita
adjusted for purchasing power had been the only criterion on which member states could
agree, thus eliminating any element of Commission discretion. In so doing, the Council
had created a statistical straitjacket. Delors added that he was horrified by the thought
of who produced the statistics. Responding to a request from the ministers present for
greater flexibility in the application of the new rules, Delors retorted that they should
not ask of the Commission a degree of flexibility that their ‘grand ministers’ (his own
words) had refused to grant. This was towards the end of Delors’s first term of office.
In his second term, he was to experience what were presumably greater disappointments
concerning the attitudes of member states.

Reasserting State Territoriality in Cohesion Policy

Bachtler et al. (2013) end their discussion of the development of Cohesion policy by
asking whether it was sustainable in the context of a lively general debate about the locus
of decision-­making power. In the early 2000s the debate had already been about clawing
Cohesion policy back into the realm of state territoriality. Its advocates amongst net con-
tributors did not renege on solidarity with new member states, but they wanted the whole
net amount, after subtracting the meagre funds which Cohesion policy recycled to them,
to go to Central and Eastern European countries (CEECs) directly. So, perhaps out of a
feeling of intergovernmental solidarity, they wanted to support their state territoriality.
498  Handbook on Cohesion policy in the EU

Proponents of renationalisation amongst net contributors also wanted to eliminate the

conditions set by the Commission on the use in their countries of what they considered
their own funds; yet another attempt, therefore, to restore state territoriality.
The conflict came to a head in 2005 when the Financial Framework 2007–2013 was
finalised with the UK, still under a Labour government, in the vanguard. Before then,
the issue of who should exercise territoriality had already been evident. The Council
of Ministers had diluted EU objectives by changing the area designation system.
Monitoring and evaluation procedures, conditionality, additionality, the Community
Initiatives (CIs) and partnership arrangements had all been further objects of debate.
Even such apparently technical issues, such as the setting up of European Groupings of
Territorial Cooperation (EGTCs) in the mid-­2000s, was controversial. Merely intended
to facilitate the administration of the funds, the latter could in due course develop their
own dynamics, which is perhaps why member states, some more than others, continued
to hesitate.
Drawing on earlier work by two of the three authors, Bachtler et al. (2013: 26) point
out finally that, responding to pressures coming from New Public Management (NPM),
an ‘audit and bureaucratisation explosion’ is drawing attention away from the delivery
of strategic objectives. Net contributors are once more asking whether they should
jump through the hoops in order to claw back a fraction of the funds they pay into the
Community coffers. This is labelled seditiously as the ‘pumping around of money’, and
refuels the debate on renationalisation, meaning the return of responsibility for regional
policy to nation-­states, thus recouping lost territoriality. One can only agree with Bachtler
et al. (2013: 27) where they say that ‘the origins, nature and evolution of Cohesion policy
provide important insights about the EU as a political project’. Cohesion policy has
stimulated reflections on this around the concept of multilevel governance.

MULTILEVEL GOVERNANCE AND TERRITORIALITY

Cohesion policy had made a dent in the armour of the absolutistic territorialism of
member states. However, as Delors had complained at Nantes, the Commission had
little discretion over the overall allocation of funds to member states as the area allo-
cation system based on per capita GDP had kicked in. Cohesion policy territoriality
came into its own in formulating programmes to be agreed between member states and
the Commission. Beyond this, the identification of projects and partners remained in
the hands of member states. This was based on grounds of subsidiarity but also of the
member states’ responsibility for financial management. Cohesion policy proceeds by
way of a mosaic of projects within and across administrative territories involving ad hoc
and temporary actor-­constellations: relativistic constructivism. The sum of this is the
diffusion of authority in new political forms which, as Hooghe and Marks (2010) state,
leads to a profusion of new concepts for describing and analysing the outcome.
Since the 1990s, Hooghe and Marks themselves have invoked the concept of multi-
level governance. It is often taken to mean, as the Committee of the Regions (2014)
would have it, coordinating actions by the EU, the member states and local and regional
authorities based on partnership and aimed at drawing up and implementing EU poli-
cies. Conzelmann (2008) gives Marks (1992) credit for having formulated the concept.
 499
The territoriality of Cohesion policy  ­

Looking from the other side of the Atlantic at what then still went under regional
development policy, Marks found evidence of ‘network governance’ which neither a
state-­centred (intergovernmental) perspective nor a supranational view of the EU could
explain. A more open-­textured, multilevel perspective was needed to describe what the
Commission, being in continuous dialogue with those in the field, did to strengthen
its position and depoliticise a key and growing policy area. This challenged centralised
decision-­making within member states; in the terminology of this chapter: state terri-
toriality. Naturally, mobilising, as it did, subnational governments to become active in
its Cohesion policy, the Commission met with responses from member states attempt-
ing to control the newly formed relations. The consequence was that the European
Community turned into a new political (dis)order that was multilayered, constitution-
ally open-­ended and programmatically diverse. Marks contrasted this with the classic
Weberian conception of the state controlling the legitimate means of coercion within
the territory under its control: absolutistic territorialism. Set against this classic view,
multilevel governance operates on the basis of a relativistic constructivism. Multilevel
governance is one of those explanations of European integration which give attention,
rather than to ‘grand theories’, to the interactive processes taking place on a daily basis
and constituting the ‘governance turn’ in EU studies (Kohler-­Koch and Rittberger
2006; Gualini 2006).
Marks continued and continues his work with Hooghe. In Hooghe and Marks
(2010:  17) they refine the concept of multilevel governance by distinguishing two types,
implying different forms of territoriality. Type I refers to multilevel polities: formal
authority dispersed across different levels with general-­ purpose jurisdictions, whose
boundaries never intersect. This is the most common view, as invoked also by the
Committee of the Regions. Type II refers to the potentially huge number of specialised
jurisdictions, lean and flexible and task-­specific, and criss-­crossing judicial boundaries,
the implication being a dispersion of territoriality (see also Gualini, Chapter 32, this
volume). This is because those responsible generally have – albeit partial – jurisdiction
over a defined area: a river basin, a school or hospital district, the area of responsibility
of a metropolitan transport authority, and so forth, implying relativist constructivism.
As originally conceived, multilevel governance (MLG) does not use such terms but
they are implied because ‘even though many implementation networks are situated at
the regional or local level, their boundaries often do not converge with administrative
delineations. In addition, they are often of a more ephemeral nature . . . In that sense,
functional need . . . is the key concept’ (Conzelmann 2008: 26). In other words, the ad
hoc formations administering Cohesion policy are of Type II. The Commission and
member states negotiating the Financial Framework (FF) and Partnership Agreements
(PAs) conform to Type I MLG. Between them the two types form a jumble of territories
of various kinds, with an array of permanent or ad hoc institutions, each exercising some
form of territoriality, but never of the comprehensive kind that would befit states.
Hooghe and Marks (2010) are aware of the complexity resulting from their two types
existing side-­by-­side. They invoke other authors talking about ‘fragmegration’ – public
and private actors collaborating and competing in shifting coalitions – and about
‘New Medievalism’. Indeed, Hooghe and Marks point out that in its totality, multilevel
governance resembles pre-­modern government, and thus a form of government as it
existed before the ascent of Westphalian state territoriality. According to Zielonka (2006)
500  Handbook on Cohesion policy in the EU

the EU is indeed a neo-­medieval empire with fuzzy boundaries characteristic of such

configurations.
In the EU, multilevel governance is nonetheless mostly, and too narrowly, conceived in
terms of Type I. Certainly cross-­border and transnational cooperation does not fit this
mould, giving Wedel (2010) reason to think about these forms of cooperation in terms
of the ‘re-­medievalisation’ of Europe. He sees the macro-­regional strategies as further
evidence of this. With an underlying functional logic and framed only loosely in terms of
fuzzy geographic notions – the ‘Baltic Sea Region,’ the ‘Danube Region’ the ‘Adriatic and
Ionian Space’ and the ‘Alpine Space’ – macro-­regional strategies, too, represent Type-­II
multilevel governance (see Gänzle, Chapter 24, this volume). As with the EU, which is
generally said to suffer from a democratic deficit, one may ask where the strategies derive
their legitimacy from (see Piattoni, Chapter 4, this volume).

TERRITORIALITY AND REPRESENTATIVE DEMOCRACY

In a representative democracy, the state’s integrity and the administration’s staying power
rely on the consent of its national constituency. So, state territoriality is where the social
and the spatial come together (Mamadouh 2001) to shape the economic, social and,
importantly, the political map of the world, naturally including that of the EU.
Keen as geographers and, more generally, social scientists are to criticise notions of
territorial units, Varró and Lagendijk (2013) nonetheless conclude from their review of
the literature that ‘territorially embedded’ and ‘relational and unbounded’ conceptions
are, and must be treated as, complementary. As Harrison (2013: 71–72) says, there are
inherited landscapes of sociopolitical organisation alongside ‘ever-­more-­complex con-
figurations, with new conceptual frameworks capable of theorizing the “inherently poly-
morphic and multidimensional” nature of social relations’. Others, too, recognise
complexity but seem to agree that, as the only ones which are democratically legitimated,
territorial authorities may claim ultimate responsibility.
There is of course much discussion about democracy as such, in particular at the level
of the EU, but hardly ever of democratic representation exclusively in terms of territo-
ries. Elsewhere, I criticise the way in which, much as multilevel governance, subsidiarity
too is invoked to bolster claims for more autonomy coming from (in these cases lower-­
level) territorial administrations (Faludi 2013: 1306). The privileging of territories may
have made sense in the past, but the fact that territorial units, in particular states, have
become naturalised makes us believe that there is no alternative. Challenging this belief
implies that elected representatives should relinquish any exclusive claims on territorial-
ity, in other words: abjure absolutistic territorialism.
The staying power of states is great because they have nestled themselves in people’s
minds. The more states reinforce their sense of identity through the institution of demo-
cratic representation, the greater the resilience of state administrations. But the current
Commission Vice President in charge of the ‘digital single market’, Andrup Ansip, who
as Estonian Prime Minister had overseen his country’s great leap forward into the digital
age, stated recently: ‘You can’t use 18th century law for a digital world.’ By the same
token one may ask whether one should use eighteenth-­century ideas about democratic
representation and the associated territoriality of the state. To rephrase: can absolutistic
 501
The territoriality of Cohesion policy  ­

t­erritorialism deal with an interconnected world? We have already seen that Cohesion
policy is operating on the basis of relativist constructivism, with temporary, ad hoc
institutions shaping functional interdependencies pursuing what is now called ‘smart spe-
cialisation’ (McCann 2015). Nonetheless, debates about the European construct and in
particular its democratic legitimacy continue as if there had not been a ‘governance turn’
fuelled, amongst others, by research into the workings of Cohesion policy.
It is also useful to remind ourselves that there is an older form than territorial representa-
tion: functional representation or corporatism (Piattoni 2011). Under the former, individu-
als rather than social groups are represented in aggregated districts, but this only came with
universal suffrage during the French Revolution. It is no accident that this is also when ter-
ritoriality became the dominant principle, but functional representation continues. In fact,
the EU itself was first conceived as functional integration, as a Common Market.
Piattoni’s point, which is not discussed here, is that neither functional nor territorial
claims must be what she calls ‘lumpy’, or non-­negotiable. Rather, party ideologies must
be able to disaggregate them to facilitate compromise. At EU level though, without party
platforms, this is complicated, and so territorial representation is crowding out func-
tional representation. Piattoni also discusses alternative ways of handling the coexistence
between territorial and functional representation under ‘democratic experimentalism’:

Representation is the way in which territorial claims are normally conveyed; participation is the
way in which functional claims are conventionally expressed. The combination . . . secures the
representation of both territorial and functional claims by encouraging the activation of citizens
in two different capacities. Indirectly, as principals of territorially elected agents and, directly, as
functional agents. (Piattoni 2011: 376)

The second approach is multilevel governance, on which Piattoni (2010) has published
previously. The focus here is on the relation, on which Hooghe and Marks have said
relatively little, between Type I and Type II multilevel governance. In their work and also
more generally speaking, relations between Type I levels of government are the dominant
concern. This is insufficient to address ever more prominent functional relations criss-­
crossing administrative boundaries.
At this point it is useful to refer to Switzerland. Reflecting on Swiss practices for artic-
ulating territorial and functional issues on an equal basis, Eichenberger and Frey (2006)
identify, next to territorial administrations at various levels, what they call functional,
overlapping and competing jurisdictions (FOCJ). They are inspired by ‘functionalist
federalism’, which in turn builds on the economic theory of federalism. Areas of respon-
sibility and the powers of self-­governing FOCJ are defined by their tasks.
Their example is Canton Zurich with 1.2 million inhabitants in 171 territorial commu-
nities, and with 174 more units responsible for wastewater management and purification
plants, cemeteries, hospitals and regional planning. Being largely satisfied, the population
usually defies attempts, which do occur, by cantonal bureaucracies and politicians to suppress
them. Not without a certain pride, the authors claim: ‘The example of Switzerland – which
is generally considered to be a well-­organised and administered country – ­demonstrates that
a multiplicity of functional jurisdictions under democratic control is not a theorist’s wishful
thinking but has worked in reality’ (Eichenberger and Frey 2006: 168).
FOCJ – for instance school districts – may extend over various overlapping geo-
graphic areas, sometimes even competing with each other. After all, individuals and/or
502  Handbook on Cohesion policy in the EU

communities may choose from which to obtain specific services. Importantly, individuals
and/or communities also have a say in running FOCJ. The management can be held to
account also in that the members, be they individuals or whole communities, have the
right to exit wholly or in parts, thus mimicking market competition. Each FOCJ is:

a democratic governmental unit with authority over its citizens, including the power to tax.
According to the two types of overlap, two forms of membership can be distinguished. First, the
lowest political unit . . . is a member, and all corresponding citizens automatically become citi-
zens of the FOCJ to which their community belongs . . . Second, individuals may freely choose
whether they want to belong . . . but while they are citizens, they are subject to its authority.
(Eichenberger and Frey 2006: 160–161)

FOCJ amount to Type II multilevel governance: units catering for the same function  –
as for instance is the case with school districts, education – may overlap. As they have
no monopoly over a certain area of land, the concept of FOCJ ‘differs completely from
archaic nationalism with its fighting over pieces of land. It also breaks with the notion
of federalist theory that units at the same level may not overlap’ (Eichenberger and Frey
2006: 159). To prevent, not only governments, but also the governing bodies of FOCJs
from forming monopolies, the authors ask for constitutional guarantees for the right
to establish and operate new FOCJ. Once established, higher-­level political units must
finally reduce the taxes of those citizens who become their members.
These are not mainstream views but they show that territorial representation need not
enjoy the monopoly on producing democratic legitimacy that it is usually granted. The
situation is reminiscent of ‘directly deliberate polyarchy’ which Cohen and Sabel (1997:
313–314) claim has ‘problem-­ solving capacities useful under current conditions and
unavailable to representative systems . . . collective decisions are made through public
deliberation in arenas open to citizens who use public services, or who are otherwise
regulated by public decisions’. As indicated, multilevel governance, the governance turn,
the democratic experimentalism referred to by Piattoni (2011; see also Sabel and Zeitlin
2010), but also studies of the ‘comitology system’ preparing and managing many an EU
policy, concern the heterarchical character of new governance. Comitology in particu-
lar represents an ‘uneasy fit with the idea of principal–agent democratic accountability
through parliamentary representation’ (Smismans 2008: 875). As Joerges and Neyer
(1997: 621) say, deliberative governance structures indicate how the democratic deficit
could be reduced where ‘majoritarian models of democracy are primarily suited for
decision-­making at the level of the nation-­state and face serious normative difficulties
when adapted to the European  level’. This is also true for Cohesion policy and underpins
the case against absolutistic territorialism based on a majoritarian model operating within
fixed and closed territories; while it favours relativistic constructivism, allowing for, indeed
encouraging, the reconfiguring of spatial relations to suit the geography of problems.

