Investing in regions: The reformed EU Cohesion Policy 2014-2020 Presentation by 1

Basics on EU Cohesion Policy 2

The European Union is diverse … GDP/capita Map from 2007-2013 period. Until the end of 2014 Mayotte isn't registered as NUTS 2 region, this is why it isn't taken over on the map. Wide disparities between the Member States, but also within each Member State Economic and social disparities have significantly deepened after enlargement in 2004 – at regional level this is even bigger Huge difference between richest regions, such as London Capital, and for example the poorest region in Romania Highest GDP/capita in Scandinavian countries, NL, Germany, parts of Italy Lowest GDP/capita in CEEC countries

The European Union is diverse … Unemployment Map from 2007-2013 period. Until the end of 2014 Mayotte isn't registered as NUTS 2 region, this is why it isn't taken over on the map. Employment rates vary considerably, not only across Member States but also within Member States Though in Netherlands, there is little divergence – more or less the same percentage across regions Highest unemployment rates in Spain, Portugal, Greece, Ireland, South of Italy, Baltic states (crisis-affected countries) Low unemployment in Austria, Germany 4

The European Union is diverse … Third-level Education Map from 2007-2013 period. Until the end of 2014 Mayotte isn't registered as NUTS 2 region, this is why it isn't taken over on the map. Highest tertiary education rates in UK, Ireland, Finland, Lowest ones in Portugal, South of Italy, Those wide disparities between the regions endanger two fondamental growth policies of the European Union: internal market and the monetary union. 5

Why an EU Cohesion Policy? Top Bottom Ratio GDP per person (% average EU-28) Luxemburg 266% Bulgaria 47% 5.7* Employment rate (%, ages 20-64) Sweden 79.8% Greece 53.2% 1.5 GDP per person: 2011 data Employment rate: 2013 data; : the highest employment rate is about 50% higher than the lowest one. Cohesion Policy aims to reduce disparities between EU regions in order to achieve balanced economic, social & territorial development. * In the United States, the difference is only 2.5 and in Japan 2

Cohesion Policy finds its origins on the Treaty of Rome Preamble to the Treaty of Rome (1957): necessity ‘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’. Article 174 Treaty of Lisbon (2010): ‘In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion. In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions‘.

What is a region? Eurostat has developed a classification of territorial units for statistics (NUTS). Cohesion policy takes into account the NUTS 2 regions which include from 800 000 to 3 000 000 inhabitants. Currently 274 NUTS 2 regions in the EU.

EU Cohesion Policy 2014-2020: 1/3 of the EU budget The reforms agreed for the 2014-2020 period are designed to maximise the impact of the available EU funding. €1 082 billion OVERALL EU 2014-2020 BUDGET Other EU policies Agruculture Research External Etc. €730.2 billion 67.5% 32.5% €351.8 billion COHESION POLICY GROWTH Smart Sustainable Inclusive Cohesion Policy delivers Europe 2020 Strategy

Cohesion Policy delivers the Europe 2020 strategy Launched in March 2010: Follow-up to the Lisbon Agenda (2000 and 2005). A strategy from the European Commission ‘for smart, sustainable and inclusive growth’ over the next 10 years Smart agenda: innovation; education; digital society. Sustainability agenda: climate, energy, and mobility. Inclusive agenda: employment and skills; fighting poverty and social exclusion. 8 ambitious targets for the EU in 2020 : Employment: 75% of the 20-64 year-olds to be employed R&D: Innovation: 3% of the EU's GDP (public and private combined) to be invested in R&D/innovation Climate change /energy: greenhouse gas emissions 20% lower than 1990, 20% of energy from renewables, 20% increase in energy efficiency Education: Reducing school drop-out rates below 10% , at least 40% of 30-34–year-olds completing third level education Poverty / social exclusion: at least 20 million fewer people in or at risk of poverty and social exclusion

