In spite of the European Commission’s denials, study of a possible separation of the European Social Fund (ESF) from the Cohesion Fund has indeed been launched in the institutions concerned. This issue is on the agenda of the European Parliament and the member states, even as the regions bombard Commission President José Manuel Barroso with letters urging him to reject the idea.

Many see revision of the multiannual financial framework as the ideal context for putting the ESF back on the drawing board. The initiative is encouraged by the Chair of the EP Committee on Employment, Pervenche Berès, who calls for “analysing without any taboos how to encourage optimal use of the ESF. […] We have to acknowledge that results have been mixed so far”.

“All options are being studied,” explain sources at the Commission, “from method to budget, project selection, application criteria, control and competent authorities.”

For regional associations, the cat has been set among the pigeons. They fear a “dismantling of cohesion policy”.

WHAT WOULD THIS MEAN?

The Commission’s aim would be to create an independent employment strategy with support from the European Social Fund.

The ESF would nevertheless continue to be guided by common strategic orientations with the European Regional Development Fund (ERDF), the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF), as evidenced by the idea defended by Commissioners Johannes Hahn, Maria Damanaki, László Andor and Dacian Ciolos. In a letter to Barroso dated 31 August, they call for greater complementarity among the different funds so as to focus support on the EU’s strategic priorities, specifically those contained in the ‘Europe 2020’ strategy.

Reflection on an independent Social Fund may also be motivated by a determination to give a higher profile to the Union’s measures to stem unemployment resulting from the economic and financial crisis.

As a consequence of such a separation, the ESF would de facto no longer be territorially based, in either its aims or implementation. At present, although the fund’s strategy and budget are negotiated and agreed by EU member states, the European Parliament and the Commission, its interventions are implemented by member states and regions. This aims to promote the development of the least advanced regions and to help regions in crisis to change direction.

The problematic point of the reflection process inevitably lies in financing, explains a diplomatic source. Separating the European Social Fund would mean giving it its own budget, separate from the budget for the other Structural Funds, namely the ERDF. The volume of funds would therefore be changed and member states would no longer have the opportunity to negotiate in terms of their needs, since the budget would be centralised at EU level. Apparently, this creates division.

REGIONS CONCERNED

Even though the idea is still “in the reflection stage and nothing has been decided yet,” as Barroso told the Committee of the Regions, there have been numerous reactions to Regional Policy Commissioner Johannes Hahn’s revelation during an informal Council in Toledo last June. As a general rule, they are not very positive.

Danuta Hübner, chair of the European Parliament Committee on Regional Development (REGI), was the first to oppose the move. She wrote to Barroso, on 29 June, to explain the potential consequences of a separation on the coherence of the EU’s two Structural Funds and consequently on their effectiveness. Her views are based on experience, “which clearly shows that at the level of the Union’s 271 regions, the ERDF is more effective if it is closely coordinated and forms part of the ESF. Experience has shown that where the ESF’s action is implemented primarily by a member state, its European added value is diminished”. A few days earlier, she had already addressed her concerns to President Barroso, stressing the role of cohesion policy in the 2020 mechanism, “which was the only real success of the Lisbon strategy”.

For Marie-Ange Orihuela of the Conference of Peripheral Maritime Regions (CPMR), the strength of the Social Fund is to act directly on the territories and through the territories, which allows it to be close to realities on the ground. “This is a real step backwards and will undoubtedly weaken the effectiveness of both the ERDF and the ESF,” observed Mercedes Bresso, president of the Committee of the Regions. She also quoted Jacques Delors, who maintains that “for the ESF to be effective, it must be integrated with the ERDF on regional projects”.

Michèle Sabban, president of the Assembly of European Regions (AER), added her voice to the protests: “How can we redevelop a territory and open it up to new socio-economic activities without including in the project a training dimension or aid for the populations most vulnerable to unemployment? […] The weaknesses of this policy, which we recognise, should not lead to its dismantling but to a thorough review of its functioning and priorities”.

Associations of regions are not the only stakeholders voicing concerns. In early August, Slovakia sent a signal to the European Commission on behalf of the four ‘Visegrád countries’ (Poland, the Czech Republic, Slovakia and Hungary). In a letter to President Barroso, the quartet argues for maintaining the Social Fund as a pillar of cohesion policy. This instrument needs to be simplified and made more transparent, but should not be isolated.

There has been no response to any of these letters but the Commission president is expected to explain his views to the European Parliament in October. “We will accompany this discussion with a resolution to bring the debate to a close, with the expected employment objectives,” announced Berès, who describes these early reactions as “conservative”.

Analysing without any taboos how to encourage optimal use of the ESF - MEP Pervenche Berès

Legally impossible? No…

A few days after Hahn’s announcement in Toledo, on 22 June, the Commission denied the idea, arguing that it “would very simply be legally impossible, since all Structural Fund allocations are treated as a package in the treaty”. Yet the example of the European Agricultural Fund for Rural Development proves just the opposite. It is presented in the Lisbon Treaty as a cohesion fund, but exited the Structural Funds in 2007 to become part of the Common Agricultural Policy. Pulling the ESF out of the Structural Funds would therefore not be legally impossible.

Background

The Structural Funds (ERDF and ESF) and the Cohesion Fund are the financial instruments of the EU’s regional policy, which aims to reduce development gaps between regions and member states. Each state, as well as any region that has its own operational programmes (not all do), agrees with the European Commission one or more operational programmes that set the priorities for the ESF intervention and its objectives.

In general, ESF funding, based on the principles of co-financing and shared management, has two main objectives: the convergence objective (to help the poorest regions) and the regional competitiveness and employment objective.