CONCLUSIONS: COHESION POLICY BEYOND STATE

TERRITORIALITY

Eichenberger and Frey state explicitly that their Swiss example has a bearing on the EU.
They sympathise with views seeing it as a new type of governance and of territoriality,
 503
The territoriality of Cohesion policy  ­

pointing out that the EU started as a functional free-­trade area. ‘Neofunctionalists’ have
argued that this would spill over into other areas of policy until the EU approximated
a federal construct with an abundance of rules which newcomers would have to accept
lock, stock and barrel. Eichenberger and Frey suggest that members and non-­member
states should be allowed to establish less demanding FOCJ instead. This ‘goes beyond the
proposal for a multispeed integration of some “chosen” countries into a “core Europe”’
(Eichenberger and Frey 2006: 170). In terms of territories and territoriality, the picture
would be, on the one hand, national territories, each with borders enclosing ‘absolute’
spaces; and on the other, a multitude of overlapping spaces constituted not by their
borders, but by networks. Think for instance of sea ports which, without being contigu-
ous, are enmeshed in relational networks. Under ETC, Cohesion policy is rich in exam-
ples of such transnational networks constituting relative spaces.
FOCJ can exist at all levels of government. Member and non-­member states can
avail themselves of the figure of FOCJ for managing their relations, and so can com-
munities and regions. What would distinguish FOCJ from present formations would be
their elected governing bodies. Examples already exist, not only in Switzerland: in the
Netherlands, too, water boards are democratically legitimated through elections.
Eichenberger and Frey were writing before the EGTC came on the statute book with
the idea of facilitating the management of cross-­border, transnational and interregional
cooperation under Cohesion policy. It is worth considering what it would mean for them
to become FOCJ with elected governors dealing with whatever issue they liked, always
subject to the consent of a membership willing to observe the rules it sets and to pay its
dues.
This need not be limited to ETC, which is where EGTCs can be found now. The
management of projects co-­financed under Cohesion policy could be entrusted to them
constituted as if they were FOCJ. Thus, assorted administrative units, semi-­public insti-
tutions and also any firms involved would be members with voting rights and of course
also obligations, including the provision, as is already the case with Cohesion policy
projects, of their own resources. Thus constituted, each and every EGTC, including
those resulting from citizen initiatives, would be allowed to compete for Cohesion funds.
There would above all be an independent supervision ensuring fair and open selection
of proposals. After all, Eichenberger and Frey (2006: 178) warn about FOCJ: ‘Even if
political competition works well to the advantage of citizens, established politicians who
see their power reduced will make an effort to block or at least undermine the concept.’
Apparently true for Switzerland, how much more would this be true for beneficiaries of
absolutistic territorialism fighting back in the EU?

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32. Multilevel governance and multiscalar forms of
territorialisation
Enrico Gualini

INTRODUCTION

This chapter discusses European Union (EU) Cohesion policy in relation to the con-
struction of new policy spaces in Europe. The contribution of Cohesion policy to
breaking the mold of ‘bounded territoriality’ is customarily associated to its role in
developing supra-­and transnational territorial policies. Through the ‘regionalisation’ of
EU policies and the ‘Europeanisation’ of regional policy, Cohesion policy has contrib-
uted to a relativisation of the nation-­state’s territorial sovereignty and has established
a system of incentives – elements of positive integration – promoting cross-­border
policy-­making and new forms of transregional and transnational space-­making. Its con-
tribution to the ‘invention of regions’, however, has extended well into national states,
affecting the logic of territoriality of state policies and inducing phenomena of de-­and
re-­territorialisation.
The new institutional and policy rationales introduced by Cohesion policy have defined
new modes of socio-­spatial structuration. This thesis, based on the theoretical assump-
tion that socio-­spatial structuration is a co-­constitutive dimension of socio-­political
regulation, is addressed in three steps. First, European integration research and multilevel
governance are discussed with regard to their merits and limitations in understanding
emergent spatial configurations of governance in Europe. Second, a heuristics of change
in state territoriality is addressed which combines the analysis of multilevel governmental
relations and of multiscalar governance practices. Finally, related concepts are combined
in analysing paradigmatic cases of developments in national state territorial politics, in
which EU Cohesion policy acts as a factor for practices of de-­and re-­territorialisation
and the constitution of new policy spaces.

COHESION POLICY AND MULTILEVEL GOVERNANCE:

CONCEPTUAL AND ANALYTICAL IMPLICATIONS

In which sense has Cohesion policy contributed to defining new modes of socio-­spatial
structuration in Europe? The regionalisation of Cohesion policy, introduced by the 1988
Structural Funds reform and formalised in the Maastricht Treaty on European Union,
relied on the assumption that short-­ term EU financial support should be targeted
at long-­term improvements in socio-­economic conditions by enhancing endogenous
resources and institutional capacity at the territorial levels involved. This implied, in the
first place, envisioning regions as active policy-­making units, acting both as programming
agents and as managing authorities vis-­à-­vis the Commission. Secondly, it introduced

506
 Multilevel governance and multiscalar territorialisation  ­507

a practice of multiannual programming requiring funding to be allocated according to

strategic regional development frameworks. Thirdly, it promoted an integrated develop-
ment approach, based on territorial coordination of multisectoral lines of programming.
Key to this was the introduction of ‘territorial criteria’ in the eligibility and imple-
mentation rules of Cohesion policy. Eligibility criteria, on the one hand, emphasised
‘objectively’ defined socio-­economic conditions at given territorial levels, reducing the
scope for intergovernmental distributive bargaining. Implementation criteria, on the
other hand, entailed a system of incentives promoting the integrated territorial mobilisa-
tion of material and immaterial resources through a renewal of regional policies, based
on regulatory inputs as well as on epistemic resources like the diffusion of new regional-
ist policy concepts. Moreover, Cohesion policy pursued an ‘EU added value’ consisting
in the mainstreaming of EU policy principles in regional development policies of the
member states. Thus, Cohesion policy rules – including additionality – significantly
promoted regional experiments in integrated development programming and area-­based
applications of subsidiarity and partnership principles within governance arenas geared
to the involvement of regional actors.
In sum, Cohesion policy has thus influenced the nature of regional policies along three
main dimensions:

● strengthening regional authorities – including their institutionalised representation

in the Committee of the Regions;
● promoting integrated regional development, by activating endogenous potentials
and by mobilising regional development coalitions;
● and, last but not least, fostering the ‘invention’ of regions as new spaces and arenas
for cooperation through ‘experimental’ territorial programmes at the cross-­border
and transnational level.

Cohesion policy played an important role in mediating between regionalisation as a

process ‘from above’ and regionalism as a process ‘from below’, favouring the building of
new institutional capacities, interest coalitions and collective commitments for regional
development: in short, by contributing to the emergence of truly regional policy arenas.
This process, however, has been anything but linear or uncontested. It has in fact devel-
oped along significant changes in state agency and institutions, involving struggles for
redefining the rationale of state territoriality. Among the interpretive frameworks devel-
oped within European integration studies, multilevel governance represents an attempt
precisely at addressing the development of forms of governance – most notably in the
EU – across territorial levels and policy arenas, challenging conceptions of the state as an
instance of government which relies on hierarchical rule and authoritarian coordination
in a system of mutually exclusive territorial jurisdictions.

Multilevel Governance as ‘Vertical’ Rearticulation of Intergovernmental Relations

In general terms, multilevel governance (see Bache and Flinders 2004; Piattoni 2010) is
a specification of the concept of governance (Stoker 1998; Jessop 1995; Le Galès  1998;
Pierre and Peters 2000; Gualini 2010), intended as the pursuit of collective action
goals through the combination and coordination of different (governmental or
508  Handbook on Cohesion policy in the EU

­ on-­governmental) actors and (institutional and non-­institutional) forms of regulation.

n
Specifically, multilevel governance refers to processes of policy-­making developing across
various jurisdictions. As such, it highlights, in structural terms, the constitution of new
relationships between levels of governmental jurisdictions and, in process terms, the
forms of involvement of non-­governmental actors within this framework of relation-
ships. Important references for multilevel governance are policy-­making practices in
cooperative federal systems and, in particular, the quasi-­federalist mode of policy-­making
developed by the EU in certain key policy areas, most notably EU Cohesion policy. In
this respect, multilevel governance has been interpreted mainly as a vertical rearticula-
tion of intergovernmental relations through the systematic involvement of governmental
actors at different levels, in a framework that redefines, and partly challenges, nested
institutional hierarchies. The primary reference is here to ‘levels’ as territorial jurisdiction
defined by specific competencies within the sovereign territorial national states. To this,
multilevel governance adds an emphasis on the increasing relevance of supranational and
subnational institutions which constitute new levels of influence and participate in defin-
ing decision-­making arenas, processes and outcomes, which to a certain degree challenge
the sovereignty of state politics.
The concept of multilevel governance has been applied to research on EU policies
which promote a new role for lower-­level governments in decision-­making and imple-
mentation, in both the ‘ascending’ and ‘descending’ phases of European policy-­making.
Multilevel governance has served as a framework for analysing the way EU policies,
promoting active measures of ‘positive integration’ (see Scharpf 1999) such as Cohesion
policy, have fostered dynamics of institutional innovation involving new forms of rela-
tionships between regional, national and supranational governments. Accordingly, multi-
level governance interprets the way EU policies affect nation-­states and their subnational
articulations in a different way than state-­centric theories of European integration do. It
views the increasing independent influence of supranational institutions and the mobi-
lisation and empowerment of subnational governments as part of a dynamic of power
dispersion in the European Union, involving a relative shift in regulatory power towards
the supranational level, and in decision-­making and operational capacity to the subna-
tional levels (Hooghe 1996; Marks et al. 1996; Hooghe and Marks 2001). This leads both
to a vertical readjustment of relations among territorial, general-­interest institutions, and
a horizontal dynamic involving neo-­corporatist and informal, network forms of special-­
interest representation in the decision-­making and implementation of development pro-
cesses (Heinelt and Smith 1996; Benz and Eberlein 1999; Kohler-­Koch and Eising 1999).
In this emergent European ‘post-­national state’ (Bulmer 1994; Caporaso 1996), rela-
tionships between levels of state authority – particularly the national and local state – are
seen as interconnected rather than hierarchical, defined by ‘less of a formal principle,
implying ongoing interactions among different levels above and below the nation-­state’
(Caporaso 1996: 47).
Accordingly, Europeanisation as institutional change is no more seen as occurring
exclusively by design ‘from above’. The strategic interpenetration of domestic and supra-
national politics gives rise to multilevel negotiations. Regionalism and localism, under
such conditions, can be seen as outcomes of pressures ‘from above’ and ‘from below’
(Keating and Hooghe 1996), which define new unstable balances of power as well as the
need for new institutional responses. While regional governance actors enter EU policy
 Multilevel governance and multiscalar territorialisation  ­509

arenas, national state authorities move from ‘authoritative allocation and regulation
“from above” to the role of partner and mediator’ (Kohler-­Koch 1996: 371) of multi-
level negotiations. This represents a chance for policy-­driven institutional innovations
to emerge below the threshold of constitutional interventions (Kohler-­Koch and Eising
1999; Héritier 1999).
This way, multilevel governance theories have introduced new perspectives on insti-
tutional adaptation and change in European studies. Research on Europeanisation,
originally intended as the domestic impact of supranational policies, has in its turn
increasingly focused on the multiplicity, non-­linearity and variation of modes of adap-
tation and change involved in the creation of European political spaces (Green Cowles
et al. 2001; Stone Sweet et al. 2001; Featherstone and Radaelli 2003). As a result, multi-
level governance and Europeanisation research express a growing interest for the embed-
ding of supranational pressure to change into domestic policy discourses and practices
– national and subnational – and for their interaction with endogenous factors of change,
capable of accounting for ‘inside-­out’ or ‘bottom-­up’ processes of Europeanisation, pos-
sibly leading to unexpected consequences in terms of the impact of supranational poli-
cies on the political-­institutional system and on its innovation (Radaelli 2003; Gualini
2004a) (see Chapter 7, this volume).

Multilevel Governance as Horizontal Reconfiguration of Policy Arenas

Multilevel governance, in addition, implies extended patterns of participation across the

public–private threshold. A case in point is the promotion of ‘horizontal subsidiarity’
and ‘extended partnership’ as a requirement for EU Cohesion policy programmes; a
tendency interpreted by scholars as a sideways process of power dispersion affecting not
only vertical intergovernmental relationships but also the constitution of governance
arenas involving representatives of civil society and the markets.
A significant expression of claims for involvement of market and civil society in public
policy-­making represented by regionalist-­ localist movements as well as by state-­ led
responses emerged in Europe from the 1980s (Keating 1997; Sharpe 1993; Le Galès and
Lequesne 1998). Cohesion policy is paradigmatic of the connections between the struc-
tural dimensions (decentralisation, devolution and constitutional change in state–local
relationships) and the process dimensions of governance (involvement and mobilisation
of societal and economic interests on a territorial basis in the framework of action-­
oriented forms of partnership, for example, Structural Funds programming and imple-
mentation). Access by subnational governments and by representatives of local societies
to policy-­making – in particular in policy areas where a significant role is played by
supranational institutions – rearticulates relationships in terms that are not understanda-
ble exclusively in vertical (relatively hierarchical) intergovernmental terms, but imply new
opportunity structures for access and influence in horizontal terms, linking interests and
actions of diverse societal sectors, public and private, and of different institutional levels,
national and supranational, in new negotiated ways (Kohler-­Koch 1996; Piattoni 2014).
As a result, regional studies have moved towards understanding regionalisation
­phenomena in light of changes in state policy rationale. Rather than assuming a ‘Europe
of the Regions’ as a given institutional order (see Chapter 13, this volume), attention
has been directed towards emergent institutional innovations at a plurality of territorial
510  Handbook on Cohesion policy in the EU

levels, with a focus on both micro mechanisms and macro effects involved in processes of
state restructuring.
Despite an appreciable non-­ontological attitude promoting new lines of inquiry into
dynamics of interest representation and mutual adjustment in the EU, multilevel govern-
ance research has barely addressed emergent institutional patterns of territorial govern-
ance in Europe. Its understanding of regionalisation in the EU, for instance, has been
mainly framed as a political-­institutional process of jurisdictional autonomisation (see
Benz and Eberlein 1999): processes of regionalisation ‘from above’ and ‘from below’
have been analysed in terms of the mobilisation of regions as social-­political actors
(Kohler-­Koch and Eising 1999), pointing to new practices of intergovernmental relations
(Grande 1996; Heinelt and Smith 1996) and to the new role of national and subnational
governments as their ‘gatekeepers’ (Bache 1998). The prevailing intergovernmental bias,
however, has kept this research entangled in a ‘territorial trap’ (Agnew 1994). What
has remained largely unexplored is the emergence of horizontal or sideways processes
of power dispersion, leading to experimental institutional forms of state restructuring
beyond territoriality and to the constitution of new spatial governance configurations.
Combining vertical and horizontal dimensions of change appears as a logical implica-
tion for multilevel governance. However, this approach raises questions about multilevel
governance’s analytical consistency and theoretical adequacy. Arguably, reference to
levels in multilevel governance research needs to encompass not only institutionalised
governmental-­jurisdictional levels – traditionally defined by a logic of nested hierarchical
and mutually exclusive relationships among bounded territorial units – but also decen-
tralised levels or arenas of decision-­making that are conceivable as standing aside or even
outside of hierarchical governmental structures (such as autonomous administrative
agencies or non-­governmental organisations, associations and interest representations).
In this sense, two issues arise about the meaning of ‘level’. On the one hand, the differ-
ent nature of these entities and the independence of the latter from forms of hierarchical
nesting make it impossible to directly comprise them all under the notion of ‘level’. On
the other hand, while reference to territoriality – which seems a necessary condition for
a meaningful reference to ‘multilevel’ forms of governance – is still pertinent, insofar as
most sideways transfers and delegations of power and competencies are embedded in,
or related to, defined territorial jurisdictions, their spatial features differ from a bounded
conception of territoriality. Phenomena of horizontal extension of governance arenas –
as defined above – are in principle characterised by their potential challenge to the ‘juris-
dictional integrity’ (see Skelcher 2005) of territorial levels. Thus, reference to levels seems
inadequate to grasp the territorial nature of governance practices.

