The intent of this chapter is to supply a brief theoretical background of the EU Cohesion Policy necessary to understand the subsequent analysis on the instance of Romania. After a selective debut on the most singular reforms of the EU Cohesion Policy in general, the rules, aims, budgetary proposal and institutional construction of the EU Cohesion Policy for the 2007-2013 scheduling period are presented.

Historical Development of the EU Coherence Policy

The EU Coherence Policy ( besides known as the Regional Policy ) aims at “ tapered regional and societal disparities ” between and within EU Member States by advancing “ economic and societal coherence ” ( Bache, 1998, p. 69 ) . Throughout the decennaries since its origin in 1975, the policy has been subjected to assorted transmutations. This subdivision contains an overview of the most important transmutations from the historical development of the Cohesion Policy until the current 2007-2013 scheduling period.

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The Treaty of Rome of 1957 led to the constitution of the European Economic Community ( EEC ) . In the Preamble and Article 2 of the Treaty of Rome, the demand to beef up the economic integrity of Member States by “ cut downing the differences bing between the assorted parts and the retardation of the lupus erythematosus favoured parts ” by advancing a “ harmonious development of economic activities ” was highlighted ( Treaty of Rome, 1957 ) . However, the attending devoted to those committednesss was minimum until the creative activity of the first Structural Fund for regional development in 1975, the European Regional Development Fund ( ERDF ) . The fiscal resources allocated by agencies of the ERDF were intended to ease structural and regional development in order to fix the Member States at that minute for the Economic and Monetary Union ( Bache, 1998, pp. 31-32 ; Manzella & A ; Mendez, 2009, pp. 5-8 ) .

The 1989-1993 period constituted a cardinal milepost in the development of the Coherence Policy. The accession of three new Member States ( Greece, Spain and Portugal ) well widened the regional disparities within the Community and led to a important reform. The determination to set up the Single Market across the Community was the chief driver of the reform ( Bache, 1998, pp. 67-68 ) . In add-on to the Single Market, a more incorporate Community regional development policy under the new rubric of “ economic and societal coherence ” was officially addressed in the Single European Act of 1986 ( Manzella & A ; Mendez, 2009, p. 14 ) .

One purpose of the reform was to incorporate the three bing Structural Fundss under the umbrella of the new Coherence Policy. These financess are: ( a ) the European Social Fund ( ESF ) , ( B ) the European Agriculture Guidance and Guarantee Fund ( EAGGF ) , and ( degree Celsius ) the European Regional Development Fund ( ERDF ) . Furthermore, a simplified fiscal direction based on four indispensable rules was set out in the new ordinances regulating the financess: ( a ) concentration of policy aims, ( B ) multi-annual scheduling, ( degree Celsius ) partnership, and ( vitamin D ) additionality. As portion of the reform, the one-year budgetary allotment was doubled over the 1989-1993 scheduling period ( European Commission, 2008, pp. 8-10 ; Bache, 1998, p. 70 ; Manzella & A ; Mendez, 2009, pp. 13-15 ) . All of these alterations targeted balanced regional economic development across the Community.

With respect to the 1994-1999 scheduling period, no extremist alterations in the construction and rules of the Coherence Policy took topographic point. However, the Treaty on the European Union signed in Maastricht in 1992 constituted a new measure in the policy development. Within the context of the acceptance of the Economic and Monetary Union and the completion of the Single Market, “ economic and societal coherence ” was promoted as one of the cardinal EU aims. Furthermore, in add-on to the three Structural Funds ( ESF, EAGGF, and ERDF ) , another fiscal instrument was created. The Cohesion Fund was designated to co-finance environment and conveyance substructure undertakings in less-developed parts that had a Gross National Income ( GNI ) per capita of less the 90 % of the EU norm. These parts were chiefly in Greece, Portugal, Spain, and Ireland. The great attending devoted to the Structural and Cohesion Funds involved a significant addition of 50 % of the one-year fiscal resources for the period ( one tierce of the entire EU budget ) . Another of import constituent in the development of the Coherence Policy was the constitution of the Committee of Regions in order to promote regional governments to take part in the policy-making determination procedure of the EU ( European Commission, 2008, pp. 14-16 ; Manzella & A ; Mendez, 2009, pp. 15-16 ) .