3 funds to invest in growth and jobs DELIVERED THROUGH 3 FUNDS EUROPEAN REGIONAL DEVELOPMENT FUND EUROPEAN SOCIAL COHESION COHESION POLICY FUNDING € 351.8bn COHESION POLICY FUNDING EXPECTED PUBLIC & PRIVATE NATIONAL CONTRIBUTIONS LIKELY IMPACT OF COHESION POLICY € 500bn +

Investing in all EU regions ADAPTED TO ALL EU REGIONS BENEFIT LEVEL OF INVESTMENT LEVEL OF DEVELOPMENT € 182 billion for less developed regions GDP < 75% of EU-27 average 27% of EU pop. for transition regions GDP 75-90% of EU-27 average 12% of EU pop. €35bn for more developed regions GDP > 90% of EU-27 average 61% of EU pop. €54bn 50.5% 9.9% GDP/head 15.1%

Cohesion Policy Funding 2014-2020 (€ 351.8 bn) Less developed regions Transition regions More developed regions European territorial cooperation Urban innovation actions Youth employement initiative (top-up) Cohesion fund Specific allocation for outermost and sparsely populated regions Technical assistance 13

Budget allocations per Member State (2014-2020) BG 75.88 CY 7.36 CZ 219.83 DE 192.35 DK 5.53 EE 35.90 EL 155.22 ES 285.59 FI 14.66 FR 158.53 HR 86.09 HU 219.06 IE 11.89 IT 328.23 LT 68.23 LU 0.60 LV 45.12 MT 7.25 NL 14.04 PL 775.67 PT 214.65 RO 229.94 SE 21.06 SI 30.75 SK 139.92 UK 118.40

The method: Programming, Partnership and Shared Management Common Strategic Framework Partnership Agreements Operational Programmes Management of programmes/ Selection of projects Monitoring/ Annual reporting Common Strategic Framework translates the Europe 2020 priorities into ESIF priorities Shared management: Sharing of responsibilities between the commission and the member states in the first place, and between the state and the regions (where applicable). Up to 1987 the Commission used to manage all the programmes. Partnership Agreement: An overarching strategy at national level Proposed by the Member State, finally adopted by the Commission Covers the 5 European Structural & Investment Funds (ESIF) In line with the Common Strategic Framework sets out the planned use of the Funds consistent with the Europe 2020 strategy and relevant Country Specific Recommendations coordinated to ensure an integrated approach Core elements: strategic choices = selected thematic objectives, allocations, main results list of programmes coordination between Funds and with other policies commitments on administrative capacity and reduction of administrative burden Operational programmes: Set out a coherent intervention strategy for the territory/sectors Selection of thematic objectives, investment priorities, specific objectives, allocations and justification – intervention logic Financing plan and list of major projects Integrated approach to territorial development; specific needs and demographic challenges Ex ante conditionalities Performance framework Short, concise programmes with a clear focus on results. Main platform for ex ante conditionalities. Management of programmes/Selection of projects: Projects selected by the Member States and/or the regions to be "shared management". Major projects are decided by the Commission (total costs EUR 50 million and EUR 75 million for transport projects) Monitoring/Annual debate: by the Spring European Council on the basis of a Annual Report of the Commission and the Member States

3 authorities to implement Cohesion Policy A managing authority to implement the operational programme, and a monitoring committee to oversee it. A certification body to verify the statement of expenditure and the payment applications before their transmission to the Commission. An auditing body for each operational programme to supervise the efficient running of the management and monitoring system. National, regional or local public authorities.