Multilevel Governance and Emergent Spatial Governance Configurations

In addressing these issues, the notion of multilevel governance has been extended to more
general shifts in governing activity in the jurisdictional as well as in the non-­jurisdictional
domain. The latter take the highly diverse forms of ‘informal governance’ arenas, char-
acterised by flexible, ad hoc, non-­exclusive and sometimes overlapping arrangements –
including transnational cooperation (Christiansen and Piattoni 2003) – but often also by
problematic relationships with existing territorial jurisdictions and with requirements of
democratic legitimacy and accountability.
 Multilevel governance and multiscalar territorialisation  ­511

The distinction among two fundamental types of governance (Hooghe and Marks
2003) addresses this issue by extending the classic question of multilevel governance –
that is, the extent to which authority for a particular territory is dispersed across multiple
jurisdictions – so as to capture variations along further dimensions such as: changes in
the relationship between territorial jurisdictions; changes in their scope and purpose;
changes in their statute and nature; and the extent to which decision-­making has shifted
away from formal authoritative institutions to public–private networks. According to
their distinction, Type I governance encompasses phenomena characterised by dispersion
of authority to a limited number of non-­overlapping jurisdictions at a limited number
of levels, bundling authority in quite large and relatively stable packages; while Type II
encompasses a more complex, fluid patchwork of innumerable, overlapping jurisdictions,
that are lean and flexible, often non-­governmental and even non-­territorial, possibly rear-
ranged into functionally specific spatial and organisational domains as specific demands
for governance change (see also Chapter 31, this volume).
Of interest here is the nexus between changing institutional and policy rationales and
the emergent spatial configuration of governance, which reflects a substantial change in
territoriality as a principle of state regulation. Type II governance emerges from the need
for policy practices defined ad hoc for specific tasks, most notably when these cannot
be addressed efficiently and/or effectively by traditional governmental structures. Type
II governance may in this sense refer both to supra-­or transnational and to subnational
governance arrangements. What is characteristic of them is the by-­passing of traditional
competence barriers among institutions and organisations which are liable to raise trans-
action costs, coordination burdens and potential for conflict and, by this, to constrain
flexible, timely and effective responses.
In ideal-­typical terms, territorial structures and organisations reflecting Type II gov-
ernance do not fit a ‘nested’ territorial articulation of the ‘Westphalian’ state – even if
state structures may be the primary actors of their constitution. On the contrary, Type
II governance forms cross-­cut and overlap Type I jurisdictions in modes that may be dis-
orderly and chaotic as a result. Type II governance therefore delineates the picture of a
‘centre-­less’ society, in which policy actors play simultaneously in different arenas, whose
borders are mobile and whose membership becomes flexible and non-­exclusive. This
may lead to mixed affiliations which make it difficult to establish a clear attribution of
tasks, competencies and accountability obligations. Authors such as Le Galès (1998) and
Skelcher (2005) talk in this respect of ‘polycentric’ governance, in which the multiplic-
ity, flexibility and overlapping of jurisdictions of different kinds create new conditions
for exchange and cooperation, but also new challenges for the integrity of territorial
institutions.
Notwithstanding its contribution, the distinction between multilevel governance types
falls short of generating systematic inquiry into related changes in spatial configurations.
In particular, it falls short of advancing explanations for sideways governance practices
that reach beyond mere functional arguments. A more differentiated analytical frame-
work is needed for inquiring into governance processes not as phenomena of the disper-
sion of state power towards functional non-­territorial organisations, but as phenomena
involving a redefinition of territoriality. This requires inquiring into forms of political
regulation involved in emergent multilevel systems of relationships.
512  Handbook on Cohesion policy in the EU

Multilevel Governance Types: Rationales, Mechanisms and Arrangements

Categorisations of multilevel modes of decision-­making and coordination point to the

emergence of policy-­making rationales alternative to hierarchy. Many such contribu-
tions have emerged from European integration studies, originating from the search of
alternatives to the mix of hierarchy and intergovernmental negotiations represented
by the Community method, and by the problems of what Fritz Scharpf has called the
­‘asymmetric political economy’ of EU decision-­making. In his well-­known discussion
of the prospects for democratisation of the European polity, Scharpf frames the issue
in terms of a trade-­off between input-­oriented and output-­oriented legitimacy (Scharpf
1999). While output-­oriented forms of legitimacy – represented by functional and task-­
specific Type II forms of governance – express a reaction against constraints to policy
effectiveness, in Type I multilevel systems they threaten to blur conditions for account-
ability typically granted by general-­purpose, multi-­task jurisdictions in a hierarchical and
nested framework of representative-­democratic institutions.
Inquiry into these aspects stems not only from the normative pressure towards
democratisation of governance in the EU which emerged in the 1990s (CEC 2001), but
also from a more differentiated scholarly view on actual processes of European policy-­
making. Research on Europeanisation as ‘domestic change’, in particular, has underlined
the variety of mechanisms involved in determining forms of pressure to domestic adapta-
tion and change in response to supranational inputs that cannot be reduced to issues of
‘goodness of fit’ (Radaelli 2003: 45; Knill and Lehmkuhl 2002; Knill and Lenschow 2003;
see also Gualini 2004a). Attention has been drawn in particular to new instruments, that
is, to regulatory approaches introduced in EU policies since the 1990s which, while defin-
ing standards for mandatory convergence, leave details for achieving convergence to the
discretion of lower-­level actors and to more flexible modes of formalisation in bilateral
agreements, including various forms of negotiated contracting, performance contracts
and competitive bidding (Benz 2004). The Open Method of Coordination, introduced
as part of new measures for ‘positive integration’ by the Amsterdam Treaty, went even
further in ‘accommodating diversity’, pursuing the rationale that member states should
define policy targets of ‘common concern’ while leaving actual policy choices for their
implementation to national or subnational actors (Scharpf 2001). These new regulatory
mechanisms place the burden of implementing policy targets – and hence of devising
context-­specific modes and trajectories of adaptation – on lower-­level actors. Such pro-
cesses are usually referred to as regulatory competition and self-­regulation, by which
alignment to (exogenous) EU goals occurs within a process of (endogenous) definition
of regulatory means.
This perspective bears relevance for understanding multilevel governance relationships
in a way that rejects a zero-­sum view of involved relationships of power. European policies
– and Cohesion policy among them – do not necessarily only call for ‘isomorphic’ adap-
tation within a given set of preferences, but may also affect the interpretation of policy
dilemmas, altering the perception of what is at stake, and change preferences (Radaelli
2003: 36). Europeanisation, in brief, may modify the actors’ strategic relational behavior
and the nature of interactions and policy arenas. Moreover, in a multilevel governance
environment, actors are in principle involved at all institutional levels, and this makes
connections and relationships possible from which new resources and o ­ pportunities may
 Multilevel governance and multiscalar territorialisation  ­513

emerge (Kohler-­Koch and Eising 1999). This opens up to the consideration of the genera-
tive dimension related to the experimentation of new policy rationales in non-­bounded
territorial contexts.
The mechanisms mentioned represent variations on the ‘shadow of hierarchy’ theme,
whereby – in Scharpf’s (1999) terms – a shift occurs from modes of ‘hierarchical decision’
towards a more negotiated order. In principle, while all of them imply a certain degree
of coordination through intergovernmental negotiation, Type II forms of governance
are typically characterised by a rationale of decentralised responsibility in which more
room is given to ‘local’, place-­based and context-­specific forms of mutual adjustment and
joint decision-­making. Along this line, some contributions have discussed such Type II
governance arrangements by relating specific shifts in policy rationales and mechanisms
to distinctive political-­institutional arrangements. Examples are Schmitter’s (1996) or
Skelcher’s (2005) distinctions between different modes of governance in supranational
or subnational contexts. While such contributions refer to emergent spatial configura-
tions related to de-­territorialisation processes, they do not make them as their object of
research, however, treating them as residual phenomena. A heuristic strategy to fully
appreciate such new spatial configurations would require, instead, moving beyond a mere
dichotomic juxtaposition of types, and analysing them relationally along a third dimen-
sion represented by their variegated combination with specific forms of socio-­spatial
structuration (see Jessop et al. 2008).

EMERGENT FORMS OF TERRITORIAL GOVERNANCE:

MULTILEVEL-­MULTISCALAR IMPLICATIONS

A key dimension of Type II forms of governance in a multilevel system is the co-­

constitutive relationship between new institutional rationales and new socio-­ spatial
configurations. What is required in order to address it is a heuristic of the emergence of
new socio-­spatial configurations which highlights them as a crucial dimension of state
restructuring.
New socio-­spatial configurations of state agency affect traditional understandings of
territoriality. They call for a renewal of the conceptual vocabulary of processes of socio-­
spatial structuration. While its most common expression is the revision of concepts such
as ‘region’, ‘place’ and ‘locality’ (Keating 1997; Paasi 2001; Massey 2005), recent debates
on the notion of scale emphasise the need for concepts less dependent on a bounded con-
ception of space and territoriality. Critical geographers concerned with change in the role
of the state as a site and as an actor of socio-­economic regulation, in particular, adopt
a social-­constructivist perspective on the production of scale as a dimension of socio-­
political agency. Key to this attitude is the rejection of assumptions on scale ‘as an onto-
logically given category’ (Marston 2000: 220). Contrary to an idea of space as already
divided up in units of bounded and internally coherent spatial systems, socio-­spatial
structuration (its very nature, duration, identity and effects) is at stake in socio-­political
interactions and relations (Delaney and Leitner 1997; Massey 2005).
New conceptualisations of scale inquire into the definition of scalar relations in rela-
tion to concrete practices of socio-­spatial structuration (Paasi 2004: 538). Scale is not
seen as a pre-­given hierarchical framework for ordering the world, but as a contingent
514  Handbook on Cohesion policy in the EU

outcome of structural forces and practices of human agents. Scale is ‘socially produced
as simultaneously platform and container of certain kinds of social activity’ (Smith
1995:  228); an outcome of co-­evolutive dynamics involving shifting hierarchies and new
articulations of socio-­spatial practices (Brenner 2001: 591).
Such conceptualisation leads to a distinctive focus on process and, more specifically,
on processes of scalar change or rescaling. Furthermore, it calls for avoiding a narrow
view of the politics involved in scaling processes centred on formal state structures and
governmental institutions. Processes of rescaling are by no means restricted to the alloca-
tion or reallocation of formal state powers: they are part of a restructuring of modes of
governance and regulation that involve shifts in the relationship between state and society
and their influence on spatial relations.
Accordingly, critical geographers are interest in the ‘uneven waves of territorialization,
deterritorialization and reterritorialization’ in state restructuring processes (Jessop 2000:
326), as concrete expressions of the need for the ‘mobilization and/or construction of
scale-­specific state policies and institutions’ and for the ‘institutional infrastructure’ of
territorial policies to be ‘systematically reconfigured’ (Brenner 2000: 321, 337). Under
such conditions, governance becomes an emergent, experimental practice, in which a
redefinition of governance scales is co-­constitutively implicated (see Jessop 2002: 199).
The conceptual adequacy of multilevel governance to address phenomena of de-­and
re-­territorialisation is relativised, in this respect, since changes in governmental relation-
ships as implied by reference to levels are only one side of the phenomena involved. What
is highlighted is, rather, the complementarity between changes in multilevel government
and emergent of forms of multiscalar governance (Jessop 2004), involving a rearticula-
tion of spatial governance arenas beyond nested territorial hierarchies, defined by a
variable combination of modes of socio-­spatial structuration (see Dicken et al. 2001;
Sheppard 2002; Jessop et al. 2008).
Multiscalarity – as a variegated articulation of scalar forms of socio-­ spatial
­structuration  – is related to the increasing importance of practices of metagovernance
(Jessop 2004, 2009). In multilevel systems where the (vertical) articulation of intergovern-
mental practices goes along with variation in the (horizontal) articulation of policy arenas
and modes of regulation, new multiscalar governance practices emerge. A defining feature
of related governance arenas is that they entail more than a single dominant logic of socio-­
spatial structuration, instead being articulated in different and often coexisting forms (see
Jones and Jessop 2010). They require therefore new ‘meta’ forms of governance (Jessop
2009, 2010) – such as the provision of overarching policy frameworks, in order to devise
procedures for their negotiated coordination and conflict resolution – in order for the
state to retain regulating capacities over multiscalar governance arenas that are no more
granted by hierarchical rule and authoritative coordination in a nested territorial logic.

Experimental Regionalism and Multiscalar Metagovernance in Three European Countries

Three examples will illustrate the conjoint development of multilevel and multiscalar
governance practices, originating in the historical juncture of the 1990s. It should be men-
tioned that no direct or linear relation of causality should be inferred between Cohesion
policy and these practices; rather, Cohesion policy’s influence on the phenomena dis-
cussed here is variable and specific to each case. However, the multilevel rationale and
 Multilevel governance and multiscalar territorialisation  ­515

multiscalar effects introduced by Cohesion policy since the 1990s tie in with processes of
state restructuring which, in each of these cases, involve significant reforms in territorial
politics. These restructuring processes are driven by a common logic characterised by a
decidedly developmental rather than redistributional regional policy orientation, by the
promotion of regional self-­governing and of place-­based governance arenas, and by
the promotion of territorial practices overlapping and affecting the institutional set-­up
of territorial jurisdictions. As a result of this historically contingent process, territorial
politics defines an emergent negotiated order, which combines multilevel governmental
practices and multiscalar governance arrangements in constituting new experimental
policy spaces.
Germany is a most interesting case in this perspective. Since the mid-­1980s, ‘the Federal
Republic of Germany has been at the vanguard of the development of a Europe of the
Regions’ (Benz 1998: 111). Despite being a highly decentralised federal system, Germany
faced a peculiar ‘regional question’ in the 1990s. The result has been a significant drive
towards policy innovation, leading to a variety of new regionalisation practices.
The reasons for these developments are of a political-­institutional as well as a socio-­
economic nature. A first reason relates to the challenge involved in coping with the
regional programming rationale of Cohesion policy. The embedding of regional policies
in a European multilevel governance system resulted in a peculiar challenge for Germany
insofar as ‘regions in the sense of European policies, that is, those defined by economic
and cultural aspects, exist[ed] in Germany only outside the institutional framework
of government’ (Benz 1998: 115). Despite their legitimate claim for representation in
European policy-­making arenas, the German Länder – as internally highly differentiated
territorial systems – faced a new regional issue.
The fragmented nature of German regionalism manifested itself in terms of political-­
institutional representation as well as of socio-­cultural and economic identity. Below the
federal level of statutory territorial competences, Germany in fact presented a peculiarly
fragmented structure at the regional level: a ‘territorial patchwork’ of ‘different regional
units operating in different territorial boundaries and institutional settings’ (Benz
1998:  112). Under such circumstances, the statutory federal system of territorial compe-
tences was hardly attuned to confer adequate representation to a highly diverse reality of
socio-­economic and cultural regions.
A further critical factor resided in the dominant framework of intergovernmen-
tal relations. The joint federal–state regional development schemes – particularly
the Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftsstruktur (Joint
Programme for Regional-­Economic Structural Improvement) – was increasingly per-
ceived as being rigid and ineffective in the face of rising interregional competition and of
debates on Germany’s territorial competitiveness (the so-­called German Standortdebatte)
developing in the early 1990s (see Brenner 2000). In fact, on the background of the
solidarity effort required by German reunification, conflicts-­of-­interest intermediation
and resource distribution increasingly marked a clear divide which emerged between
central and peripheral regions and between ‘strong’ Länder advocating open interregional
competition within a ‘Europe of the Regions’ and ‘weak’ Länder advocating redistribu-
tive, cohesion-­oriented policies for a ‘Europe with the Regions’. A distinctive result was
a relative loss of centrality of the Gemeinschaftsaufgabe and of its principles of ter-
ritorial equalisation, in favour of the acknowledgement of territorial competition as a
516  Handbook on Cohesion policy in the EU

­ evelopment factor and of the promotion of regionally specific territorial development

d
policy approaches at both the federal and state levels.
The multilevel governance rationale of Cohesion policy influenced this process in
both a vertical and a horizontal way. It helped to by-­pass the ‘interlocking politics’ of
federal decision-­making by rearranging (vertical) intergovernmental relations and by
lending autonomy to intergovernmental arenas in particular, through a relativisation of
joint regional policy-­making and through emphasis on interregional differences between
Länder. And it contributed to rearranging (horizontal) intraregional relations in particu-
lar, by promoting the development of regional development networks or coalitions within
single Länder or ‘institutional regions’.
As a result, Germany experienced in the 1990s a proverbial ‘run for the regions’,
marked by characteristic ‘experimental’ forms of regionalisation (see Benz et al. 1999;
Gualini 2004b). The German case has been accordingly defined as an instance of
­‘regionalisation without regionalism’: that is, as a movement of reform driven ‘by prag-
matic considerations rather than political ideologies, by administrative concerns rather
than political conflicts, by economic development rather than ethnic cleavages’ (Benz
1998: 129). The need to rearticulate intergovernmental relationships in order to promote
scale-­specific policy approaches in the shadow of institutional hierarchies has developed
a drive towards institutional experimentation at all levels of the multilevel polity:

● at the level of federal policies, in terms of the constitution of area-­based initiatives

for the development of local policy experimentation and of networks for policy
exchange;
● at the level of state policies, in terms of the constitution of new flexible arenas for
state–regional interest intermediation and for the representation of local–regional
development coalitions;
● at the level of socio-­economic regions, in terms of the constitution of ‘projected
spaces’, of new territorial arenas for building commitments to scale-­specific devel-
opment strategies.

