Regional Policy

In 1957, when the European Community was established, the Treaty of Rome mentioned the need for "harmonious development", but no specific common policy was set up to that end apart from the removal of customs barriers and the gradual opening-up of markets.

In the 1970s, following the first waves of industrial restructuring, the Member States established the European Regional Development Fund (ERDF). However, it was mainly in the 1980s, once countries such as Greece, Portugal and Spain had joined the Community, that the economic need and political will to reduce disparities in development and living standards clearly emerged.

Budget resources allocated to European cohesion policy have grown steadily since 1989, and today, economic and social cohesion is enshrined in the Maastricht Treaty, alongside monetary union, as one of the priorities of the European Union.

Main aims

The purpose of the Union's cohesion policy is to correct imbalances in development by addressing the economic and social factors, which sustain them. This is why it is referred to as a "structural" policy.

The aim is not just to transfer financial resources to poorer regions but to give them the assets they need to speed up their development and improve the living standards of their inhabitants. These assets include basic amenities, workforce skills, technological capabilities, an attractive environment for inward investment, etc.

It is worth bearing in mind that, besides affecting the less favoured regions and less privileged population groups, imbalances in development also slow growth throughout the Union as a whole and prevent it from making the most of its economic, technological and human potential.

Regional funds

As a general rule, European assistance should complement that of the Member States, not replace it. The Community share of financing varies from 25% to 85% of the total cost, depending on circumstances. Naturally, it is highest in the Member States and regions whose public sector is unable to shoulder the financial burden of development alone. Whenever possible, public-sector assistance (both national and European) is also supplemented by private-sector finance.

The Structural Funds and Cohesion Fund provide grants, while the European Investment Bank supplies loans for development projects.

The Cohesion Fund puts up direct financial assistance for large transport - and environment-related infrastructure projects. The Structural Funds, on the other hand, tend to finance programmes which provide a wide range of measures to promote development in a given area. These development programmes are drawn up by the Member States and, whenever possible, in collaboration with the regional and local authorities and the relevant social and economic partners.

Budget resources

The financial resources of European cohesion policy for the period 1994-1999 were set by the heads of State and government at the European Council meeting held in Edinburgh in December 1992. Some euro 170 billion were earmarked for the period. Total public spending by Member States stands at between 40% and 60% of national GDP, depending on the country, while the entire Community budget represents only 1.2% of the Union's GDP.