EU Community Expenditure and Economic Cohesion
Community Expenditure
- Operating expenses
Institutions: personal, current goods, services, management costs… The Union’s own resources are collected by member states. The European Agricultural Guidance and Guarantee Fund (EAGGF) finances the costs of the common agricultural policy. The European Social Fund (ESF) aims to promote employment opportunities and occupational and geographical mobility of workers. The European Regional Development Fund (ERDF) is the main financial instrument of regional policy, and its purpose is to promote economic and social cohesion through the correction of regional imbalances. The Financial Instrument for Fisheries Guidance (FIFG) aims to help achieve a balance between fisheries resources and their exploitation, increase the competitiveness of structures, and revitalize areas that depend on fisheries. The Cohesion Fund is an instrument of solidarity that is addressed to those countries that, at the time of its introduction, had a GNP per capita less than 90% of the EU average, contributing to the reduction of public deficits.
Other financial instruments of the EU are:
The European Development Fund (EDF) is a financial instrument not integrated into the general budget, with the role of funding development aid to poorer countries. The European Investment Bank (EIB) aims to contribute to the development of less advanced regions of the EU. Credit Operations, by granting loans through the European Investment Bank to countries in Central and Eastern Europe and the Mediterranean basin. The European Investment Fund (EIF) serves as a guarantee to credit to facilitate the development of large investment projects in the EU.
Economic and Social Cohesion
The European Community Treaty provides that, in order to promote harmonious development, the EU will develop measures to strengthen its economic and social cohesion through proposals to bridge the gap between different regions. The objectives and financial instruments are:
Objective 1: Development of Less Developed Regions
Promoting the development of less developed regions, those with a GDP below 75% of the EU average. The financial instruments used are EAGGF Guidance Section, ERDF, FIFG, and ESF.
Objective 2: Economic and Social Conversion
Supporting the economic and social conversion of regions facing structural problems and significant population or area decline. The same region may not be included in both objectives, and the instruments applied are ERDF and ESF.
Objective 3: Adaptation and Modernization
Supporting the adaptation and modernization of policies and systems of education, training, and employment of nations not covered by Objective 1. Funding is through the European Social Fund.
These actions are limited because they are a supplement to state funding and may not exceed 75% of eligible costs, which may rise to 80% for areas belonging to a State beneficiary of the Cohesion Fund. For Objectives 2 and 3, the limit is 50%.
Each state must submit a Regional Development Plan (RDP) to establish strategies and priorities. The Commission approves the Community Support Framework (CSF), which includes strategies, priority lines, objectives, and a plan of financing by each fund.
The Community Initiatives planned for the period 2000-2006 are:
INTERREG III: Aims to foster cross-border, transnational, and interregional cooperation.
LEADER: Promotes rural development.
EQUAL: Focuses on new methods of combating discrimination and inequalities in accessing the labor market.
URBAN II: Promotes economic and social revitalization of cities or areas in crisis.