Italy has also experienced significant policy change as a result of the Europeanisation
of regional policy. This troubled process resulted during the 1990s in the institution-
alisation of approaches to local development within a new negotiated framework of
state–local relationships. Despite substantial changes since the 1970s, reform of post-­
war Italian regional policy was the result of a ‘normative shock’, consequent to the
1988 Structural Funds reform and to the rationales of Cohesion and state aids poli-
cies. A significant innovation was introduced in the mid-­1980s with a policy shift from
‘direct  macro-­intervention’ to ‘indirect micro-­ intervention’ (Martinelli 1998), and a
progressive demise of central steering in favour of regional and local governments sup-
ported by decentralised special agencies. As a matter of fact, however, the Intervento
Straordinario – the policy scheme for Italy’s lagging southern regions – was abolished
only in 1992 as a hurried response to pressure from Brussels.
Aligning to EU policy rationales entailed radical consequences in terms of both inter-
governmental process and territorial scope. The regional programming approach pursued
by Cohesion policy implied unprecedented requirements in terms of institutional capac-
ity. Moreover, the new regional policy framework was based on a radically different
 Multilevel governance and multiscalar territorialisation  ­517

political geography. Compliance with Cohesion policy and state-­aid eligibility criteria
implied a much more diversified, plural and negotiated view of regional policy objectives,
supported by claims for public support from emerging neo-­localist mobilisations as well
as by debates on Italian regionalism.
From both a political and a scholarly perspective, the regional approach pursued by
Cohesion policy emphasised what Trigilia (1991, 1992; see also Bagnasco and Oberti
1998) called the ‘paradox’ of Italian regions; that is, the low level of interaction between
expressions of socio-­economic ‘localism’ and regional institutions and, as a result, the
low level of connection between the self-­organised local socio-­economic initiatives and
the regional governance. The disjunction between institutional and socio-­ economic
regionalism – resulting in the modest and uneven level of performance of Italian regions
in the first funding periods – highlighted the need to reframe the rationale of Italian
intergovernmental (public–public) and interorganisational (public–private) relationships
in order to foster demand-­side territorial policies and to support local endogenous devel-
opment in line with Cohesion policy rationales.
A significant institutional measure in this direction was a new legal framework, known
as ‘negotiated programming’, introducing in the mid-­1990s a concerted model to serve
as a foundation for joint policy action based on subsidiarity and partnership principles.
What is relevant in our perspective is that the framework of negotiated programming
concerned the adoption of a contracting approach in (vertical) intergovernmental coor-
dination as well as in promoting (horizontal) local forms of territorial self-­organisation.
It extended concerted policy approaches from intergovernmental relations to the promo-
tion of social partnership within new interorganisational arenas, thus involving all rel-
evant territorial scales – from state–regional agreements to micro-­regional development
initiatives – and providing conditions for embedding local action in a comprehensive
programming approach.
Following debates on the institutionalisation of forms of territorial policy coordina-
tion such as industrial districts, negotiated programming introduced instruments extend-
ing the approach to non-­jurisdictional territorial arenas. Among these, patti territoriali
(territorial pacts) and contratti d’area (area-­based contracts)1 were specifically targeted at
promoting partnership-­based initiatives at the local scale, involving multiple actors and
integrating different sources of programming and financing. Instruments such as con-
tratti d’area and patti territoriali constituted elements of a multilevel governance system
as they represent decentralised forms of programming towards Type II governance arenas
and as they are embedded in multilevel negotiations for Cohesion policy implementation.
These forms of institutionalised territorial policy coordination also constituted new
‘policy spaces’, as they promoted local initiatives explicitly requiring context-­specific
forms of partnership and cooperation. Significantly, negotiated state support was prem-
ised upon competitive bidding procedures implying capacities for which locally specific
organisational forms as well as the mobilisation of local political formations and coali-
tions was crucial. As such, these forms of local mobilisation aimed at constituting new
territorial actors – rather than mere recipients – of Europeanised regional policy. At the
same time, in this process, the burden of policy innovation shifted from central steering to
new state-­promoted forms of territorial self-­organisation, responsive to neo-­regionalist
claims for endogenous development.
The Netherlands presents similar developments in constituting new policy spaces.
518  Handbook on Cohesion policy in the EU

Recent experiments with new forms of territorialisation stand against the background
of a long and troubled history of attempts at jurisdictional reform aimed at ‘upscaling’
territorial boundaries and redefining competencies, dating back to the 1970s. Attempts
at territorial reforms aimed at this purpose, however, have ever since faced the institu-
tional resilience of the territorial set-­up of the state. Since the late 1980s, requirements
from the Europeanisation of regional policy – confronting the country with the absence
of an effective regional programming and managing authority – merged with national
development strategies towards territorial competitiveness in promoting approaches to a
more effective developmental regional policy. Recent attempts at creating new territorial
jurisdictions, however, failed against the resilience of the three-­tiered territorial jurisdic-
tions system defined by the Dutch constitution, as well as related political-­institutional
interests.
Despite deadlocks in territorial reforms, the country has since the mid-­1990s experi-
enced multiple initiatives in territorial self-­organisation – promoted both ‘from above’ and
‘from below’ – in which formal hierarchical structures, while kept in place, were increasingly
overlapped by Type II governance arrangements. This determined a shift towards extended
practices of intergovernmental negotiation, in which formal statutory bodies are increas-
ingly called upon to deal with informal consensus-­based arrangements at variable scales.
As a response, an ‘experimental’ institutional environment has emerged, in which
multiple actor constellations and multiple development coalitions define flexible, often
overlapping governance arrangements that are increasingly autonomous from territorial
jurisdictions. A proliferation of functional governmental agencies has defined a diverse
landscape of task-­and organisation-­specific governance arrangements. Mechanisms for
improving coordination and for promoting collaborative strategies among local govern-
ments (municipalities) have emerged in particular as a key alternative to comprehensive
jurisdictional arrangements in metropolitan areas.
More recently, policies devised by Dutch central government agencies have promoted a
mainstreaming of multilevel negotiated practices in spatial development policy. Subsumed
under the notion of Programma Aanpak (programming approach), policy schemes such
as the 2004 Pieken in de Delta (Peaks in the Delta), 2007 Randstad Urgent (Urgent
Programme for the Randstad) and the interministry infrastructure improvement pro-
gramme, MIRT (2008) were originally developed primarily out of a concern with central
interdepartmental coordination – also referred to in Dutch policy jargon as ‘­ multi-­project
management’ – in developing and implementing territorially targeted measures for which
a complex mix of diverse national and EU funding sources is required. Their common
feature is the combination of interagency coordination with area-­based multi-­party
concertation practices, focused on ‘area-­based programmes’ (gebiedsagenda’s), the scope
and scale of which are defined according to negotiated development-­oriented agendas
(Gualini forthcoming).

CONCLUSION: CHALLENGES OF MULTILEVEL–

MULTISCALAR METAGOVERNANCE

Comparing these emergent multilevel, multiscalar territorial systems highlights the

complex co-­existence of multiple Type II rationales, arrangements and mechanisms.
 Multilevel governance and multiscalar territorialisation  ­519

These systems in some cases originate from a design of state restructuring in which
intergovernmental negotiation is a key mode of state-­led coordination; in other cases,
they originate from the promotion of self-­organising policy arenas ‘in the shadow of
­hierarchy’. They often share different facets of the mechanisms of decision-­making men-
tioned by the literature. Most notably, however, different mixes of rationales, arrange-
ments and mechanisms also give rise to specific forms of re-­territorialisation, with
distinctive scalar features.
We can recognise some ideal-­typical features of the ‘variable geometry’ of emergent
multilevel–multiscalar territorial systems in European countries. The first feature is the
emergence of policy practices defined by variable spatial configurations, which confer
upon development policies and related socio-­spatial practices a distinctive ‘experimen-
tal’, loosely institutionalised character. The second feature is an increasing multiplicity
of scales. Local–regional policy spaces result from the co-­presence of different rationales
and practices, defining variable spatial configurations. The third feature is an increasing
co-­existence and, possibly, redundancy of scales: a proliferation of spatial governance
configurations exceeding and potentially overlapping nested territorial jurisdictions. This
relativises and destabilises bounded territoriality as a spatio-­temporal fix, but often also
highlights its resilience to institutional reform and innovative policy action (Figure 32.1).
Multilevel-­multiscalar territorial systems feature a tension between territorially
bounded institutional relations and emergent, non-­territorially bounded policy arrange-
ments. State regulation is called to keep them in balance while exploring new spatial

Type I governance Type II governance

‘jurisdictional integrity’

redefined: challenged:

new political relations new governance

among territorial entities rationales, mechanisms and structures
in non-territorial arenas

rearticulation of emergence of new

jurisdictional relations spatial configurations
across governmental across governance
levels scales

multilevel government multiscalar governance

Figure 32.1  Multilevel and multiscalar territorial systems: scheme of analysis

520  Handbook on Cohesion policy in the EU

arenas and practices. This sets institutional practices in an intermediate domain between
a ‘logic of sovereignty’ by which state agency remains defined by a territorial logic, and
‘logic of regulation’ by which state agency is redefined through context-­specific combina-
tions of regulatory mechanisms within variable spatial configurations.
The result is a combination of processes concerning the redefinition of multilevel
governmental relations as well as the development of multiscalar governance practices.
Their mutual relationship is dynamic, contingent and not necessarily durable. A heuristic
of change in territorial governance needs to put their specific combination in context and
to inquire into their generative relations and co-­evolutive trajectories. Moreover, it needs
to inquire into the possible contradictions and tensions related to their emergence and
forms of institutionalisation. A guiding question in this respect is: what specific political
challenges emerge in multilevel government systems implying a multiplicity of govern-
ance scales?
The alleged dichotomy between types of multilevel governance discussed in the lit-
erature is, in fact, an issue of compatibility and functional interdependence; between
formally sovereign and hierarchically ordered territorial entities, and autonomous non-­
territorial entities with an own rationale of operation and legitimation. This is crucial for
multilevel-­multiscalar systems and their capacity to perform and persist in legitimate ways
across new policy spaces. Traditionally, the issue is framed by contrasting the democratic
embeddedness of Type I jurisdictions to the problematic ‘democratic experiments’   –
deliberative, associative, or other – found, at best, in Type II governance arrangements.
Democratic accountability is thus seen as being challenged by the contrast between gen-
eralist, multipurpose jurisdictions and the rise of specialised, functional task arenas akin
to technocratic or interest-­based ‘stakeholder democracy’. Accordingly, the ‘institutional
void’ – in terms of guidance, control or coordination – is highlighted, characterising
relationships between the two, as well as related trade-­offs between input and output
legitimacy. Multilevel governance literature accordingly points to the need for innovative
coordination approaches. Different types of governance are seen as potentially coexisting
in a ‘negotiated order’ (Peters and Pierre 2002) combining different rationales – a mix of
positive and negative coordination mechanisms – which complement each by establishing
loosely coupled relationships and avoiding deadlocks (Benz and Eberlein 1999).
However, multilevel–multiscalar territorial systems, implying redefinitions of relation-
ships among actors in both vertical (intergovernmental) and horizontal (sideways) terms,
raise specific ‘sustainability’ issues, beyond simple coordination among Type I and Type
II governance arrangements. Relations among Type I and Type II governance arrange-
ments can be framed either by distinct domains – for example, by division or complemen-
tarity of competences and tasks – or, as is often the case, by belonging to co-­extensive,
overlapping and possibly conflicting domains, implying an ongoing renegotiation of
relationships. A potential tension may hence arise across governance at different scales.
Scale ­compatibility  – or ‘compossibility’ (Jones and Jessop 2010) – is an issue of coexist-
ence and consistency between governance rationales in a context defined by institutional
complexity and scale redundancy. Scalar structuration should be addressed along three
dimensions:

● internal consistency within or at defined scales;

● relational consistency across or /among scales;
 Multilevel governance and multiscalar territorialisation  ­521

● strategic selectivity in the promotion of ‘compossible’ (Jones and Jessop 2010)

scalar relations.

Far from resorting to command-­ and-­control, these dimensions highlight a specific

metagovernance challenge related to the redefinition of governance scales: develop-
ing a strategic-­selective capacity of regulation among and across coexisting forms of
­territorialisation – as well as coping with its possible failure.

NOTE

1. The patti territoriali (territorial pacts) were locally based agreements, ‘bottom-­up’ initiatives involving
employers’ representatives and unions, private firms and local public authorities with the aim of local
development around specific sectors. The contratti d’area (area contracts) are agreements between a public
administration (national, regional or local), representations of employers and trade unions, and any other
interested parties aimed at the development and creation of employment in defined areas (traditionally they
had the specific goal of employment creation and industrial development within ‘industrial crisis’ areas in
the Mezzogiorno).

