A DISPUTE in the European Commission over the future of EU structural funding has postponed publication of a major report on the relative performance of member states. The Cohesion report and its conclusions are of critical importance to Ireland as they will lay the basis for the debate on how to allocate funding in the post 1999 budget.
Crucially, a draft copy of the report from the Regional Affairs Commissioner, Ms Monika Wulf Mathies, which has been seen by The Irish Times, warns of the need to avoid a immediate cut off in aid to countries which are no longer eligible for the maximum levels of funding.
However, the report was withdrawn from yesterday's Commission meeting because of concerns from a number of Commissioners that its conclusions may prejudge what most expect to be a radical and far reaching debate on funding mechanisms in the next budget. The conclusions will now be rewritten.
The report is broadly positive on the effect of the Union's structural funds on the poorest four countries, the "cohesion" countries - Ireland, Spain, Portugal and Greece - although Ireland's performance is most noteworthy.
By virtue of its exceptional growth, Ireland is now about 5 per cent in excess of the eligibility limit for cash from the special Cohesion Fund and regional funding for the most deprived areas, the Objective One category. To be eligible, per capita income must be less than 75 per cent of the EU average. The report points out that Ireland will even surpass Finland's per capita income. The report acknowledges the problems countries like Ireland will face in the next budget round and, although urging a more targeted approach to regions within Objective One areas, it warns against too sudden cut offs in funding.
The report writes of the "need to avoid abrupt changes in the level of financial aid to member states and regions. This would also imply that when lists of assisted regions are reviewed there should be a phasing out of assistance (rather than it being brought to a sudden halt) in cases where the eligibility criteria are no longer met". The report, the first of its kind, finds that, overall, the structural and cohesion funding of the Union has achieved its purpose of drawing together the level of member states' economic performance. In part the idea is to create equal economic opportunities for all, in part to reflect at community level the ideas of social solidarity which underpin the majority, social market based political outlook of the member states.
The report points out that Irish growth has been considerable faster than that of other members, but that two other "cohesion"
countries, Spain and Portugal, have also grown significantly faster than the rest of Union, narrowing the gap between their economies.
In 1983 the four cohesion countries had an average income of 66 per cent of the Union average - by 1993 it had reached 73 per cent, and 76 per cent by 1995. Ireland did markedly better - from 64 per cent in 1983, to 80 per cent in 1995, and 90 per cent in 1995.
For all the cohesion countries, the challenge is generally one of seeking to improve both productivity and the numbers in employment. But Irish and Spanish productivity has converged on the EU average, so the main challenge, the report says, is to turn this into jobs.
The report records an increase bin poverty in most member states in the 1980s, but Ireland Spain and Portugal saw a decline in the number of households below the poverty line.
"There has been significant progress in reducing economic and social disparities in some areas and some of the weakest member states and regions have embarked on a long term process of convergence with the rest of the Union" the report notes, commenting that such progress has been made despite the recession of the early 1990s and rising overall unemployment.
The report's message is of the need to maintain the fundamental macro economic strategy of debt reduction, fiscal discipline, and structural reform.
Ireland is shown as having gained particularly from the Union's agricultural spending because it exports highly protected agricultural produce and contributes relatively little to the CAP budget.
The report suggests that net contributions to the Irish budget added half a per cent to annual growth and boosted jobs by some 3.5 per cent overall.
It confirms notable progress on infrastructure relativities within the Union and points out that some 50 per cent of students in post compulsory education in Ireland are in receipt of some EU assistance.