The reformed EU Cohesion Policy VIDEO

Five European Structural & Investment Funds (ESIF) working together PARTNERSHIP AGREEMENT Common rules for ESI Funds Simplified cost options. E-governance. Eligibility rules. Financial instruments. CLLD- Community –Led Local Development. European Agriculture Fund for Rural Development Cohesion Fund European Social Fund European Regional Development Fund European Maritime and Fisheries Fund Simplified cost options: Where simplified costs are used, a category of costs of a project or of a whole project itself are calculated according to a pre-defined method based on outputs, results or some other costs. The approach of tracing every euro of co-financed expenditure to individual supporting documents is not required any more: it significantly alleviates the administrative burden of a project administration. E-Governance: All exchanges of information between beneficiaries and a managing authority, a certifying authority, an audit authority and intermediate bodies need to be carried out by means of electronic data exchange systems instead of by paper documents. CLLD – Community-Led Local Development: Rural or Urban Development Instrument with help of Structural Funds. Already used with the European Agricultural Fund for Rural Development Fund. Can now be used with all ESI Funds.

11 thematic objectives Research and Innovation Combating climate change Information and Commu- nication technologies Competitiveness of SMEs Low-carbon economy Environment and resource efficiency Sustainable transport Better public administration Better education, training Social inclusion Employment and Mobility 1 5 8 2 6 9 3 7 10 4 11 Investment from the ERDF will support all 11 objectives, but 1-4 are the main priorities for investment. Main priorities for the ESF are 8-11, though the Fund also contributes to 1-4/6. The Cohesion Fund supports objectives 4-7 and 11. Objectives of Europe 2020 Strategy: smart, sustainable and inclusive growth Translated into 11 thematic objectives (TO) for all five ESI Funds – identified in the Common Provisions Regulation TOs broken down into more detailed objectives in the form of investment priorities (IP) - identified in Fund-specific Regulations Corresponding specific objectives - identified by each programme

Concentration of investments on 4 thematic priorities (ERDF) 15% 20% 12% 50% 60% 80% Less developed regions Transition regions More developed regions On low-carbon economy (energy efficiency and renewables) there are separate obligations to dedicate ERDF resources (Less Developed regions: 12%, Transition regions: 15%, More developed regions: 20%). On SME support: greater use of Financial Instruments Research and Innovation. Information and Communication Technology (ICT). Competitiveness of Small & Medium Sized Entreprises (SME)-greater use of Financial Instruments. Transition to a low CO2 emissions economy (energy efficiency & renewable energies). 1 2 3 4 20

Better focus on results Indicators Reporting Monitoring Evaluation Aims and Targets CLEAR TRANSPARENT MEASURABLE Explain performance reserve in this slide: Linked to the programmes: 6% of all OPs are frozen until end 2018. After submission of the Annual Implementation Report by end June 2019, or in the progress report, the EC decides which priorities achieved milestones, detailed by region/fund end August 2019 – review of the programmes. If the priority axes of the OP have met the milestones and therefore are on track to achieve objectives by the end of the period, the 6% are unfrozen. If the priority axis isn't well on track, the 6% are at disposal of another priority axis, if necessary in another OP that works well. Necessary reprogramming is then undertaken. Performance reserve 6% funding allocated in 2019 to programmes and priorities which have achieved 85% of their milestones.

Stronger role for partners in planning & implementation European Code of Conduct on Partnership A common set of standards to improve consultation, participation and dialogue with partners during the planning, implementation, monitoring and evaluation stages of projects financed by all European Structural and Investment Funds (ESIF). Partners: public authorities, trade unions, employers and NGOs and bodies responsible for promoting social inclusion, gender equality and non-discrimination. How it will work: Partners can be full members in the monitoring committees of the programmes Provide partners with information as a prerequisite for a proper consultation process Support capacity building of partners Create platforms for exchange of good practise