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Index
absorption
capacity 96, 311, 401
as implementation challenge 190, 241–2,
280–81
rate 315, 335
of Structural Funds 160, 186–7, 307–9
accessibility and transport infrastructure
349–51
accountability 72–3, 76, 144, 170, 172, 179,
181, 182, 212–13, 299, 502, 510–12, 520
achievements
in rich central countries 278–9
in southern periphery countries 243–6
in sparsely populated countries 295–7
in United Kingdom and Ireland 263–5
actors in Cohesion policy 36–42, 48
additionality principle 22, 30, 158, 192–3, 257,
435–6, 447, 450–51
administrative capacity
importance, in compliance with EU laws and
regulations 96
as possible reason for modest efficiency of
CP 317
role of, in new member states 86–7
in southern periphery countries 242, 244
administrative procedures, as implementation
challenge 281–2
agglomeration economies 52–3, 59, 61, 345–6
agricultural and rural development
agricultural policies from the ‘old’ sectoral
paradigm to territorial centrality 326–31
CP and economic performance in less-
developed regions 329–31
First Pillar CAP 326–8
rural development 328–9
different areas of Community policy 325–6
distribution of EU funding for various
policies 331–3
evolution of sectoral and territorial policies
in EU 326
gaps in literature 325
policies and funding overview 332, 334–5
allocation
aim 59
allocative arguments 56
allocative principle 56
in Central and Eastern Europe countries
310–11, 313–14
525
in EaP 402
levels, in budget negotiations 130–32
regional expenditure 331–2
in rich central countries 273–7
within social dimension 479–82, 484–5, 487
for sound financial management 438, 440
in southern periphery countries 236–9
in sparsely populated countries 287, 290–94
of Structural Funds 93–103
in United Kingdom and Ireland 256–8
Andalucian Party 204, 208–9
architecture of Cohesion policy
actors 36–42, 48
agencification 48
funds 42–3
governance arrangements 47
implementation cycle 43–6
technical assistance 46–7
audit authorities 37–8, 173–7, 179, 182–3
audit of Cohesion policy see European Court
of Auditors (ECA)
Austria
ability to represent member states 207
budget negotiations 131
Cohesion policy
caution over allocations 125–6
in favour of rationalising 272
funding 274–6, 315
important role of 278
integration 281
programmes 269, 279
EDRF absorption rates 281
enlargement 24
as federal state 207, 272
funding devoted to social cohesion priorities
479–81, 485–6
GDP per capita 268, 467
as one of wealthiest member states 268
refusal to honour guarantees for debts 466
Structural Funds support review 278
Thematic Objectives 277
Barca Report 56, 61, 127, 135, 160, 243, 326,
334, 365, 375, 416, 423, 482–3, 487, 492
Basque Nationalist Party (PNV) 208–10, 212,
214, 228
Belgium
absorption 281
526  Handbook on Cohesion policy in the EU

Cohesion policy number of programmes 303–5

funding 268, 273–6, 280, 315 origin and evolution of regional problem
programmes 269 306–8
as contributor to, and recipient of, pre-accession period 309–10
Community budget 272 reforms framed to support accession of 25,
EGTC for 389 109
as federal state 207, 272 and regionalist parties 211–12
funding devoted to social cohesion priorities representing largest area of less-developed
479–81, 485–6 regions 341
GDP per capita 268, 467 results of enlargement 203, 211, 213, 302,
as one of wealthiest member states 268 306, 339–40
provincial influence 272 and state territoriality 497
self-rule 99 central areas see rich central countries,
Structural Funds 280 Cohesion policy
Thematic Objectives 277 certifying authorities 37–8, 173–4, 176, 178
budgets Christian Social Union (CSU) 210, 212
2007–2008 budget review 124–6 CIs see Community Initiatives (CIs)
budgetary politics and territoriality 494–5 cities
negotiating, in Cohesion policy reform as actors in multilevel governance systems
130–33 414–15
Bulgaria European Parliament on delegation of
accession to EU 84, 302 power to 152
budget allocation ratios by Thematic role of 144–6
Objective 314 see also urban redevelopment
Cohesion Fund 42, 303 climate policy integration (CPI) 381
Cohesion policy Cohesion Fund
adjustment to 85 allocated at level of member states 445
funding 311, 315 in Central and Eastern Europe countries
impact 311 303–6
programmes 303 and CoR 158
decreasing poverty as aim of 313 creation of 24, 58, 109, 156
funding devoted to social cohesion priorities DG REGIO responsible for 37
480–81, 485–6 and environmental policy 370–74, 380
GDP per capita 308, 467 member states aimed at 42
integrated territorial OPs 315 as one of three Cohesion policy funds 42
investment clause 194 as one of three Structural Funds 93
management of Structural Funds 87 percentage devoted to social cohesion
opposition to reduction in EU co-financing priorities 480–81
rate 131 in reform regulations 29, 32, 190
public investment levels 192–3, 306 seeking to promote income convergence 461
in southern periphery countries 232–6, 238,
CEMR see Council of European 241
Municipalities and Regions (CEMR) in sparsely populated countries 287–90, 293,
Central and Eastern Europe countries, 297, 299
Cohesion policy transportation and public infrastructure
appropriateness of, and regional gap 317–18 financed by 339–40, 342, 431, 435
changes caused by enlargement 306 in UK and Ireland 251, 253
environmental needs 373 for urban redevelopment 416–17
evolution of strategies 312–15 see also Structural and Cohesion Funds (SCF)
financial resources 310–11 Cohesion policy (CP)
impact 311–12 debate on post-2020 reform of 11, 137
impact of joining EU 435 ESIF allocations xxx
implementation challenges 315–17 as expression of experimentalist governance
intensive phase of Europeanisation for 84, 48
309–10 highly political nature of 2

importance of 1
interpretations of 1
limited effectiveness 9–11
main aim of 17
potential as redistributive policy 10
slice of total EU budget 1, 17
Committee of the Regions (CoR)
as advisory body representing regional and
local authorities 124
and Cohesion policy
as main actor of 39
non-consultative activities contributing to
debate on 162–6
in successive rounds of reform 157–62
creation 156–7, 206, 415
limitations 210
strengthened role 415
value of 166–7
Common Agricultural Policy (CAP) 26, 30,
125, 129, 131, 205, 212–13, 250, 310,
326–32, 334–5, 495
Common Fisheries Policy (CFP) 30, 205,
212–13
Common Provisions Regulation (CPR) 37–8,
45–6, 133–4, 144, 149, 181, 191–2, 196,
377–8, 380–81, 483
Common Strategic Framework (CSF) 9, 116,
134, 154, 238, 291, 380, 419–20
Community funding 27, 280
Community Initiatives (CIs) 23, 25–7, 70, 112,
256, 275, 443, 498
Community-Led Local Development (CLLD)
283, 315, 416, 419–20, 492
Community support 21
Community Support Frameworks (CSFs)
in Greece 233, 239
in Ireland 254–6, 259, 261, 264
in Italy 233
as macro-strategy 232
minimal compliance to requirements of 484
in Portugal 234, 243
in Spain 235, 239
in United Kingdom 258–9
urban pilot projects supported through
415–16
compensation aim 59
competition policy rationale 57–8
competitiveness
versus cohesion 317–18
versus equity goals 475–6, 486–7
impact of economic crisis 189
issue of EU’s lack of 110, 112
in multifaceted policy 447
as Thematic Objective 238, 291–4
and urban dimension 413, 423
Index  ­527
compliance audit 178–9
concentration
principle 22, 26–7, 330
of effort 33
of resources 33, 127, 328
of spending 33, 59
thematic 42, 130, 133–5, 140, 144–6, 376
conditionalities
ex ante 33, 127, 147, 151–2, 246, 483
macroeconomic 33, 128, 131, 135–6, 155,
190–92, 195
need for workable and powerful 364
strengthening, in CP framework 161
Conference of Peripheral Maritime Regions
(CPMR) 41
Convention on Europe 210
convergence
and Cohesion policy
financial crises 463–6
lessons from East Asia 466–70
previous research on 462–3
prospects for policy coherence 471–2
reasons for exacerbation of regional
divergence 461–4
as regional policy goal 51–2
Convergence Objective 28–9, 74, 436, 445
CoR see Committee of the Regions (CoR)
Corsican National Liberation Front 204
Council of European Municipalities and
Regions (CEMR) 41, 415, 424
Council of the European Union (CEU)
as central to Cohesion policy 4
co-decisions on regulations for programming
periods 75
composition of 123
member states’ representatives in 36
negotiating budget and legislative package
130–32
CP see Cohesion policy (CP)
CPR see Common Provisions Regulation
(CPR)
crisis management 310, 406, 408–9
Croatia
accession to EU 302
budget allocation ratios by Thematic
Objective 314
Cohesion Fund 42, 303
Cohesion policy
evolution of strategies 313
funding 311
programmes 303
Europeanisation in 84–5
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 308, 467
528  Handbook on Cohesion policy in the EU

cross-border cooperation funding devoted to social cohesion priorities

Carpathian Basin 313 480–81, 485–6
Council of Europe as driver for 390 GDP per capita 308, 467
EGTCs for 390, 396 integrated territorial OPs 315
eligibility for 29 as most privileged in funding allocation
INTERREG initiative aimed at fostering 112 29
law 387–8 Structural Funds 87
need for more 145
Objective supporting 29 Deep and Comprehensive Free Trade Area
structures of Euro-regions as cornerstone (DCFTA) 403–5
of 386 deep trade pragmatism
as subset of territorial cooperation 384–5 moving from democracy promotion 402–5
CSF see Common Strategic Framework moving to operational pragmatism 405–7
(CSF) delivery, as implementation challenge 241–2
Cyprus Delors I Package 21, 167, 259
budget negotiations 130 Delors II Package 157
Cohesion Fund 42, 233 Delors, Jacques 21, 109, 205, 429–30, 441,
Cohesion policy 496–8
commitment appropriations 236 Delors Report (1989) 56, 58
funding 315 Delors Report (1990) 430–31
main goal of 231 democracy
programmes 233 new model of
resource distribution to Thematic in CEE countries 316
Objectives 238 in interconnected settings 65, 73–5
strategies 238–9 representative
debt restructuring 465–6 constraints imposed by 469
funding devoted to social cohesion priorities and formation of judgement 75
480–81, 485–6 and multilevel governance 71–3
impact of economic crisis 188–9 and territoriality 8, 500–502
legislative package 133 Denmark
negotiations on MFF 131–2, 136 absorption of allocations 281
as new policy priority 126 accession to EU 19, 50, 329, 495
PPP per capita GDP relative to EU28 administrative procedures 282
average 467 applicability of patents compared to papers
as Presidency involved in negotiations 123, 355
150 Cohesion policy
regionalist parties welcoming 211 allocations under 125–6
stability in 128 funding 273–6, 315
Van Rompuy 123, 132, 136 concertation at territorial level 272
Czech Republic and ERDF 19
accession to EU 302 evaluation of Danish Objective 2
as benefiting most from financial allocations Programme 278
29 focus on competitiveness and innovation
budget allocation ratios by Thematic 272
Objective 314 framing of social exclusion 484
budget negotiations 131 funding devoted to social cohesion priorities
Cohesion Fund 42, 303 479–81, 485–6
Cohesion policy GDP per capita 268, 467
focus on least-developed member states legislative package 133
125 as net contributor to Community budget
funding 132, 311, 315 272
impact 311 no Cohesion funding 268
as new policy priority 126 as one of wealthiest member states 268
programmes 303 pre-legislative work 150
Europeanisation in 84–6 Thematic Objectives 277

Directorate-General Employment, Social
Affairs and Inclusion (DG EMPL) 37,
122, 127
Directorate-General for Agriculture and Rural
Development (DG AGRI) 325
Directorate-General for Internal Policies 39
Directorate-General for Regional and Urban
Policy (DG REGIO) 18, 36–7, 122, 126–7,
129, 135, 140, 142, 162, 192, 297, 325,
373–4, 376, 393, 413, 417–18
distance 345–6, 348–9, 353, 355–6
distributive arguments 55–6
disturbance factors 452–3
domestic contexts, as implementation challenge
243
East Asia, lessons from 466–70
Eastern Partnership (EaP)
Association Agreement 399, 403, 405–6
countries within 400
from deep trade pragmatism to operational
pragmatism 405–7
from democracy promotion to deep trade
pragmatism 402–5
Eastern Partnership Initiative 403
economic indicators 407
external Europeanisation through 401–2
geopolitical make-up 399
historical milestones 403
index 406
new security challenge and EU
transformation crisis 409
Partnership and Cooperation Agreements
403, 405
from pragmatic multilateralism to crisis
management 408–9
econometric aspects 454–6
Economic and Monetary Union (EMU)
as beneficial for Northern European
countries 471–2
‘blueprint for deep and genuine’ 193
Cohesion policy as tool for 24–5
convergence criteria 464, 470
Delors Report on 430
launch of 26
more sustainable design for 131
removal of exchange rate and jurisdictional
risk 462, 465
role of Cohesion Fund 156, 461
Economic and Social Committee (ESC) 21, 36,
75, 156
see also European Economic and Social
Committee (EESC)
economic cohesion 7, 20–21, 92, 156, 291, 325,
334, 384–5, 461
Index  ­529
economic context
Cohesion policy’s ability to adapt to
evolving 153
importance in 1999 reform 26
responding to mutated in 2014 reform 30–33
economic convergence see convergence
economic crisis
impact of 187–8, 198–9
on competitiveness 189
on regions 189–90
macroeconomic framework before and
during 188–9
providing relief from 245–6
economic geography see geography, economic
economic governance
additionality principle 192–3
evolution of 199
impact on Cohesion policy 199–200
investment clause 193–4
macroeconomic conditionality 190–92
economic growth principle 431–3
economic imbalances, period of 187–90
economic performance, in less-developed
regions 329–31
economic polarisation 7, 461, 470
economic theory of Cohesion policy
balanced economic growth
policies for growth 60–61
supportive institutions 61
‘Cohesion’ as open to variety of
interpretations 50
current economic priorities
logic of intervention 59–60
two policy imperatives 58–9
economic effectiveness 62
economic objective
allocative arguments 56
distributive arguments 55–6
public finance economics 54–5
macroeconomic rationale
for Cohesion policy 56–8
competition policy 57–8
for regional policy 56
research orientations 61–2
roots in regional economics and geography
50–54
effectiveness
of Cohesion policy see impacts: assessment
improving, in view of enlargement 25–7
of internal controls 171, 177, 179
EFSI see European Fund for Strategic
Investment (EFSI)
EGTC see European Grouping of Territorial
Cooperation (EGTC)
eligibility 449–50
530  Handbook on Cohesion policy in the EU
EMU see Economic and Monetary Union
(EMU)
ENE-MA (European Network of
Environmental Authorities – Managing
Authorities) 379
enlargement
big bang 388
Central and Eastern 203, 211, 213, 302, 306,
317–18, 339–41, 373
Cohesion policy as substitute for 402
and concentration 158
as context for changes 159–60
Convention and regions ‘left behind’ 209–12
East-West dimension 310
Eastern 109–10, 211, 226, 387, 401–2
economic disparities 108, 205, 308, 318, 373
European Neighbourhood Policy detached
from 408
Europeanisation in context of 79, 83–5
to Finland, Sweden and Austria 24
Greek threat to veto 20
improving effectiveness in view of 25–7
‘internal’ 204, 213, 219
loss of Objective 1 status for Ireland 253
matching with wider EU goals 27–30
new territorial challenges in view of 24
Southern 108–9, 112–13
statistical effect of 159, 167, 450
successive rounds of 1
to United Kingdom and Ireland 18
ENP see European Neighbourhood Policy
(ENP)
environmental policy see green economy
EPI (environmental policy integration) 369–75,
377–81
ERDF see European Regional Development
Fund (ERDF)
ESF see European Social Fund (ESF)
ESIF see European Structural and Investment
Funds (ESIF)
Estonia
Cohesion Fund 42, 287, 289, 293
Cohesion policy
challenges to administration of 298
funding 290, 315
impact 296–7, 311
implementation 287
programmes 288
strategies 291
de-Europeanisation example 86
ERDF and ESF 293–4
EU funding, indirect effects 299
on financing of poorer regions 125
funding devoted to social cohesion priorities
480–81, 485–6
great leap into digital age 500
impact of SCF on GDP 295
income levels 466
and NUTS 2 285–6
Operational Programmes 292
population size 285
PPP per capita GDP relative to EU28
average 467
regionalist parties welcoming 211
Thematic Objectives 291, 294
ETC see European Territorial Cooperation
(ETC)
EU Macro-Regional Strategies (EUMRS) 386,
390–96
EU Strategy for the Baltic Sea Region
(EUSBSR) 390–96
EUMRS see EU Macro-Regional Strategies
(EUMRS)
Eurocities 41, 415, 424
Europe 2020
aims of 129, 318
as cohesion-less 143
European Council approving 31
first draft of 141
linking Cohesion policy to 144–6, 148, 163,
190
and priority of inclusive growth 482–6
replacing Lisbon Strategy 110
and TEN-T network effects 351–4
thematic objectives related to 32–3
Europe of the Regions 5, 203–4, 207–10,
212–14, 217, 224–5, 316–17, 493, 515–16
European Agricultural Fund for Rural
Development (EAFRD) xxx, 32, 43, 93,
133, 172, 293, 329, 450
European Agricultural Guidance and
Guarantee Fund (EAGGF) 18, 20, 22, 25,
27, 236, 256, 276, 329, 431
European Anti-Fraud Office (OLAF) 40, 179,
438
European Commission (EC) and Cohesion
policy
as actor of 36–7
building, expanding and maintaining 108–10
designing governance modes and building a
multilevel system 114–18
determining substance of 111–14
general role in 107–8, 118–19
linking to Europe 2020 144–6
role in reform 121–36
tighter collaboration with Parliament 141–3
European Council
adoption of Lisbon Strategy 110
approval of payments for 2007–2013
programmes 31
 Index  ­531