Among other reforms, the 2000-2006 period was marked by alterations in the design and processs of the EU Cohesion Policy. These alterations included: ( a ) a greater concentration of the fiscal aid by cut downing the figure of policy aims, ( B ) a stronger engagement of Member States in the design and direction of programmes, ( degree Celsius ) a simplification of the policy execution procedure, and ( vitamin D ) a fiscal control demand reinforced by adhering monitoring and coverage ( Manzella & A ; Mendez, 2009, pp. 16-17 ) . Another high spot of the period was the accession of 10 new Member States with different degrees of economic development to the EU in May 2004. This expansion of the EU extensively increased regional disparities, particularly in the Gross Domestic Product ( GDP ) . It resulted in “ a 20 % addition in the EU ‘s population, but merely a 5 % addition in the Union ‘s GDP ” ( European Commission, 2008, p. 18 ) . In add-on to this, hard macroeconomic conditions such as the debut of the Euro and concern sing turning unemployment had a enormous impact on the budget allotment for the 2000-2006 period. The budget portion remained changeless and was distributed as follows: for the old 15 EU Member States the fiscal resources totaled up to a‚¬213 billion, while for the 10 new entrants it represented a‚¬22 billion ( European Commission, 2008, p. 18 ; Manzella & A ; Mendez, 2009, p. 16 ) .

The most far-reaching reform of the EU Cohesion Policy was adopted in the current 2007-2013 period. The accession of Romania and Bulgaria to the EU in 2007 amplified the already existing regional disparities. This addition in the figure of EU Member States was reflected by a fiscal encouragement. Therefore, the fiscal allotment designated to implement the Cohesion Policy ‘s major aims was increased well. With respect to the Coherence Policy aims, the increased fiscal allotment was closely linked to the aims of fight, economic growing, and employment laid down in the Lisbon Strategy ( Manzella & A ; Mendez, 2009, p. 18 ) .

To reason, the EU Cohesion Policy suffered major transmutations from the Treaty of Rome in 1957 until the current scheduling period 2007-2013. However, it is deserving adverting that despite the increased budgetary bundle and the widened regional spreads triggered by the accession of new Member States, the chief end of the Policy has remained unchanged over the old ages: tapered economic and societal disparities in less-developed parts across the EU.

Aims and rules of the 2007-2013 EU Coherence Policy

In order to carry on an analysis of the EU Cohesion Policy in Romania for the 2007-2013 period, it is necessary to derive an apprehension of the nucleus rules and aims for the direction and execution of the policy ‘s fiscal instruments.

The European Council ( EC ) Regulation No. 1083/2006, that governs the EU Cohesion Policy, lays down nine rules for implementing the Structural and Cohesion Funds. Relevant for the farther analysis are the undermentioned four nucleus rules: ( a ) scheduling, ( B ) partnership, ( degree Celsius ) additionality and ( vitamin D ) concentration.

The rule of scheduling was foremost introduced in the reform of 1988 and refers to a more crystalline and consistent design of programmes. In add-on, the execution of EU financess takes topographic point through multi-annual programmes stand foring an indispensable displacement from the former project-based attack. Important to reference is besides the simplified scheduling procedure. Under this rule, Member States exert greater influence in planing and pull offing programmes compared to the old scheduling periods. In this respect, they submit a individual papers for European Commission blessing, the alleged Single Programming Document. This papers comprises the national development precedences designated for farther execution through branch-specific Operational Programmes ( OPs ) ( Bachtler & A ; Mendez, 2007, p. 547 ; Pollack, 1995, p. 380 ) .

The rule of partnership has been invariably developed since it was officially defined in 1988. This rule aims at bettering the efficiency of the Coherence Policy by widening over clip the figure of histrions involved in the assorted phases of the scheduling procedure. Therefore, a close cooperation at different degrees ( e.g. between the European Commission, national, regional and local governments and non-state histrions ) is promoted ( Bache, 2008, p. 24 ) . However, Allen ( 2005 ) relates the effectivity in affecting sub-national histrions instead to “ the nature of the constitutional agreements in a peculiar member province than [ to ] the Commission ‘s partnership agreements ” ( Allen, 2005, p. 231 ) .