Necessity of pre-conditions for an effective EU investment Thematic ex ante conditionalities Linked to the thematic objectives and investment priorities of Cohesion Policy and applied in relation to investments in the specific thematic area: strategic, regulatory and institutional pre-conditions, administrative capacity. General ex ante conditionalities Linked to horizontal aspects of programme implementation and apply across all ESIF: anti-discrimination policy, gender equality policy. Thematic pre-conditions: Strategic: Regions must define strategies for Smart specialisation (innovation), Investment in research infrastructure, ICT growth and broadband development, Climate risk prevention, Transport or Energy infrastructure. Regulatory: Member States must have transposed directives on Energy efficiency in buildings, Cogeneration, Renewable energies, Water investments, Waste investments Institutional/administrative: i.e. Regions must have put in place measures to promote entrepreneurship Reducing time and cost to set up businesses and get licences and permits- Monitoring mechanism for Small Business Act (SBA) General pre conditions: Implementation of anti-discrimination policy, gender equality policy, non-discrimination against people with disabilities Apply European public procurement and state aid laws, environmental impact and strategic environmental assessment legislation Keep a statistical basis for evaluations on a basis of result indicators. NB: They do not apply to European Territorial Cooperation.

Examples of pre-conditions for EU funding National Transport strategy Environmental law compliance Public procurement system Business-friendly reforms ‘Smart specialisation’ strategies INVESTMENT All conditions do not apply to all programmes Why pre-condition for funding? To improve the effectiveness of investment To ensure that the necessary framework conditions for effective use of EU support are in place These conditions are: the appropriate regulatory framework, effective policy frameworks (strategies), and sufficient administrative/institutional capacity.

Enhanced role for the European Social Fund For the first time in cohesion policy a minimum share for the ESF is set at 23.1% for 2014-2020 Based on: national ESF shares for 2007-2013; and member State employment levels; actual share to be determined in the Partnership Agreements based on needs and challenges; total ESF amount for EU 28: € 80.3 billion. (in current prices).

ESF thematic concentration 20% of ESF resources in each Member State for social inclusion, fight against poverty and all forms of discrimination. Thematic concentration of each OP on up to 5 investment priorities (out of 19) for employment/mobility, education/training, social inclusion & institutional capacity. 60% Less developed regions 70% Transition regions 80% More developed regions For instance= 60% of ESF has to spent in more developed regions in up to 5 investment priorities (out of 19) for employment/mobility, education/training, social inclusion & institutional capacity. Investment priorities for thematic objective 'promoting sustainable and quality employment and supporting labour mobility': examples - Access to employment for job-seekers and inactive people, including the long-term unemployed and people far from the labour market, also through local employment initiatives and support for labour mobility; - Sustainable integration into the labour market of young people, in particular those not in employment, education or training, including young people at risk of social exclusion and young people from marginalised communities, including through the implementation of the Youth Guarantee; - Self-employment, entrepreneurship and business creation including innovative micro, small and medium sized enterprises; - Modernisation of labour market institutions, such as public and private employment services, and improving the matching of labour market needs, including through actions that enhance transnational labour mobility as well as through mobility schemes and better cooperation between institutions and relevant stakeholders; Investment priorities for thematic objective 'promoting social inclusion, combating poverty and any discrimination': examples - Socio-economic integration of marginalised communities such as the Roma; - Promoting social entrepreneurship and vocational integration in social enterprises and the social and solidarity economy in order to facilitate access to employment; Community-led local development strategies; Investment priorities for thematic objective 'investing in education, training and vocational training for skills and life-long learning': examples - Reducing and preventing early school-leaving and promoting equal access to good quality early-childhood, primary and secondary education including formal, non-formal and informal learning pathways for reintegrating into education and training; Enhancing equal access to lifelong learning Investment priorities for thematic objective 'enhancing institutional capacity of public authorities and stakeholders and efficient public administration': examples - Investment in institutional capacity and in the efficiency of public administrations and public services at the national, regional and local levels with a view to reforms, better regulation and good governance (Cohesion Fund countries) - Capacity building for all stakeholders delivering education, lifelong learning, training and employment and social policies, including through sectoral and territorial pacts to mobilise for reform at the national, regional and local levels.