Cohesion policy CoR’s platform 163–4

as actor of 36
agreement to grant 31
budget 43
as central to 4
Commission convincing of benefits to
107, 110
and Europe 2020 128
greater significance of role 122, 137
and Open Method of Coordination 116
reluctant adoption of proposals 111
resistance to Commission 118
role in reform 121–5, 127–37
on efforts to advance cooperation 409
for greater social cohesion 477
hopes for optimum use of Structural Funds
26
launch of ambitious programme of reforms
28
and macro-regional strategies 390, 392
meetings 28, 125, 130, 132
necessity of building Energy Union 401
policy proposals stemming from 75
proposal of Youth Employment Initiative
483
role of, in European Union 123
role over MFF 74, 131–4, 136–7
sanctions regime agreed by 395
and subsidiarity 148–50
summits restyled as 495
European Court of Auditors (ECA)
as Cohesion policy actor 4, 39–40, 182
and environmental politics 372, 375
external audit of Cohesion policy
compliance audit 178–9
opinions on new legislation 181
performance audit 179–81
internal control in Cohesion policy
introduction to 172–3
significantly reinforced for 2007–2013
programming period 173–5
‘single audit’ model 175–8
role as EU’s external auditor 170–71
strengths and weaknesses 4, 182–3
European Economic and Social Committee
(EESC) 124
see also Economic and Social Committee
(ESC)
European Free Alliance (EFA) 211
European Fund for Strategic Investment
(EFSI) 195, 198–9
European Grouping of Territorial Cooperation
(EGTC)
approval for legislative package 133
comparison with EUMRS 395–6
definition 38
Eastern Partnership encouraging 406
emergence of 386
and FOCJ 503
main location of 388
nature of 389–90
Regulation 29, 32, 133, 164, 386, 388–9,
396
setting up, as controversial 498
three components of 385
as type of territorial cooperation 384, 386
European integration
creating own economic development
dynamic 55–6
interinstitutional struggle over 496–7
regionalist parties’ positions on 210–12,
217–26
territorial cooperation as cause and effect
of 384
European Investment Bank (EIB)
activities
advisory services 197
blending with ESIF 195–6
ESIF and EFSI 198
financial instruments 196
lending for territorial cohesion 196–7
Structural Programme Loans 195–6, 199
and additionality principle 435
Cohesion policy
as actor in 40–41
importance for 4–5
interlinkage with 186
supporting 194–8
enhanced role of 186, 199–200
evolution of 194–5
financing investment and job training
programmes 436
as instrument addressing regional
imbalances 18, 20–21
instruments making use of 30
European Maritime and Fisheries Fund
(EMFF) xxx, 31–2, 43, 93, 172
European Neighbourhood and Partnership
Instrument (ENPI) 30, 402
European Neighbourhood Instrument (ENI)
402, 406
European Neighbourhood Policy (ENP) 399,
402–5, 408–9
European Parliament (EP)
Budgetary Control Committee 40
Cohesion policy
as actor in 39
benefits of intense pre-legislative effort
143–4
532  Handbook on Cohesion policy in the EU
contribution to shaping 2014–2020 policy
140, 150–53
enhancing territorial dimension of 146–7
interinstitutional relations 148–50
linking to Europe 2020 144–6
role in reform 121–2, 124, 128, 132–4,
136–7, 153
tighter collaboration with Commission
141–3
REGI (Committee on Regional
Development) 39, 140–45, 148–51, 162
European Regional Development Fund
(ERDF)
aim of 42
audit authorities 173
in Central and Eastern Europe countries 315
creation of 19, 50
criticism of early 205
development of 20
DG REGIO responsible for 37
initial objective of 19
as one of Structural Funds 93
as one of three Cohesion policy funds 42,
172
Regulation 25, 371
resources allocated to environmental
measures 376
in rich central countries 269–71, 276,
280–82 European Solidarity Fund (EUSF) 42
for smart specialisation 433
for social dimension 476–8, 480, 483
in southern periphery countries 237–8, 240,
264
in sparsely populated countries 293–4, 296–8
study of regional and national funding per
capita 220–25
in United Kingdom and Ireland 250,
252–60, 264–5
for urban development and new instruments
414–16, 419–21
European Social Fund (ESF)
audit authorities for OPs of 173
within Central and Eastern Europe 315
Committee’s opposition to removal of 142
CoR’s use of subsidiarity principle 166
Directorate-General responsible for 37
and Dutch operational programme 484
ERFD complementing 50
and European Court of Auditors 175–7, 181
European Parliament support for 146, 150
evaluation of operational programmes
437–8, 443
financial instruments 196
financing urban development projects 416
four thematic focuses 43
fund-specific regulations for 133
as guiding economies of less-developed
regions 431
as instrument addressing regional
imbalances 18
and Italian operational programme 484–5
main aim of 461
as most relevant for realisation of social
measures 483–4
as one of Cohesion policy’s main funds 42
as one of three Structural Funds 93
original aim 469
percentage representation of total funds
479–80
percentage represented by ESIF funding 340
within reform regulations 22, 24–5, 27, 29,
32
remit within different programming periods
476–9
within rich central regions 269–70, 276,
280
and Romanian operational programme
485–6
and social inclusion objective 432–3
within southern periphery 238–9
within sparsely populated countries 293–4
and training of workers 432, 436
within United Kingdom and Ireland 256–7
European Spatial Planning Observatory
Network (ESPON) 29, 42, 327, 349–50
European Structural and Investment Funds
(ESIF)
2014–2020 allocations xxx
2014–2020 regulation 487
acting as sort of litmus test 486
assumed role 110
conditionalities for effective disbursement of
147, 152
CSF for enhanced coordination between 419
EIB blending with
advisory services 197
financial instruments 196
Structural Programme Loans 195–6
enhancing oversight role of Commission 483
and European Fund for Strategic
Investments 198
expected contribution to Europe 2020
strategy 483
full exclusion, and flexibility mechanism in,
national co-financing of 194
funds comprising 93, 172
important step in Common Provisions
Regulation for 378–9
and macroeconomic conditionality 149, 191
 Index  ­533

main priorities supported by 340–41 on future of 125–6

MFF channelled through 340 implementation challenges 298
as milestone of European urban policy 416 outcomes and impacts 295–7
as powerful incentive for social inclusion planning and implementation approach
488 287
regulations creating premises of 32 programmes 288, 484
as substantial portion of EU budget 93 strategies 291–3
tensions on member state implementation enlargement 24
of 134–5 ERDF and ESF 294, 296–7
European Territorial Cooperation (ETC) xxx, funding devoted to social cohesion priorities
28–9, 31, 33, 38, 44, 112, 133, 145, 164, 480–81, 485–6
275, 384–5, 390, 396, 492, 503 GDP per capita 285, 287, 467
European Union institutional system 287, 298
impact on Europeanisation 306 Nordic cooperation 385
improving effectiveness in view of and NUTS 2 285–6
enlargement 25–7 Operational Programmes 291–2
matching enlargement with wider goals population size 285
27–30 self-rule 99
Thematic Objectives 277 Structural Funds 296
transformation crisis 409 Thematic Objectives 291, 293–4
European Units of Account (EUA) 19 FOCJ (functional, overlapping and competing
Europeanisation jurisdictions) 501–3
and Cohesion policy 69, 79–88 formalised interest groups 41–2
in context of EU enlargement 79, 83–5 France
as domestic change 512 budget negotiations 131–2
in European periphery 83 Cohesion policy
EU’s impact on 306 administrative procedures 275
external funding 135, 268, 273–5, 282, 315
easternmost region as 399 on future of 125
evolution of 402–5 impact 278
security challenge for 409 programmes 269–70, 279, 282
through European partnership 401–2 proposals for reform 128
as institutional change 508–9 concertation at territorial level 272
intensive phase, for CEE countries 84, as contributor to, and recipient of,
309–10 Community budget 272
in Italy 516 Corsican National Liberation Front in
post-accession; learning or reversal 85–7 204
regionalisation as direct outcome of 207 and EGTC 389
requirements from, merging with national and ERDF 19, 276, 281
development strategies 518 funding devoted to social cohesion priorities
and supranational policies 509 479–81, 485–6
of urban policies 421 GDP per capita 268, 467
highly formalised nature of territorial
financial crises 187–90, 198–99, 464–6 relations 280
Financial Instrument for Fisheries Guidance interregional cooperation 385
(FIFG) 24–5, 27, 236, 256, 276, 328 as one of wealthiest member states
financial management principle 170, 183, 268
437–9 regional Operational Programmes 275
Finland southern, and IMPs 20
accession to EU 287, 291 on Structural Funds 21
budget negotiations 131 Thematic Objectives 277
Cohesion policy trend towards greater regional autonomy
achievements and challenges 296 275
allocations under 287, 298 urban redevelopment 418–19
funding 290–91, 299, 315 free movement principle 384, 462, 469, 470
534  Handbook on Cohesion policy in the EU
funds, Cohesion policy 42–3
see also Cohesion Fund; European Regional
Development Fund (ERDF); European
Social Fund (ESF)
geographical scale 445–6
geography, economic
effects of 448–9
non-spatial principles in 362
roots of Cohesion policy in 50–54
see also New Economic Geography (NEG)
Germany
administrative procedures 282
allocations
absorption of 281
as benefiting most from financial 29
budget negotiations 131–2
Cohesion policy
areas of focus for resources 125–6
funding 128, 135–6, 268, 273–6, 315
impact 278
implementation 282
opposition to increased spending 26
programmes 270
sensitivity to money being spent in other
member states 496
Community budget
contribution 21
as contributor to, and recipient of 272
Convergence status 129
and development of ‘Europe of the Regions’
515–16
and Dutch border 387–8
environmental actors 379
ERDF
and ESF contributions 276
as net contributor to 19
experimental regionalism and multiscalar
metagovernance in 515–16
as federal state 207, 272
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 268, 467
highly formalised nature of territorial
relations 280
investment banks as managing authorities
276
Länder
annual growth 434
and Christian Social Union 210
exerting strong political influence 272
inserted in multilevel political context 69
as most privileged in funding allocation 29
participation in regional economic policy
280
struggling to pay enlargement costs
26
as net contributor to EU budget 26
and NUTS 2 units 446
as one of wealthiest member states 268
Operational Programmes
climate change resources 376–7
programming 415
regional 275
rejection of development of Code of
Conduct as Delegated Act 379
role in Negotiating Box 132
role of municipalities 421
territorial cooperation 385
Thematic Objectives 277
transport infrastructure and accessibility
249, 378
urban regeneration 418–19
governance arrangements
of Cohesion policy 47
designing modes of 114–18
economic 190–94, 199
EGTCs as 390
emergent forms of territorial 513–18
emergent spatial 510–11
multiscalar 506, 514–18, 520
spatial configurations 510–11
task- and organisation-specific 518
in territorial politics 515
Type II 511, 513, 518, 520–21
in UK and Ireland 260–63
see also multilevel governance
Greece
accession to EU 108, 231, 330
additionality principle 192–3
annual growth 434
challenge to manage stability of 128
Chinese support to 472
Cohesion Fund 42, 58, 156, 232–3, 302, 306,
372
Cohesion policy
absorption, delivery and institutional
capacity 242
achievements and impact 240–41
commitment appropriations for 236
financial resources 236
as former core beneficiary 80
funding 132
main goal of 231
multilevel governance 244–5
new policy paradigms and public policy
approaches 243–4
programmes 233
shielding investments and providing relief
crisis 245–6

as ‘side payment’ to 370, 497
strategies 237–9
supported by 126
and transport infrastructure networks 339
unfavourable domestic context 243
and debt 465–6
European Investment Bank loan 40–41
Europeanisation in 83
funding devoted to social cohesion priorities
479–81, 485–6
impact of economic crisis
competitiveness 189
convergence 198
employment 187–8
greater 31
regions 190
institutional system 231
Maastricht Treaty 24
PPP per capita GDP relative to EU28
average 467
regional policy 231
showing signs of disaffection 246
Structural Funds 22–3, 27, 302, 306
Structural Programme Loans 195
Thematic Objectives 238
threat to veto enlargement 20
green economy
Cohesion policy
criticism of 374–5
EPI in early 371–4
‘greening’ of 370–71
concept of sustainable development 369–70
future for green growth 380–81
from Lisbon Strategy to 2020
criticism of Cohesion policy 374–5
participation of environmental actors
378–9
policies and policy integration 376–8
programmatic commitment 375–6
growth
balanced 60–61
and development synergies 343–4
economic, principle of 431–3
economics of 53–4
models 343–5
policies to foster 60–61
priority of inclusive 482–6
HERMIN model 241, 264, 295–6, 454
history of Cohesion policy
1957–1975 (origins) 17–19
1975–1987 (development) 20–21
1988 reform (birth) 22–4
1993 reform (as tool for EMU) 24–5
1999 reform (improving effectiveness) 25–7
Index  ­535
2007 reform (matching enlarged Union and
wider EU goals) 27–30
2014 reform (responding to mutated
economic context) 30–33
Hungary
accession to EU 302
additionality principle 192
budget allocation ratios by Thematic
Objective 314
Carpathian Basin 313
Cohesion Fund 42, 190–91, 304, 306
Cohesion policy
funding 132, 311, 315
impact 311
as new policy priority 126
programmes 304
Europeanisation in 84–5
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 308, 467
integrated territorial OPs 315
legislative package 133
as most privileged in funding allocation 29
and NUTS 2 units 446
opposition to reduction in EU co-financing
rate 131
role played in European Parliament 136–7
Structural Funds 84, 87, 306
Structural Programme Loans 195
Territorial Agenda of the European Union
419
IMF (International Monetary Fund) 465–6,
472
impacts
assessment 456–7
data and methodology-related issues
451–6
issues related to CP characteristics 445–51
previous studies’ results 443–4, 456
purpose of 457
in Central and Eastern Europe countries
311–12
of economic crisis 187–8, 198–9
on competitiveness 189
macroeconomic framework 188–9
on regions 189–90
in rich central countries 278–9
in southern periphery countries 243–6
in sparsely populated countries 295–7
in United Kingdom and Ireland 263–5
for urban redevelopment 420–24
implementation challenges
in Central and Eastern Europe countries
315–17
536  Handbook on Cohesion policy in the EU
in rich central countries 279–82
of smart specialisation 365–6
in southern periphery countries 241–3
in sparsely populated countries 297–8
in United Kingdom and Ireland 260–63
implementation cycle
assessing policy and performance 46
programmes
assessing results 46
drawing up 43
projects
appraising and approving 44–5
drawing up 43–4
providing match funding 45–6
implementation time lag 450–51
IMPs see Integrated Mediterranean
Programmes (IMPs)
independence demands 203–4, 209, 212–14
innovation
in Austria 278, 281
distance and knowledge networks 355–6
and geography 353
‘green’ 369, 375, 380
institutional 508–10
as large area of expenditure 256
more limited than anticipated 245
Operational Programmes focused on 254,
259–60, 292–3, 295
policy 515–17
as policy to foster economic growth 60–61,
273
and regional economics 54
research, development and 313, 340, 343–6,
352–4
research, technological development and
237–8, 278, 291, 314
and smart specialisation 361–6
as thematic priority 276
in United Kingdom 264–5
institutional themes
and Cohesion policy reform
institutional dynamics in 122–4
institutional influences on 134
institutional capacity
benefits of strong 61
as implementation challenge 241–2
as Thematic Objective 238–9, 294, 298,
314
interinstitutional
relations and Cohesion policy 148–50
struggle over European integration 496–7
Interinstitutional Agreement 124, 132–3
supportive institutions 61
Instrument for Pre-Accession Assistance (IPA)
29–30, 39, 42, 85
Integrated Mediterranean Programmes (IMPs)
20–21, 113, 496
Integrated Sustainable Urban Development
(ISUD) 414, 416, 419–20
Integrated Territorial Investment (ITI) 283,
313, 315, 390, 397, 414, 416, 419–20, 492
intergovernmental relations 507–9
interinstitutional
relations and Cohesion policy 148–50
struggle over European integration 496–7
intermediate bodies (IB) 37–8, 43, 48, 390
internal control system 173–5
Interreg initiative 27, 112, 117, 309, 385–6, 388,
395
intervention
logic of 59–60
scale of 495–6
investment clause 193–4
investments, shielding 245–6
Ireland
accession to EU 19, 50, 329
annual growth 434
budget negotiations 130
Cohesion Fund 58, 156, 251, 372
Cohesion policy
achievements and impact 263–6
commitment appropriations for 256
convergence and divergence 433–4
as former core beneficiary 80
funding 315
on future of 125
presented as great success story of 250
programmes 251
as ‘side payment’ to 497
and debt 465–6
enlargement 18, 205
and ERDF 19, 250, 252, 254–7, 259–60, 265,
495
Europeanisation in 83
funding devoted to social cohesion priorities
479–81, 485–6
impact of economic crisis 31, 128, 187
institutional system 252
Maastricht Treaty 24
Northern, peace process in 25
and NUTS 2 units 446
population size 250
PPP per capita GDP relative to EU28
average 467
as Presidency involved in negotiations 150
regional problem 252
Structural Funds experiences
financial resources 255–8
governance and implementation
arrangements 260–63

