Jagiellonian University Kraków
The Centre for European Studies

EU Structural Policy
and the Implications of Enlargement

by

Heiko Bubholz

Prepared for: EU Enlargement in the Context of CEE ·
Economic and Political Transition

Kraków, 19 August 2002

Table of Content

Table of Content ... II

1. Introduction ... 1

2. Cohesion and Structural Policy ... 1

3. EU Structural Policy ... 2
3.1 Objectives ... 3
3.2 Means of EU Structural Policy ... 5
3.3 Agenda 2000 ... 6

4. Implication of EU enlargement ... 7
4.1 Social and Economic Cohesion vs. the EU budget ... 9
4.2 PHARE, ISPA, SAPARD, or even XYZ? ... 10

5. Conclusion ... 11

Bibliography

Abbreviations

CAP Common Agricultural Policy
CF Cohesion Fund
EAGGF-GS Guidance Section of the European Agricultural and Guarantee
Fund
EC European Community/European Communities
ECB European Central Ba nk
ERDF European Regional Development Fund
ESF European Social Fund
EU European Union
EU15 European Union, in its today’s shape with 15 Member States
EU27 European Union after the accession of all 12 Candidate Countries
GDP Gross Domestic Product
par. Paragraph
TEC Treaty establishing the European Community
TEU Treaty on the European Union

1. Introduction

After the successful and Eu(ro)phoric introduction of Europe‘s new currency – the new symbol of the Europe’s unity – emotions, especially among the Brussels technocrats, cooled down rapidly. The negotiations with the Candidate Countries entered in a new stage. Latest since the Council Meeting in Laeken the enlargement of the EU is conducted in an increasingly rational manner¹. In February 2002 rumours indicated the difficulties, which the European Union faces after the enlargement.

A prominent objective of the EU is the regional cohesion, the relative regional equality, thus can hardly be accomplished in its today’s structure after the accession of up to 12 countries. The reform of the EU Agricultural and Structural Policy is inevitably today. It will need much more efforts to do so after the enlargement of the European Union. However, the agenda for enlargement is set by the political elites, not by EU bureaucracy. Thus, the negotiations may be used for a certain kind of political blackmailing within the Community. Yet, the enlargement must not fail by financial disruption, since this could easily result in dissolution of all of the European experiment². The EU Structural Policy has been so far a more or less efficient tool to bridge the unequally distribution of wealth in the Community. It thus provided for a sustainable development and a well-balanced social climate among the Member States and its Regions. Accordingly, aim of this paper shall be first to define the term of cohesion and identify means of structural policy. The EU generated a variety of tools to accomplish its objectives in regard of “raising of the standard of living and quality of life, and economic and social cohesion” ³. Accordingly, the second part of the paper shall be devoted to describe in a limited scope the actual mechanisms of EU Structural Policy. Finally, the approaching enlargement of the Community will provoke further inconveniences concerning the Agricultural and Structural Policy. Hence, the predictable implications of the enlargement will be discussed in the last part of this paper.

2. Cohesion and Structural Policy

Discussing the term of cohesion, one should distinguish between the rather technical use of the phrase in the EU bureaucracy, and the somehow metaphysic purpose among political elites. Hence, pure cohesion is defined as the inner unity of parts of a whole⁴. This rather static explanation does not refer to benefits, which are probably resulting out of cooperation among heterogeneous territories and societies. In contrast, the EU’s objective of social, territorial, and economic cohesion was introduced with the Single European Act “to signify the importance of promoting the development of the poorer regions and countries of the EU”⁵. Accordingly, Article 158 TEC states that in order “to promote its overall harmonious development, the Community shall develop and pursue its actions, which ought to lead to the strengthening of its economic and social cohesion”. The same TEC Article requires to reduce the “disparities between the levels of deve lopment of the various regions”. This, however, is far more than the declaration of an idealistically driven policy of the EU. Instead – and as mentioned above – Article 2 TEC claims “to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, … sustainable and non-inflationary growth, … the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States”. Yet, VÖGELE intimates that it is a ‘popular Eurocrat’s method’ to ‘conceal unpleasant realities’ behind nice-sounding coinages’⁶. The notion of sustainable growth might only be assumed if the level of development of particular regions is not too heterogeneous. In the contrary case, the higher developed region might supposedly exploit the poorer one ⁷. However, cohesion in this sense does not mean to level completely the standard of living and the economic performance throughout the entire territory of the EU. Yet, applying HAYEK’s fundamental writings, this may result in a decrease of healthy competition or even political lethargy among the involved region⁸.

[...]

1 Europäischer Rat (2001).

2 Bünder (2002).

3 Article 2 TEC.

4 Schmidt (1995), p. 481.

5 Allen (2000), p. 244.

6 Vögele (1992), p. 89.

7 Following Ricardo’s theory of comparative advantageousness; Ricardo (1817); Siebert (2000), p. 62.

8 Hayek (1994); Hayek (1976).