The EU Cohesion Policies and the Lisbon Strategy

Index

1 How to be sustainable
1.1 What is sustainability?
1.2 Why sustainability in European policy?
1.3 Implementing sustainability

2 No resting on past laurels
2.1 How education, research and development shall save the economy
2.2 It needs more than money?
2.2.1 Education
2.2.2 Research and development
2.3 Wanted: A budget that can stimulate brightness

3 Forming Cohesion - the Structural Funds taking aim
3.1 ERDF-Objectives
3.2 ESF-Objectives
3.3 Separate ways, combined forces

4 The future of the past - developing agriculture and rural areas

5 Opening the purse in Brussels – the European Grant

Programmes

Bibliography

Notes:

List of abbreviations

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1 How to be sustainable

1.1 What is sustainability?

“Sustainability”, in a comprehensive definition, means the long-term effectiveness of public actions; the durability of their social, economical or structural benefit and their compatibility with other measures or policies^[1].

Based on the Brundtland-Commission’s definition of ecological sustainability^[2], the Euro­pean Union [EU] adopted a concept of “long-term (...) policies for economically, socially and ecologically sustainable development” A which was to become the “central objective of all sectors and policies”^[3].

Thereby the EU accepted that the social, economical and ecological issues of sustainable development are interdependent. For example the “shrinking” of East Germany’s indus­tries to technologically and organisationally “state of the art” capacities was of consider­able ecological benefit and an economic necessity, but had harsh consequences for the workforce and for the regions whose livelihood these “dinosaur industries” had been^[4].

1.2 Why sustainability in European policy?

In 2000 the EU-Member States’ [MS] adopted the “Lisbon Strategy”, a core policy set to stimulate economic growth and employment. Meant to close the gap between the dynamic US-American and Asian economies and the weaker performance of most European economies and labour markets, the EU was to be made the “most competitive and dy­namic knowledge-based economy in the world” B by short-term, medium and long-term economic political actions and social reforms C.

However, soon became clear that economic growth could not be the only issue. As experi­ence shows, economic benefit which is received only by a few endangers cohesion by stimulating political instability and social unrest^[5]. Economically beneficial but ecologically harmful trading policies cause economic and social decline in the long run^[6]. Public em­ployment policies that overstress a country’s capital base cause economic decline, e.g. in the former GDR. Therefore a policy striving for only one goal will not be of durable effec­tiveness. Instead all policies must be conceptually intertwined under an overall strategy.

For this reason the 2001 Göteborg Strategy added combating Climate Change, worldwide poverty as well as supporting public health, consumer protection, sustainable management of resources and transport systems as priority objectivesD to the Lisbon Strategy^[7].

This influenced the EU Cohesion Policy, which long before 2000E had striven to improve the possibilities of durable economic growth and employment in disadvantaged regionsF with an approach based on four assumed “must-haves” of prosperous economiesG:

1. Free trade
2. High quality, flexible human capital,
3. An open and competitive society and
4. A comprehensive infrastructure especially for transport and communication

This made Cohesion Policy one of the most important policy fields of the Lisbon Strategy. as one strategy for improving regional socio-economic structures and another for EU’s overall economic and social policy would make little sense. Nevertheless, actions suitable to improve “under-developed” regions and actions to guide able structures into a prosper­ous future naturally differ. Therefore the policies were kept separated but coordinated to supplement each other. Slowly but surely the Lisbon Strategy’s agenda occupied Cohe­sion Policy (see chapter 3).

As the main instrument of Cohesion Policy for financial aidH, the Structural Funds’ [SF] support national measures for building up comprehensive and durable socio-economic structures in disadvantaged regions. As a result of the convergence of Cohesion Policy and Lisbon Strategy the SF’s objectives were reformed and derived from the Lisbon Strat-egy’s objectives and action frames.

A graphic description of the different levels of policy formulation and implementation high­lights some of the links between the two policy sets:

Illustration 1: Lisbon Strategy and Cohesion Policy

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However, not all parts of the Cohesion Policy’s original agenda were easily compatible with the Lisbon Strategy. This original agenda I was set by the expectation that “harsher” effects J of internal market liberalism^[8] must be counterbalanced or that the SF should “compensate” socio-economically weaker MS who often complain that converging their national economies into the Internal Market is beneficial for “richer” MS, but puts strain on their national budgets K and create a social burden L. In order to achieve European citizens’ acceptance for economic convergence and to ensure inner cohesion in spite of “social pains”^[9], Cohesion Policy is thought to “soften” economic policies^[10]. Therefore, influencing the agenda was not a one way road. While the Lisbon Strategy brought more liberal mar­ket-orientation into Cohesion Policy, Cohesion Policy brought the importance of social consideration into the Lisbon concept’s realization.

1.3 Implementing sustainability

Based on the above mentioned structural “must-haves”, the SF always targeted issues also relevant for the Lisbon Strategy, like infrastructure M, urban or rural development, ac- tive labour market policies and education N. Nevertheless, with the revised Lisbon Strat-egy^[11] from ^[2005] O, a more “sustainable” funding strategy^[12] had to be found. However, this was more easily said than done^[13].