Objective 1 22–3, 252–3, 255–6, 264
positively affected by 265–6
shift from national to regional
programmes 252–5
strategies 258–60
threat to sabotage Paris Summit 19, 250, 252
use of bargaining power 333
Italy
additionality principle 192–3
annual growth 434
Cohesion Fund 234, 241, 302, 306
Cohesion policy
absorption, delivery and institutional
capacity 242
achievements and impact 240–41
commitment appropriations for 236
contractualisation approach 375
financial resources 236–7
funding 131, 315
main focus of 231
multilevel governance 244–5
new policy paradigms and public policy
approaches 243–4
programmes 233
regional approach pursued by 516–17
report on 127, 160
shielding investments and providing relief
crisis 245–6
strategies 237–9
support for 108, 126
unfavourable domestic context 243
and ERDF 19, 240, 250, 252
Europeanisation in 83, 516–17
and free movement of labour 469
funding devoted to social cohesion priorities
479–81, 484–6
impact of economic crisis 31, 188–90, 198,
470
institutional system 231
Integrated Mediterranean Programmes for
20, 496
interregional cooperation 385
as most privileged in funding allocation 27,
29
as net beneficiary of regional policy 26
and NUTS 2 446
possible formal referendum on independence
212–13
PPP per capita GDP relative to EU28
average 467
recommendation on poverty and social
inclusion 488
regional policy tradition 231
Sardinian political parties 204, 208
self-rule 99
Index  ­537
showing signs of disaffection 246
Structural Funds 22–3, 331, 450, 516
Structural Programme Loans 195
territoriality and budgetary politics 494
Thematic Objectives 238–9
threat to sabotage Paris Summit 19, 250, 252
JASMINE (Joint Action to Support Micro-
finance Institutions in Europe) 196, 416
JASPERS (Joint Assistance to Support
Projects in European Regions) 30, 197,
416
JEREMIE (Joint European Resources for
Micro and Medium Enterprises) 30, 196,
416
JESSICA (Joint European Support for
Sustainable Investment in City Areas) 30,
196, 416–17
knowledge networks 355–6
Latvia
accession to EU 287
additionality principle 192
as among poorer member states 285
Cohesion Fund 42, 287, 289, 293
Cohesion policy
funding 290, 315
impact 296–7, 311
as new policy priority 126
programmes 289
strategies 291
EDRF and ESF 293–4
EU funding, indirect effects 299
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 285, 467
IMF recommendation to devalue 465
impact of SCF on GDP 295
and NUTS 2 285–6
Operational Programmes 292
regionalist parties welcoming 211
Structural Funds administration 298
Thematic Objectives 293–4
learning
in post-accession Europeanisation 85–7
in pre-accession period, for Central and
Eastern Europe 309–10
recent developments 420–24
legislative package for Cohesion policy reform
133
Lisbon Agenda 28, 250, 259, 265, 424, 440–41,
477–8, 482
Lisbon Strategy 28, 60, 62, 110, 116, 129, 159,
163, 237, 273, 374, 380, 477, 487–8
538  Handbook on Cohesion policy in the EU

Lisbon Treaty see Treaty of Lisbon Madrid Convention 387–8

Lithuania Malta
additionality principle 192 Cohesion Fund 42, 234, 236
as among poorer member states 285 Cohesion policy
Cohesion Fund 42, 287, 289, 295 commitment appropriations for 236
Cohesion policy financial resources 236
funding 290, 315 funding 315
impact 296–7, 311 main goal of 231
implementation 287 as new policy priority 126
as new policy priority 126 programmes 234
programmes 289 distribution of resources to Thematic
strategies 291 Objectives 238–9
ERDF and ESF 293–4 funding devoted to social cohesion priorities
EU funding, indirect effects 299 480–81, 485–6
European Investment Bank loan 40 PPP per capita GDP relative to EU28
funding devoted to social cohesion priorities average 467
480–81, 485–6 regionalist parties welcoming 211
impact of SCF on GDP 295 managing authorities (MAs)
and NUTS 2 285–6 accreditation by independent auditing
Operational Programmes 293 bodies 166
opposition to reduction in EU co-financing change of, in France 275
rate 131 as Cohesion policy actor 37–8
PPP per capita GDP relative to EU28 data accuracy and capacity limitations 46
average 467 delegation of tasks 47
Presidency 133, 149–50 division of responsibilities between, in
progress in transport sector 297 Sweden 298
Structural Funds management and ENE-MA 379
implementation 298 help in establishing financial instruments
Thematic Objectives 293–4 196
logic of intervention 59–60 impact on utilisation of EU funds 315–16
Luxembourg and internal control systems 173, 177
absorption performance 281 operational programmes 437
administration procedures 281 programme 390
Cohesion policy project
allocations 273, 275 applications 43–4
funding 273–5, 315 evaluation plans 46
programmes 270 expenditure 451
Convergence funding 268 management 390
EDRF and ESF 276 regions acting as 506
as fairly unitary 272 view of ERDF, in Germany 279
funding devoted to social cohesion priorities work with urban authorities 152, 420
479–81, 485–6 market potential 345–6, 348
GDP per capita 268, 467 match funding 45–6, 258
national programme 275 measurability principle 433–5
as net contributor to Community budget 272 Member States, as Cohesion policy actors 37–8
NUTS 2 with disparities 268, 272 Merkel, Angela 11, 136
as one of wealthiest member states 268 metagovernance 514–18
process 477 MFF see Multiannual Financial Framework
Thematic Objectives 277 (MFF)
Millan, Bruce 156, 257
Maastricht Treaty see Treaty of Maastricht monitoring committees 38, 116, 377–9, 436–7
macroeconomic rationale for Cohesion policy Multiannual Financial Framework (MFF) 17,
56–8 31, 39, 74, 110, 121–4, 128–37, 141, 148–9,
macroregional strategies 312, 386–7, 390–96, 340–41, 401, 495
500 multilateralism 405–9

multilevel governance
Charter for 166–7
cities as actors in 414–15
and Cohesion policy 48, 67–70, 76, 141, 148,
506–13, 516
and Committee of the Regions 161, 164–5
dichotomy between types of 520
as ‘(dis)ordering framework’ 67
distinction between public and private 65–6
and economic, cultural and political
developments 66
EGTCs strengthening 390
and emergent spatial governance
configurations 510–11
explosion of, in EU studies 67–70
in field of international relation 67
as horizontal reconfiguration of policy
arenas 509–10
instruments of 517
and macro-regional strategies 312
as most apt descriptor of activity of
governing 65
and multidimensional governance 404
and new model of democracy 75
and partnership 151, 156, 260, 279
rationales, mechanisms and arrangements of
types of 512–13
and regional engagement 206–7
regional policies in Germany 515
regionalist parties’ interest in 218
regions becoming dynamic actors of 309,
316–17
and representative democracy 71–3
role of local governments in 41
in southern periphery countries 244–5
and state sovereignty 70–71
Structural Funds
leading to new forms of 203
as principle in design and implementation
of 260
Sweden’s tendency towards 295
and territorialisation 514
and territoriality 498–502
as vertical rearticulation of
intergovernmental relations 506–9
see also governance arrangements
Multiregional Operational Programmes
(MOPs) 233–4, 237, 443
National Operational Programmes (NOPs) 37,
44, 153, 233–5, 251, 288–9, 420, 487
National Programmes of Community Interest
20, 111
National Strategic Reference Framework
(NSRF) 40–41, 232, 234, 237, 288–9
Index  ­539
Netherlands
absorption performance 281
budget negotiations 131
Cohesion policy
achievements and impact 278
allocations 273–6
in favour of rationalising 272
funding 273–5, 315
on future of 125
opposition to increased spending 26
programmes 270
Convergence funding 268
developments in new policy spaces 517–18
EDRF and ESF 19, 276, 479, 484
as fairly unitary 272
functional, overlapping and competing
jurisdictions 503
funding devoted to social cohesion priorities
479–81, 484–6
GDP per capita 268, 467
on national austerity matched by budget
restraint 136
as net contributor to EU budget 26
as one of wealthiest member states 268
Operational Programmes 484
Thematic Objectives 277, 484
urban redevelopment 418–19
New Economic Geography (NEG)
catching up with reality 66
effects of 448–9
model consisting of two types of works
353
and regional policy 52–3
sixth Cohesion report favouring 59–61
and spatial structure trends 346–9
Nomenclature of Territorial Units (NUTS)
NUTS 1 level regions 70, 97–8, 250, 254
NUTS 2 level regions 70, 97–8, 253–4, 261,
265, 268, 274, 285–7, 309, 316, 347, 401,
445–6
NUTS 3 level regions 29, 254, 275, 286, 299,
445
Objective 1 310
system 495
northern countries, Cohesion policy
achievements and impact 263–5
comparison of Structural Funds experiences
265–6
EU political histories 250, 252
financial resources 255–8
governance and implementation
arrangements 260–63
number of programmes 251
programmes overview 252–5
strategies 258–60
540  Handbook on Cohesion policy in the EU
NUTS see Nomenclature of Territorial Units
(NUTS)
Open Days 39, 113, 162–3, 167
Open Method of Coordination (OMC) 114,
116–17, 488, 512
Operational Programmes (OPs)
audit authorities 38
in Central and Eastern Europe countries
313–15
as defined by member states 112, 183–4
drafting of 43
EGTC participation in preparation of 390
embedding macro-regional objectives in 395
and European Investment Bank 195–6
financing of 45
impact of Structural Funds dependent on
434
implemented over several years 57
internal control for 173–7
in legislative package 133
regulations interpreted in 37
and results orientation principle 439–40
in rich central countries 269–70, 275, 279,
376, 415
and social dimension 482–7
and sound financial management principle
437–9
in southern periphery countries 232–5, 237,
239, 481–2
in sparsely populated countries 40, 291–5,
298, 481–2
suspension of resources for 191
for sustainable urban development 420
and technical assistance 47
for Trans-European Networks 340–41
in United Kingdom and Ireland 254, 260
see also National Operational Programmes
(NOPs); Regional Operational
Programmes (ROPs)
Partito Sardo d’Azione (Psd’Az) 212, 228
Partnership Agreements (PAs)
and additionality 192–3
agreement enabling development of 133
in Central and Eastern Europe countries
313–14
and Code of Conduct 151, 161, 378
Cohesion policy reform introducing 115
conforming to Type I multilevel governance
499
implementation of 28 new 153
member states asked to embed macro-
regional objectives in 395
member states drawing up 43
providing general overview of allocation of
resources 483
provision for requesting revisions to 9
related to social cohesion 484–6
role in structuring territorial development
419–20
‘soft’ means of ‘hardening’ governance
modes 115
in southern periphery countries 232, 234,
237–9
in sparsely populated countries 291–4, 298
for urban areas 145
partnership principle
ambitious interpretation of 148
area-based applications of 507
as bedrock of regional policy 206
Delors’ emphasis on 497
for design and implementation of Structural
Funds 260
environmental actors building on 370
and European Committee of the Regions
156, 158–9, 165
European Parliament’s contribution to
shaping Cohesion policy 151
as implementation challenge in rich central
regions 279–80
involvement of local and regional authorities
161
and negotiated programming 517
as one of four basic principles 22
and regionalism 309
scope 30
shallow adaptation to 86
and Structural Funds in Latvia and
Lithuania 298
in third Cohesion Report 330
performance audit 179–81
‘place-based’ approach
ability to attract resources to deprived areas
335
acknowledging necessity of
multidimensional approach in tackling
poverty 487
advocated in Barca Report 61, 365, 416, 423,
482
and Committee of the Regions 160
compatibility with territorial cohesion 331
and conceptualisation of space 491–2
CP characterised by 329
CP territoriality evaluated by schemes of
313, 315
as in danger of becoming a generic ‘cure-all’
423
diversification of economic activities with
328

and horizontal support 470
initiatives promoting development of 259
new arguments for regional decentralisation
317
new instrument used to implement 419
potential impact on CP funding 282
rigid separation with sectoral policies 326
shifting away from 199
and smart specialisation 359
tailored to territorial needs 152
and territorial politics 515
and Type II forms of governance 513
Plaid Cymru 204, 208–12, 228
Poland
administrative capacity 309
budget allocation ratios by Thematic
Objective 314
Cohesion Fund 42, 304
Cohesion policy
budget 236
funding 306, 311, 315
as new policy priority 126
programmes 304, 311
and Eastern Partnership 407
Europeanisation in 84–6
funding devoted to social cohesion priorities
480–81, 485–6
funding for transport infrastructure 378
GDP per capita 308, 466–7
impact of economic crisis 311
legislative package 133
loss of Convergence status 129
as most privileged in funding allocation 29
pre-legislative work 150
ROPs and ERDF 315
Structural Funds
main beneficiary of 378
management of 87
Structural Programme Loan portfolio 195
policies and policy integration in green
economy 376–8
policy arenas, horizontal reconfiguration of
509–10
policy coherence, prospects for 471–2
policy effectiveness see impacts: assessment
policy, multifaceted, as issue relating to impact
assessment 446–8
policy paradigms 243–4, 252
policy prioritisation problem 360–61
Portugal
accession to EU 20, 231, 330
accession to single market 21
additionality principle 192–3
annual growth 434
challenge to manage stability of 128
Index  ­541
Cohesion Fund 42, 58, 156, 232, 234, 302,
306, 372
Cohesion policy
absorption, delivery and institutional
capacity 242
achievements and impact 240–41
commitment appropriations for 236
financial resources 236–7
as former core beneficiary of 80
funding 315
main goal of 231
multilevel governance 244–5
new policy paradigms and public policy
approaches 243
programmes 234, 239
shielding investments and providing relief
crisis 245–6
as ‘side payment’ to 370, 497
strategies 237–9
supported by 126
and transport infrastructure networks 339
unfavourable domestic context 243
Europeanisation in 83
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 434, 467
impact of economic crisis 31, 198, 239
institutional system 231
Maastricht Treaty 24
as most privileged in funding allocation 27,
29
opposition to reduction in EU co-financing
rate 131
self-rule 99
Structural Funds 22–3, 302, 306
Thematic Objectives 238–9
pre-legislative work 141–4, 148, 150
principles
‘ability to pay’ 55
allocative 56
broad interpretation, for projects 44
climate policy integration 381
cohesion 327
to combat social exclusion 423
concentration 22, 26–7, 33, 59, 127, 328, 330
conditionality 152, 310
conventional 22, 25, 429, 440
determining allocation of regional funds 94
‘economic and social cohesion’ 443
economic growth 431–3
efficiency 26
environmental policy integration 369–75,
377–81
equitable territorial distribution of benefits
of integration process 325
542  Handbook on Cohesion policy in the EU