The rule of additionality lies behind the thought of supplying Member States with extra EU support. In other words, the EU fiscal allotment does non stand for a permutation of the national or other tantamount outgo, but, instead, a addendum to the national financess ( Molle, 2007, p. 150 ; Bache, 2008, p. 24 ) . In add-on, the rule of additionality supports co-financing undertakings in parts within Member States. The part is based on the grade of necessity of the targeted part ( Molle, 2007, p. 150 ) .

The rule of concentration is one of the cardinal rules of the Coherence Policy in diminishing economic disparities across the Union. Harmonizing to this rule, the EU disbursement focal points on parts with the greatest demand for fiscal aid. Targeted are those parts where the degree of development ( GDP per capita ) is below the EU norm ( Bachtler & A ; Mendez, 2007, p. 540 ; Molle, 2007, p. 146 ) .

Beside the rules that govern the execution of Structural and Cohesion Funds, another of import constituent of the EU Cohesion Policy laid down in the European Council ( EC ) Regulation No. 1083/2006 are the policy ‘s three aims: ( a ) Convergence, ( B ) Regional Competitiveness and Employment, and ( degree Celsius ) European Territorial Cooperation. These aims outline the policy ‘s precedences for the 2007-2013 scheduling period. In order for a Member State to profit from EU financess under these three aims, certain eligibility standards had to be taken into consideration ( see Annex 1 ) .

With respect to the first aim, the Convergence aim, EU support is intended to diminish disparities in the least developed parts by “ stimulating growing and employment ” . The nonsubjective dressed ores on chief betterments in the country of physical and human capital, invention, knowledge-related society, economic and societal alteration, environmental protection and administrative efficiency. In add-on to being financed by the Cohesion Fund, the Convergence aim is financed by the two Structural Fundss: the European Regional Development Fund ( ERDF ) and the European Social Fund ( ESF ) . Regions eligible to have Structural Fundss are those where the “ GDP is less than 75 % of the Community norm ” ( European Commission, 2007, p. 13 ) . In contrast, the donees of the Cohesion Fund are Member States where the “ GNI is less than 90 % of the European norm ” ( European Commission, 2007, p. 13 ) . With a portion of 81.5 % of the entire budget of the Coherence Policy ( EC 1083/2006, Art. 19 ) , the Convergence aim plays a cardinal function in the 2007-2013 scheduling period.

The 2nd aim is the Regional Competitiveness and Employment. This nonsubjective purposes at “ beef uping parts ‘ fight and attraction every bit good as employment [ aˆ¦ ] ” ( EC 1083/2006, Art. 3 A§2 ( B ) ) in Member State parts that are non eligible under the Convergence aim. On the one manus, this nonsubjective supports parts to accomplish economic growing and beef up their fight. On the other manus, this nonsubjective promotes full employment through investings work force and societal inclusion. The fiscal resources devoted to the Regional Competitiveness and Employment nonsubjective sum to up to 16 % of the entire budget ( a‚¬55 billion ) and they are allocated from the ESF and ERDF ( Allen, 2005, p. 227 ; Molle, 2007, p. 156 ) .

Ultimately, the 3rd aim, the European Territorial Cooperation, aim was designed to beef up three different types of cooperation: cross-border, multinational and interregional cooperation. The end of the European Territorial Cooperation aim is to supply cooperation in the countries of “ research, information engineering, environment, handiness, natural and cultural resources and sustainable urban development ” ( Molle, 2007, pp. 157-158 ) . Around 2.5 % of the entire budget for the EU Cohesion Policy 2007-2013 is allocated to this aim with the part of the ERDF. The aim is complementary to the other two aims mentioned in the European Council ( EC ) Regulation No. 1083/2006 since parts are eligible to have EU funding under the European Territorial Cooperation aim and under the first two aims ( European Commission, 2007, pp. 20-24 ) .

As mentioned above, for the 2007-2013 scheduling period, the highest portion ( 81.5 % ) of the entire Coherence Policy budget is devoted to the Convergence aim. This illustrates the strong focal point of the EU Cohesion Policy on cut downing the considerable regional disparities caused by the accession of less-developed Member States to the EU. Especially relevant in this context are the fiscal instruments, described in the following subdivision, as a agency of back uping economic and societal growing in these less-developed EU Member States.