Admittedly, the European Regional Development Fund [ERDF] was rigorously “greened” by ecological priorities, while the European Social Fund [ESF] was even more focussed on providing the necessary human capital for the envisioned future socio-economy. Benefici­aries are obliged to assess the ecological and the social impacts of their measures before applying for SF financial support P. The ERDF promotes future-oriented measures^[14] that utilize seemingly disadvantageous structures, like an ageing population or a beautiful but undeveloped landscape, instead of wasting money on futile combat against them. Art 3 of the ESF-Regulation^[15] is meant to promote a sustainable labour market^[16] that focuses on future demands instead on preserving traditional structures e.g. of mass production in “Model T-fashion”. For both Funds only measures of durable effectiveness are eligible^[17].

However, national funding practice is not always following. Although MS are obliged to make the Regulations’ priorities the basis of their national “Operational Programmes”, some still favour established funding strategies over “experimental” ones. E.g. Germany, before 2005, concentrated on keeping up foreseeable chanceless structures Q (e.g. over-capacities in constructing) instead on building up e.g. services^[18]. This is perpetuated after 2007 e.g. when the Operational Programme of Thuringia gives “economic growth higher priority than social or environmental issues”. The focus is still on direct subsidies to extend

“physical infrastructure” R instead on e.g. fostering easier access to capital or substituting traditional, but weak branches by ones with better chances, like renewable energy-technologies. The legal possibility S to give higher subsidies to ecologically more valuable measures than to less valuable ones is not used.

Although dependent on the Commission’s approval, national funding strategies can still evade a change of strategy, however deep it is entrenched in the SF’s overall strategy.

2 No resting on past laurels

2.1 How education, research and development shall save the economy

This bec]omes visible on the fostering of education, research and development [ERD].

While 19th century industrial revolution made European countries the economically and technologically leading world powers, Europe is now in fierce competition with the USA and Asian countries like Japan (Meister, et al., 2006 p. 179). In the EU’s opinion this is caused by the loss of European technological and scientific leadership. It therefore regards more investment in ERD as a “must” of sustainable development T. Enhancing investment in ERD up to 3 % of GDP p.a.^[19] is thought necessary to achieve the Lisbon objectives of 3 % annual growth and high employment rates^[20].

Highly qualified human capital, an innovation-friendly environment and comprising techno­logical knowledge are also essential advantages for European economies competing with economies that can offer low wages or primary resources U. E.g., when mass-production, that needs only a handful of skilled employees but lots of untrained workers, was trans­ferred to low-wages countries, 480.000 jobs were lost in German textile- and clothing in­dustry since 1980. The industry survived by changing to advanced technological niches like artificial fibres for car manufacturing, medical products etc. V. To keep these lucrative niches it needs highly trained researchers, engineers and skilled workers. It must therefore invest in RD and depends on public education systems and on science infrastructure.

With countries like China or India catching up on high-technology advancement W and add­ing to competitive pressure from USA or Asia, quantity and quality of ERD in the EU is nevertheless still too low. E.g., with patents as the key for an economically lucrative use of research results X, the number of new patents is not as high as in the USA. The number of 25-34 year old persons with secondary education is lower; the number of tertiary educated is significantly lower than in the USA Y.

According to the PISA-Studies, European education systems also lack quality Z. However, this is somewhat qualified by the PISA-indicators’ not covering all relevant issues of edu­cation quality. The Lisbon Strategy has the same somewhat restricted view on the “knowl­edge society”. Both focus much on technological and natural sciences^[21] but less on art, history or other more “cultural” abilities, which must also be well established in an edu­cated, open and multi-ethnic society. Nevertheless, the above mentioned figures on ERD AA show that more effort is necessary BB.

[...]

^[A] (European Commission, 2001 p. 2)

^[B] (Nugent, 2006 p. 374)

^[C] (Mundschenk, et al., 2006 p. 3)

^[D] (Seyfried, 2008 p. 27)

^[E] (Armstrong, 2007 p. 430)

^[F] (Sapir, et al., 2004 p. 23)

^[G] (Fitz Gerald, 2006 p. 67)

^[H] (Nugent, 2006 p. 371)

^[I] (Goliath Business Knowledge on Demand, 2008)

^[J] (Nugent, 2006 p. 371)

^[K] (Armstrong, 2007 p. 423)

^[L] (Allen, 2005 p. 213 ff.)

^[M] (Fitz Gerald, 2006 p. 96)

^[N] (Sapir, et al., 2004 pp. 24-25)

^[O] (European Commission, 2005c)

^[P] E.g. Art 40 lit e-f General Regulation

^[Q] (Pfennig, 2005 pp. 103-107)

^[R] (Thüringisches Ministerium für Wirtschaft und Arbeit, 2006 pp. 28-29)

^[S] E.g. Art 52 lit c General Regulation

^[T] (European Commission, 2005c p. 7)

^[U] (European Commission, 2005e p. 20)

^[V] (WIKIPEDIA, 2009)

^[W] (Preeg, 2009; Global Security Organisation, 2009)

^[X] (European Commission, 2006)

^[Y] (CORDIS RTD-News, 2006)

^[Z] (Elmeskov, 2005 pp. 68-69)

^[AA] (Van der Ploeg, et al., 2007 p. 3)

^[BB] (Cohen-Tanugi, 2008 p. 84)