European Territorial Cooperation 384 new priorities and initiatives 25

of financial management 170, 183 six regulations of 24–5
of level playing field 471–2 1999 (improving effectiveness)
matching funding to policy scope 56 Community funding 27
measurability 433–5 Eastern enlargement 25–6
‘more for more’ 404, 408 economic context 26
multilevel governance 260, 404, 410 five regulations of 26–7
non-spatial 362 four Community Initiatives 27
‘nothing is agreed until everything is agreed’ priorities and proposals 26
131 2007 (matching enlargement with wider EU
polluter-pays 372, 381 goals)
programming 22, 330 change factors 27–8
proportionality 30, 166, 281, 415 new initiatives and instruments 30
‘real’ 431–41 Objectives 28–9
results orientation 439–40 operational principles 30
single audit 175, 177 seven regulations of 29
solidarity, for EU budget spending 126, 273, 2014 (responding to mutated economic
298, 478 context)
sound financial management 437–9 economic context 31
for strengthening cooperation 392 legal context 30
support allocation 310 Member States’ reactions 31–2
sustainability 375, 378, 381, 436–7 operational principles 33
territorial equalisation 515 seven regulations of 32
territoriality 501, 511 targets 31
urban policy 416, 418–19 thematic objectives 32–3
see also additionality principle; partnership of Cohesion policy
principle; subsidiarity principle 2007–2008 budget review 124–6
Priority Area Coordinators (PACs) 393–4, actors, roles and institutional dynamics
396 122–4, 153
programmatic commitment in green economy agenda-setting 126–8
375–6 as complex process 121
Programme Monitoring Committee (PMC) CoR in successive rounds of 157–62
44–6 institutional influences 134
public policy approaches 243–4 negotiating budget and legislative package
130–33
quality of government (QoG) and Structural proposals for, in dynamic and uncertain
Funds context 128–30
allocation 92–3 summary of 134–7
analysis 99–102 regeneration of deprived areas see urban
areas for further research 102–3 redevelopment
relevant literature on 94–5 Regional Competitiveness and Employment
sample, research design, data and Objective 28–9, 94, 130, 252–3, 272, 288,
measurement 97–9 385, 436, 445
in southern periphery countries 242 Regional Development Agencies (RDAs)
theory and empirical hypotheses 95–7 in England 254–5, 258–9, 261–5
QUEST III model 241, 295–6, 454 in Romania 85
in southern periphery countries 244–5
reform regional economics
1988 (birth of Cohesion policy) convergence as regional policy goal 51–2
five priority objectives of 23 economic case for regional policy 50–51
five regulations of 22 economics of growth 53–4
four basic principles 22 innovation 54
political dimension 23–4 New Economic Geography 52–3
1993 (Cohesion policy as tool for EMU) non-spatial principles in 362
five main aims for future CIs 25 regional engagement

dwindling possibilities 214
European integration for 218
and multilevel governance 206–7
objective limitation of opportunities for 209
and Structural Funds reform 209, 213
regional mobilisation
contributing to territorial restructuring 218
Convention, enlargement and regions ‘left
behind’ 209–12
Europe of the Regions 207–9
factors increasing 70
frustration with Europe 204–5, 213–14
independence demands and European
responses 213–14
multilevel governance and regional
engagement 206–7
paths of 203–4
Structural Fund reforms and the regions
205–6
Regional Operational Programmes (ROPs) 37,
44, 153, 232–5, 237, 251, 260–61, 275, 288,
311, 315, 343, 420, 443, 445
regional problem
and local policy-makers 59–60
low labour mobility exacerbating 55
origin and evolution of 306–8
in United Kingdom and Ireland 252
Regional Studies Association (RSA) 41–2
regionalism, experimental 514–18
regionalist frustration
with Committee of the Regions 210
with Europe 204–5, 213–14
regionalist parties
active, in CEE countries 203
Cohesion policy funds
analysis 220–24
data 219–20, 228
hypothesis 217–18
representing manifestation of EU policy
for regions 217
results 225–6
Cohesion policy of value to 208–9
concerns of 204–5, 210–12
criticism of draft European Constitution 210
demands for independence 212–14
early frustration with Europe 204–5
perceptions of EEC 204
positions on European integration 211–12,
217–25
supporting goal of self-determination 209
as ‘vociferous advocates’ on Europe of the
Regions 208
regions
impact of economic crisis on 189–90
‘left behind’ 209–12
Index  ­543
regulations for reforms 22, 24–9, 31–2
representative democracy see democracy
research, development and innovation (RDI)
313, 340, 343–6, 352–4
research, technological development and
innovation (RTDI) 32, 237–8, 278, 292–4,
342
results orientation
ambition to strengthen 246
of European Parliament 151–2
principle 439–40
rich central countries, Cohesion policy
achievements and impacts 278–9
common characteristics 272
funding
differences 268, 272
levels of 273–5
types and instruments 275–6
future challenges for 282
implementation challenges
absorption 281
administrative procedures 281–2
as difficult to assess 279
partnership 279–80
number of programmes 269–71
strengthening participation 282–3
thematic priorities 277
RIS3 (Research and Innovation Strategies for
Smart Specialisation) 365–6
Romania
accession to EU 302
budget allocation ratios by Thematic
Objective 314
Cohesion Fund 42, 304
Cohesion policy
evolution of strategies 313
focus on least-developed member states
125–6
funding 311, 315
impact 311
programmes 304
Convergence status 129
Europeanisation in 84–5
funding devoted to social cohesion priorities
480–81, 485–6
GDP per capita 308, 467
impact of economic crisis 131
integrated territorial OPs 315
investment clause 194
opposition to reduction in EU co-financing
rate 131
Structural Funds
centralisation traditions in managing 87
difficulties in absorbing 87
Rome Treaty see Treaty of Rome
544  Handbook on Cohesion policy in the EU

ROPs see Regional Operational Programmes need to increase public investment 192–3
(ROPs) as richest Eastern candidate country 26
rural development see agricultural and rural smart specialisation
development broader context of CP reforms 364–5
implementation issues 365–6
Sardignia Natzione 204, 208, 211 operationalising concept of 361–3
SCF see Structural and Cohesion Funds (SCF) policy prioritisation problem 360–61
Scottish National Party (SNP) 204, 209–14, relevance of 259, 366
228 social dimension of Cohesion policy
sectoral policies, evolution of 326 balancing competitiveness and equity goals
simplification 26, 69, 145, 152–3, 158, 160 486–8
‘single audit’ model 175–8 contribution of Structural Funds to social
Single European Act (SEA) 20–21, 194, 205, cohesion 478–82
327, 329, 339, 370–71, 380–81, 429, 432, Europe 2020 and inclusive growth priority
434, 436–7, 443, 469, 476, 496 482–6
single market tracing process of 476–8
and creation of Cohesion policy 429–31 vaguely defined role in countering social
deleterious effects on poorer regions 204, exclusion 475–6
330 social exclusion
in financial services (SMFS) 465, 470 Cohesion policy’s vaguely defined role in
free-market thrust of 205 countering 475
integrating effect of 58 initiatives to combat in urban
and measurability principle 433–5 neighbourhoods 418, 423
Slovakia programmes in sparsely populated countries
accession to EU 302 292–3
budget allocation ratios by Thematic see also social dimension of Cohesion policy
Objective 314 social inclusion
Cohesion Fund 42, 305–6 percentage of ESF allocated to 486
Cohesion policy Thematic Objective for 238, 291, 294, 483–4
evolution of strategies 313 sound financial management principle 170,
funding 311, 315 183, 437–9
impact 311 southern periphery, Cohesion policy
as new policy priority 126 achievements and impacts 239–41
programmes 305 added value and spillovers
Europeanisation in 84, 86 multilevel governance 244–5
funding devoted to social cohesion priorities new policy paradigms and public policy
480–81, 485–6 approaches 243–4
GDP per capita 308, 467 shielding investments and providing relief
income levels 466 crisis 245–6
integrated territorial OPs 315 as characterised by success and failure 246
investment clause 194 commitment appropriations for 236
NUTS 2 units 446 delivery of 232
Structural Funds 306 financial resources 236–7
Slovenia implementation challenges
accession to EU 302 absorption, delivery and institutional
budget allocation ratios by Thematic capacity 241–2
Objective 314 unfavourable domestic context 243
Cohesion Fund 42, 305 institutional systems 231
Cohesion policy number of programmes 233–5
funding 311, 315 strategies 237–9
impact 311 sovereignty 70–71, 209, 213
programmes 305 Spain
funding devoted to social cohesion priorities accession to EU 20, 42, 231, 330
480–81, 485–6 accession to single market 21
GDP per capita 308, 467 Andalucian Party 204, 208

annual growth 434
challenge to manage stability of 128
Chinese support to 472
Cohesion Fund 58, 156, 232, 235, 302, 306,
372
Cohesion policy
absorption, delivery and institutional
capacity 242
achievements and impact 240–41
commitment appropriations for 236
financial resources 236
as former core beneficiary 80
funding 132, 315
main focus of 231
multilevel governance 244–5
new policy paradigms and public policy
approaches 243–4
programmes 235
resource distribution to Thematic
Objectives 238
shielding investments and providing relief
crisis 245–6
as ‘side payment’ to 370, 497
strategies 237
supported by 126
and transport infrastructure networks
339, 349, 351
unfavourable domestic context 243
and debt 465–6
Europeanisation in 83
funding devoted to social cohesion priorities
479–81, 485–6
GDP per capita 434, 467
impact of economic crisis
competitiveness 189
convergence 198
employment 187
greater 31
unit labour costs 189–90
institutional system 231
interregional cooperation 385
Maastricht Treaty 24
as most privileged in funding allocation 27,
29
as net beneficiary of regional policy 26
and NUTS 2 446
RIS3 Platform hosted in 365
self-rule 99
showing signs of disaffection 246
Structural Funds 22–3, 302, 306
sparsely populated countries, Cohesion policy
differences between countries 285–6
disparity of approaches to CP 287
financial allocations 290–91
groupings by economic development 298–9
Index  ­545
implementation challenges 297–8
number of programmes 288–9
outcomes and impacts 295–7
strategies 291–5
spatial structure 345–9
spillovers
as issue relating to impact assessment 445–6
in southern periphery countries 243–6
state capacity see quality of government (QoG)
and Structural Funds
state sovereignty 70–71, 209, 213
Structural and Cohesion Funds (SCF) 37, 125,
186–8, 195, 197, 225, 236, 256, 263–4,
273, 290, 295, 299, 306, 309–10, 318, 380,
416–17, 476, 481, 487
Structural Funds
allocation 92–103
in Central and Eastern Europe countries
302, 306, 309, 315, 317–18
contribution to social cohesion 478–82
effect on regionalist parties 219–26
in green economy 370–81
and impact assessment 447–8, 450, 453,
455
management of 21, 79–80, 84–8, 252, 317
misuse of 40
reform, and the regions 205–6, 208–9, 213,
506, 516
in reform regulations 22–3, 25–7, 30
in rich central countries 276–7, 280
in rural development 328, 330–31
for social dimension 477–80, 487–8
in sparsely populated countries 293–4, 296,
298
in United Kingdom and Ireland 252–66
in urban areas 414, 416, 418–19, 423
see also Structural and Cohesion Funds
(SCF)
Structural Programme Loan (SPL) 195–7, 199
subnational governments (SNGs) 25–6, 156,
158, 196, 311, 499, 508–10
subsidiarity principle
area-based applications of 507
as bedrock of regional policy 206
bodies guarding breaches of 75
CEMR’s respect for 41
and Cohesion policy 217
and European Committee of the Regions
157–9, 165–6
importance attributed to 225
and Lisbon Treaty 415
and negotiated programming 517
and regionalism 309
reinvention of 148–50
specifying roles in light of 24–5
546  Handbook on Cohesion policy in the EU
use in opposition to biodiversity 377
viewed as empty shell 210
SURE Committee 141
sustainability principle 375, 378, 381, 436–7
sustainable development (SD) 369–70, 373–4,
377, 380–81
Sweden
accession to EU 287
budget negotiations 131
Cohesion policy
achievements and challenges 296–8
allocations under 125–6, 287, 290–91, 298
effects of SCF on GDP 295–6
ERDF and ESF 293–4, 297
funding 290–91, 299, 315
implementation challenges 297–8
operational programmes 295
outcomes and impacts 295–6
planning and implementation approach
287
programmes 288
strategies 291–5
enlargement 24
ERDF and ESF 293–4, 297–8
funding devoted to social cohesion priorities
479–81, 485–6
GDP per capita 285, 287, 467
as ineligible for Cohesion Fund 293
institutional system 287
low applicability of patents in comparison to
papers 355
municipalities responsible for social cohesion
421
on national austerity matched by budget
restraint 136
as NUTS 2 region 285–6, 446
Operational Programmes 292, 295
population 285
socio-economic development 285
Thematic Objectives 291, 294
technical assistance 46–7, 196–7, 242, 313, 379,
394
TEN-T see Trans-European Transport
Network (TEN-T)
territorial cooperation
cross-border cooperation law
making, inside EU 388
outside EU 387–8
EGTC and EUMRS comparison 395–6
EU macro-regional strategies 390–95
European groupings for 389–90
evolution into core aspect of Cohesion
policy 385–6
growth of, since end of World War II 384
plethora of institutions 384–5
three discernible components of 385
types of 386
territorialisation
challenges of multilevel-multiscalar
metagovernance 518–21
emergent forms of territorial governance
and implications 513–18
experimental regionalism and multiscalar
metagovernance in three European
countries 514–18
multilevel governance
and Cohesion policy 506–13
and emergent spatial governance
configurations 510–11
as horizontal reconfiguration of policy
arenas 509–10
types of 512–13
as vertical rearticulation of
intergovernmental relations 507–9
territoriality
and budgetary politics 494–5
of Cohesion policy 491–8
evolution of territorial policies in EU 326
and interinstitutional struggle over
European integration 496–7
move towards territorial centrality 326–31
and multilevel governance 498–500
multilevel–multiscalar territorial systems
518–21
and representative democracy 8, 500–502
and scale of intervention 495–6
state
Cohesion policy beyond 502–3
reasserting 497–8
territorial dimension of Cohesion policy
146–7
territorial needs, place-based policy tailored
to 152
unravelled 493
thematic concentration 42, 130, 133–5, 140,
144–6, 376
Thematic Objectives (TOs)
distribution of resources to
in Central and Eastern Europe countries
313–14
in rich central countries 277
social cohesion priorities 485
in southern periphery countries 238–9
in sparsely populated countries 291,
293–4
environmental 376
linked to inclusive growth/social inclusion
483–4
new, related to 2020 priorities 32–3, 375–6

thematic priorities, in rich central countries
276–7
Thomson Report 18
time dimension 452
Trans-European Transport Network (TEN-T)
193, 297, 339–40, 351–4
transportation
Cohesion policy
and growth models 343–5
and transport infrastructure networks
339–43
Europe 2020 strategy and TEN-T network
effects 351–4
growth and development synergies 343
innovation, distance and knowledge
networks 355–6
New Economic Geography and spatial
structure trends 346–9
spatial structure, market potential,
agglomeration economies and urban
hierarchies 345–6
transport infrastructure
and accessibility 349–51
networks 339–43
treaties
of cross-border cooperation 388
environmental 369–71
Treaty of Amsterdam 26, 512
Treaty of Lisbon 30, 123–4, 128, 136, 140–41,
143, 146, 159, 165, 183, 384, 415, 421
Treaty of Maastricht 24, 39, 109, 157, 165,
206–7, 372, 384, 415, 429, 435, 506
Treaty of Rome 1, 3, 11, 17–18, 164, 194, 429,
494
Treaty on European Union (TEU) 157, 160,
165, 186, 194, 325, 372, 413, 433
Treaty on the Functioning of the European
Union (TFEU) 30, 50, 147, 149–51, 177,
183, 199, 461, 470
United Cities and Local Governments
(UCLG) 41
United Kingdom (UK)
accession to EU 19, 50, 329, 495
budget negotiations 131
Cohesion policy
achievements and impact 263–6
on allocations under 125
challenges 250
Index  ­547
funding 315, 375
on future of 125
pressure for establishment of 329
programmes 251
as redistributive 59
regionalist parties welcoming 208
Common Agricultural Policy 250, 495
different approach for 18
and ERDF 19, 250, 254, 256–9, 264–5
funding devoted to social cohesion priorities
479–81, 485–6
government on Cohesion as redistributive
policy 59
impact of economic crisis 187
impact of European urban policy 418
institutional system 252
on national austerity matched by budget
restraint 136
NUTS 2 units as artificial 446
opposition to EU budget reform 21
performance audit methodology 180
population size 250
potential impact of referendum 214
PPP per capita GDP relative to EU28
average 467
self-rule 99
shift from infrastructure support towards
enterprise 250
and state territoriality 498
Structural Funds experiences
as complex 265–6
financial resources 256–8
governance and implementation
arrangements 260–63
Objective 1/Convergence status
252–5
strategies 258–9
urban hierarchies 345–6
urban redevelopment
cities as actors in multilevel governance
systems 414–15
impact and learning 420–24
recent developments 418–20
urban dimension in Cohesion policy 413–14,
416, 419–20, 422–4
from urban pilot projects to urban
mainstreaming 415–18
Van Rompuy, Herman 123, 132, 136