Fiscal Instruments of the 2007-2013 EU Coherence Policy

Harmonizing to the European Council ( EC ) Regulation No. 1080/2006 regulating the EU Cohesion Policy, the relevant fiscal instruments for the 2007-2013 scheduling period are the Cohesion Fund and the two Structural Fundss: the ERDF and the ESF.[ 1 ]Besides the Cohesion and Structural Funds, there are two more fiscal instruments: the European Investment Bank ( EIB ) and the Instrument for Pre-Accession Assistance ( IPA ) . Yet, the latter two will non be discussed in this paper as they are non portion of the EU Cohesion Policy budget ( Heijman & A ; Koch, 2011, p. 50 ) .

Both the Structural Funds and the Cohesion Fundss are designed to accomplish the Cohesion Policy ‘s end. However, they differ sing execution and choice standards. First, the Structural Fund ERDF has increased its focal point on turn toing regional instabilities since 1957 when it was foremost established. With a entire budget of a‚¬201 billion for the 2007-2013 scheduling period, the ERDF is the largest fiscal instrument that finances undertakings under all three aims of the Coherence Policy ( Heijman & A ; Koch, 2011, pp. 51-52 ) . As set down in the European Council ( EC ) Regulation No. 1080/2006 Art. 2-4, the ERDF chiefly supports less-developed parts and promotes territorial cooperation. Funding precedences include investings in assorted countries such as research, invention, occupation creative activity, environment, civilization, instruction, wellness, and substructure.

The 2nd Structural Fund is the ESF that was established by the Treaty of Rome. Under both the Convergence and the Regional Competitiveness and Employment aims, the ESF focuses on societal facets. In peculiar, it focuses on developing human resources and the betterment of employment chances in order to incorporate unemployed people into the labour market ( Bovis, 2011, p. 95 ) . In line with this, some of the financed enterprises of the ESF are: the investing in human capital through instruction and preparation offers, reenforcing the societal integrating of disadvantages groups to employment, beef uping fight and battling favoritism ( EC No. 1081/2006 Art. 2 ) .

Third, the Cohesion Fund set up by the Maastricht Treaty in 1992 co-finances large-scale undertakings refering the environment and the transit substructure. The co-financing rates total up to 85 % . The Member States with a GNI per capita of lower than 90 % of the European norm are entirely eligible to have fiscal aid under the Cohesion Fund, non separate parts ( Bovis, 2011, pp. 98-100 ) . With a entire allotment of a‚¬70 billion, the Cohesion Fund finances undertakings under the Convergence aim. In the 2007-2013 scheduling period, all new Member States beside Greece, Portugal ( on a transitional footing ) , and Spain are covered by the Cohesion Fund. In entire a figure of 15 Member States ( Heijman & A ; Koch, 2011, p. 52 ) .

Another of import facet to see when lucubrating on the fiscal instruments is the Member States ‘ public presentation and their bound on the fiscal transportation. In order to advance a better fiscal direction in Member States and to guarantee an optimum allotment of fiscal financess to project, the automatic budget de-commitment regulation, the alleged “ n+2 regulation ” is applicable in the 2007-2013 scheduling period. Harmonizing to the European Council ( EC ) Regulation No. 1260/1999 Art. 31 ( 2 ) that lays down the general commissariats on the EU financess:

The Commission shall automatically decommit any portion of a committedness which has non been settled by the payment on the history or for which it has non received an acceptable payment application [ aˆ¦ ] , by the terminal of the 2nd twelvemonth following the twelvemonth of committedness.

With respect to the committednesss from 2007 until 2010, an extension from two to three old ages has been introduced as a more relaxed clip frame to promote the new Member States. For this four-year period ( 2007-2010 ) , the “ n+3 regulation ” applies to the 12 new Member States ( Bulgaria, Romania, the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia and Slovakia ) every bit good as to Portugal and Greece ( European Commission, 2007, p. 36 ) .

In footings of the fiscal transportation bound each Member State is allowed to profit from a certain sum of EU fiscal resources. As set down in the European Council ( EC ) Regulation No. 1260/1999 Art. 7 ( 8 ) the maximal fiscal transportation in signifier of Structural and Cohesion Funds “ should non transcend 4 % of national GDP ” for each Member State.

After clear uping the function of the fiscal instruments and the necessary regulations regulating the allotment of EU fiscal resources to Member States, the following subdivision illustrates the institutional system responsible for the execution of Structural and Cohesion Fund.