Youth Employment Initative (YEI) A budget of € 6.4 billion for 2014-2015. In regions with a youth unemployment rate above 25%. Target group: Individuals "NEETs" aged below 25, or optionally below 30: inactive or unemployed (+long-term); registered or not as jobseekers; residing in the eligible regions. Adoption of Operational Programmes including YEI. Why this initiative? More than one in five young Europeans on the labour market cannot find a job. NEET: Not in Education Employment or Training. 7.5 million in Europe A gap of over 50 percentage points between the MS with the lowest rate of youth employment (Germany 7.7%) and the Member States with the highest Greece 58.2%)

Sustainable urban development: A priority for 2014-2020 At least 5% of European Regional Development Fund (ERDF) should be invested in integrated sustainable urban development at national level Integrated urban development strategies developed by cities to be implemented as Integrated Territorial Investment (ITI), a multi-thematic priority axis or a specific Operational programme. Projects are selected by the cities in line with the strategies. Urban-rural linkages have to be taken into account. Use of community-led local development approaches possible (CLLD): consulting local citizens' organisations. Integrated urban development strategy : developed by cities adressing economic, environmental, climate, demographic and social challenges. To be implemented as 28

ITI: Combination of funds and programmes Regional ERDF-OP National ERDF-OP ESF-OP INTERMEDIATE BODY + complementary funding from EAFRD and/or EMFF ITI can be financed by different Ops and from different funds and that this funding is managed by an intermediate body, cities (urban) territory I T I 29

Other instruments for Urban Development Innovative actions for sustainable urban development (from 2015) €0.37 bln. for 7 years to promote innovative and experimental projects. Calls for interest on annual basis. At least 50.000 inhabitants involved. Urban development network Direct dialogue between European Commission and cities implementing integrated urban development and innovative actions. Managed by the European Commission. URBACT continues (URBACT III) Programme within European Territorial Cooperation programme, all cities can apply. URBACT: Cities from several Member States cooperate on one project. 30

Reinforced cooperation across borders 3 strands: Cross-border. Transnational. Interregional. Budget for 2014-20: €10.2bn 2.9% of Cohesion Policy budget.

Transnational Cooperation 32

Cross-border Cooperation Areas of the cross-border programmes co-financed by the ERDF. Each programme area is shown with a specific colour. Hatched areas are part of two or more programme areas simultaneously. 33

Macro-regional strategies EU Strategy for the Baltic Sea Region; the Danube Region; the Adriatic & Ionian Region (proposed by the EC in June 2014). A 'Macroregional strategy' is an integrated framework endorsed by the European Council, which may be supported by the European Structural and Investment Funds among others, to address common challenges faced by a defined geographical area relating to Member States and third countries located in the same geographical area which thereby benefit from strengthened cooperation contributing to achievement of economic, social and territorial cohesion.

EU Cohesion Policy: The key elements of the reform Link with EU 2020 Stategy. Coordinated use of five European Structural & Investment Funds. Target resources at key growth sectors. Set clear objectives and measure results. Ensure the right conditions for investment. Enhanced role for the European Social Fund. Stronger role for partners in planning, implementation and control. Integrated approach to territorial development. Reinforce cooperation across borders.

Thanks to Cohesion Policy… So far, in the period 2007-2013: 600.000 jobs created – at least 1/3 in SMEs. 200.000 SMEs supported. 1.800 km of new or reconstructed railways. 25.000 km of new or reconstructed roads. Broadband access for 5 million citizens. Access to clean drinking water for 3 million citizens. ESF: 15 million participants per year. 940 financial instruments in 25 Member States raising €8.36 bn. funding for equity, loans and guarantees.

EU Cohesion Policy and Solidarity European Union Solidarity Fund (EUSF) established in 2002 following severe flooding in Central Europe. Financial aid for reconstruction. To cope with major natural disasters and express EU solidarity towards devastated areas. EUSF intervention so far in 56 cases of natural disasters (forest fires, earthquakes, storms, drought, floods). 23 European countries have benefitted so far from over € 3.58 billion in aid.

Project examples

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