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European Cohesion Policy is becoming ever more important in strengthening competitiveness and innovation capacity in our regions. Compared to other important instruments such as the Research Framework Programme or the Competitiveness and Innovation Programme it does not only have ‘critical mass’ in terms of budget allocation, but it is also crucial in aligning national and regional policies towards common goals and actions.

However, the present policy not only raises questions with regard to equity versus excellence but also with regard to effectiveness of the present policy instruments and their decentralised implementation.

In October 2008 the Commission has published a Green Paper on Territorial Cohesion and opened a public consultation (until 28 February 2008) to kick-start, once again, a debate on the future of the Structural Funds.

The Committee of the Regions, in its draft opinion of this paper (to be adopted 12 December), attests the Commission Paper a lame-duck status, namely “lack of ambition”. It also criticizes that it does not define the concept of territorial cohesion at the outset, which leaves us with a paper, well, … on an undefined subject.

The CoR offers a definition of its own making, stating “that territorial cohesion aims to give Europeans equal opportunities in terms of quality of life, with each Community territory aspiring to offer its citizens fair – but not necessarily equal – access to “basic” infrastructure and services of general and general economic interest; this will enable citizens to enjoy decent living conditions in line with 21st century European standards.”

The CoR also asks for more money for Territorial Cooperation, but is rather weak on offering a proper rationale for this beyond reiterating commonplaces such as “the undeniable added European value of territorial cooperation, and its contribution to the objective of territorial cohesion.” It does also not offer any views on how to further improve the added value of these programmes that is taken for granted.

I could help out, since I just received a very interesting comment on the Territorial Cooperation Programmes. This expert, who prefers to remain unidentified, essentially argues that the present programmes and their implementation regulation need radical overhaul and should allow for true innovation that is currently suffocated by a straightjacket of administrative burden and lack of quality management.

1) The purpose of Structural Funds (SF) Cooperation programmes is to subsidise cooperation among European regions. The basic idea is to transfer know how and tools from one region to another in order to speed up regional development and to avoid the need to reinvent the wheel in each European region. Innovation in the context of cooperation programmes is fueled by diversity and thus very different compared to what could have been created in a purely regional or national context. There is no doubt that Structural Funds cooperation is a beautiful idea/ideal at the heart of the European Union.

2) Unfortunately the present funding system is overburdened by complicated rules and controls making cooperation an administrative nightmare and true innovation rather unlikely to occur. Since their launch, SF cooperation programmes have continuously experienced high error rates and a dramatic increase in administrative requirements. To date the main mechanism to improve SF cooperation programmes and reduce associated error rates has been based on step-by-step improvements of the existing system.

In response to alarming reports of the Court of Auditors regarding the high error rate of the Structural Funds, in each SF period a new set of ever more complicated rules and control mechanisms was added to the ones previously existing in a desperate attempt to ‘get the system right’. The preliminary peak was reached in the current SF period, where requirements for all involved actors have reached an unprecedented all time high. The irony so far has been that adding more and more complicated rules and controls so far apparently outweighed the ability or willingness of member states and programmes to learn. Why should adding more rules and controls be an effective remedy for the situation anyway?

3) What we are witnessing is the roaring of the financial machine in a command and control system that has killed many positive attempts to foster innovation and cooperation culture. The two main guiding principles of SF cooperation to date are to spend funds correctly (in financial and legal terms) and to do it fast. Financial controls are necessary and will always be necessary but what is done and how it is done should be a matter of serious debate. Instead of adding more and more requirements and controls, the funding system as such would need to be carefully studied and updated to reflect available experiences and also recent changes in society. For instance, credible information would be needed on the costs of compliance with specific rules (e.g., state aid, reimbursement of real costs, calculation of staff costs, n+2/n+3), benefits associated with compliance and potential alternatives.

Such a system review needs to be guided by the real goals of cooperation such as bringing Europe together, fostering innovation and cohesion rather than fear and frustration caused by the command and control system. And practitioners from programmes and projects need to be involved in the debate. The outcome must be a separate Regulation for Territorial Cooperation Programmes that takes into account the primarily goals of cooperation as well as the inherent complexity of cooperation and makes applicable rules simple and transparent. We need clear rules at the EU level. We don’t need further reduction of rules at the EU level under the banner of subsidiarity. Anything not solved at the level of EU regulations is bound to become much more complicated when Member States develop their own rules making cooperation among partners from different countries a nightmare.

4) In an administrative environment that makes the correct spending of funds a matter of titanic expertise and resources on the sides of programmes as well projects (with the resulting involvement of ever more consultants) very little room is left to do what should be done in the first place: generate content and foster innovation and cohesion. As a consequence cooperation programmes do not add as much value as could be expected. Interestingly – unlike all potentially applicable financial and legal rules – the apparent difficulties of programmes and projects to deliver content and innovation has never been at the center of attention even though this obviously constitutes a very serious system error. Systematic knowledge and innovation management, therefore, has to become the third pillar of programme management after financial management and activity management. It needs to provide the infrastructure for systematic quality management in programmes all along the project cycle management, starting with the application phase and going all the way down to the dissemination of results.

5) After so many years of building a SF cooperation funding system it would be unwise to simply grandfather the system and establish something completely new. There is still hope to get existing system on track in a serious attempt to review the system and weed out unnecessary rules and requirements. In addition, radical innovation is needed and part of the available funds should be allocated to the testing of a range of alternative funding schemes. The main focus of these pilot schemes should be on the generation of innovative outputs and results and prizes for real innovation instead of reimbursement of real costs. In addition, mechanisms are needed to involve and inform regional actors and potential project partners such as central information and technical support hubs in each country staffed with adequate resources.

So what do we need then?

1) A separate Regulation for European Territorial Cooperation with significantly simplified rules and a common regulatory frameworks for all beneficiaries in all participating countries, besides national rules.

2) A stronger focus on content, quality and innovation instead of focusing on financial and legal requirements only.

3) Intensified information, training and technical support to programme management bodies and especially to project applicants.

4) Transparency of the decision making processes, including application assessment, funding decisions by Monitoring Committees and funds allocated to individual project partners.

5) Testing of alternative and innovative funding schemes.

6) Require programmes to set up a system of coordination with relevant other EU programmes, such as Objective 1 and 2, Research Framework Programme, CIP, to correct ‘governance failure’.

Please note/Disclaimer: This is not an ERRIN position, but a comment received by an unidentified expert!

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