EU cautions on powers for new bodies

The State is facing a potential conflict with the European Commission over the level of autonomy it intends to devolve to the new regional authorities, which were agreed at the Berlin Summit earlier this year.

At the summit, the Government successfully argued its case for the retention of Objective One status for at least part of the State - the Border, midlands and western regions. The second region, the southern and eastern region, is to be designated Objective One in Transition, effectively a reducing level of EU aid spread over the next seven years.

At the time, the EU Regional Affairs Commissioner, Dr Monika Wulf-Mathies, said she expected the new regional authorities would be similar to other European regions, called NUTS II. These regions have significant powers and in some cases by-pass state government to negotiate with the EU for funding. Because of this, the heads of NUTS II regional authorities often have as much power as members of central government.

Dr Wulf-Mathies was keen to make the point that the Republic's new regional authorities should not be a "paper trick" designed to secure the maximum EU funding, but should have real power to co-ordinate regional development in their regions.

However, while devolution and the creation of new growth centres throughout the State have been discussed by the ESRI and the existing regional assemblies which are broadly in favour, the Minister has recently appeared to back off the idea.

A memorandum on the subject, which was brought to the Government by the Minister for Finance, Mr McCreevy, pointed to reasons for caution, noting that foreign investment was often only attracted to large cities.

It also said it would take longer than the period of the National Development Plan 2000-2006 to implement a strategy of developing alternative growth centres.

Sources close to the Commissioner acknowledged that the Republic was only under an obligation to set up the new authorities to qualify for funding, but warned that the EU would be examining the way in which the State intended to spend the money.

"Value for money, accountability and additionality - that is that the State should be seen to add its share of finance, will be assiduously checked," said the source. "If there is a feeling that the new authorities are in any way disposable, there will be a potential conflict," concluded the source.