Examination of Witnesses (Questions 247-259)
Mr Dirk Ahner, Mr Nicola De Michelis, Mr Eric Dufeil
and Mr Pascal Boijmans
6 MARCH 2008
Q247 Chairman:Good morning. We are reasonably
short-handed this morning because some of our colleagues are attending
the tripartite meeting between the European Parliament, Lords
and Commons.
Mr Ahner: A real stressful day for you.
Q248 Chairman: It is very good of
you to receive us. We have taken quite a lot of evidence on this
inquiry and we are boiling up to arrive at a provisional set of
conclusions. You have had a copy of the topics we would like to
discuss.
Mr Ahner: Yes.
Q249 Chairman: If I introduce my
colleagues: I have here Lord Woolmer, a member of my Committee,
and Lord Trimble, who has enormous regional experience from Northern
Ireland. Would you like to introduce your colleagues?
Mr Ahner: My colleague, Pascal Boijmans, who
is working in the unit which is responsible for regional development
in Poland. Nicola De Michelis is the Head of our Economic Analysis
Unit. We have reorganised our Directorate-General and we have
one directorate which is policy planning, policy evaluation and
economic analysis. Nicola heads the Economic Analysis Unit team.
Q250 Chairman: You have had the various
questions we want to ask. We can either chunk our way down them
with refinements or is there an opening statement you would like
to make?
Mr Ahner: If I may suggest, I will go very rapidly
through the questions and leave the details for my colleagues.
In the meantime, Mr Dufeil has joined us, who is responsible for
Spain. In addition, Eric has worked on Germany for many years
so he can compare two quite different countries as far as their
development patterns are concerned. Let me start with two or three
sentences about where we are to get into the subject. Last year
we had a very, very intense year of programme approval for the
new programming period, 2007-13. Practically all programmes were
approved last year; there are very, very few still missing. This
year the implementation has started. Some countries started the
implementation last year, but this year the bulk of the countries
and regions will start the implementation process. To say something
about the new period, I think it will make sense in terms of evaluation
in two or three years' time. At the end of this year and early
next year we expect a whole set of evaluation reports and evaluation
studies of the 2000-06 period and it is our intention in the first
half of next year to come with an overview and synthesis report
of the outcomes of these evaluation studies. This year, and this
is why I am so grateful that we have the possibility of this exchange
today, we are starting our work on the future Cohesion Policy.
This is work where we look a year ahead, so it is a window of
opportunity to discuss, exchange and analyse the situation. This
work is ongoing, it started just a few weeks ago. Looking at the
past and coming back to your questions, let me first of all underline
that I am a complete—I do not know how you say it in English—greenhorn.
This has been a good year to work in regional policy. I worked
in rural development policy before, which is familiar but is a
different field, much more agricultural and sectorially oriented.
I will give you my first reactions to your questions and then
we will attend to the detail. The first question was has the policy
been successful so far. It is extremely difficult to have a benchmark
for success: when do you speak about success and when do you not
speak about success. If we look at the period for which we have
comparable statistics available we can see that convergence has
taken place but Regional Development Policy, Cohesion Policy,
in our view at least, is not only about the question of convergence.
First of all, yes it is about convergence because it is a question
of solidarity and this is why a lot of the money is concentrated
on the poorer regions, or on regions which have particular problems
of structural adjustment, but at the same time it is a policy
which helps us to sustain a model of development which we think
is the model we have in Europe, which is one of a relatively spatially
balanced economic development with a polycentric orientation.
In our view, this makes sense in economic terms for the very simple
reason we believe if we accept there is a strong concentration
of economic activity on very few areas we would very rapidly have
a double problem, first of all negative externalities in the big
agglomerations, and this is something with which we are already
living today in some cases, and the other point is we would probably
lose a lot of potential which exists and which would remain unused
if we did not have this approach to more balanced development
in spatial terms. If you look at the EU-15, where we can observe
10 years from 1995-2005 where we have comparable statistics, convergence
took place. It is extremely difficult to say that was exclusively
because of Cohesion Policy. I would say it was also because of
Cohesion Policy and the evaluation studies which exist for this
period, if I understand them correctly, confirm this. When we
say we have cohesion, we have development in those regions which
were lagging behind, but very often what one should not forget
is this has feedback effects on the economies of the other countries.
We have made a static calculation for the year 2004 where we saw
about a quarter of the money which was spent in the poorer regions
of the Community went back in the form of demand for equipment
and other things to the richer regions of the EU. There is an
ongoing effect which takes place. That is my answer to the first
question. If you want figures and details, let me say you have
a lot of figures in the Cohesion Report of last year but my colleagues
can go into more detail if you want. What lessons can be learned
from Spain? Is Spain a model? I must say, we have such a diversity
of situations in Europe, even within Spain, that I would be extremely
cautious speaking about models. It is true we are testing policy
and approaches. One of the specificities of the Cohesion Policy
which I think makes sense, and as compared to Rural Development
Policy I am delighted to see how it works in the field of Regional
Policy, is what is done at the regional and local level is worked
out and decided by the regional and local level. It then comes
up in the form of programmes to the Commission but the Commission
is not really the body which decides on programmes; the Commission
has the role of a sparring partner and adviser. We get a programme
from the region or from a Member State, we discuss this programme
with them and look at whether this programme, since it is EU money
being spent, is in line with the priorities which we have commonly
set at the EU level and does this programme really address the
problems of the regions. Each programme has to carry out an analysis
where they show what are the weaknesses and strengths of their
regions and what are the opportunities. In our teams we have people
who have worked for a number of years with these regions concerned
and we discuss it with them. Normally in these discussions, and
some call it a negotiation but it is not really a negotiation,
what we see is generally we have what I call an improvement of
these programmes and at the end we have an outcome where both
sides say, "We have brought together something on which we
agree which makes sense". I lived through it for the first
time last year during the programme approval phase we had, and
this is why I am particularly impressed, and we had very hot and
heavy meetings. I remember, Eric, you had one prime minister from
a German Länder one evening in a restaurant in Brussels and
you were discussing the questions of this programme up to midnight.
Something comes out of this dialogue which in my view generates
a real value-added, but we can discuss this further if you want.
Q251 Chairman: Mr Ahner, I would
like to pause at this point but, on the other hand, are you able
to be with us all morning?
Mr Ahner: I can stay with you for as long as
you want.
Q252 Chairman: That is very helpful.
If we were going to lose you after an hour—
Mr Ahner: You will lose me when you throw me
out!
Q253 Chairman: That is terrific.
I wonder, therefore, if I could stop on this question. We shall
see Valencia this afternoon and I would very much welcome a comment
on the Spanish experience.
Mr Dufeil: Thank you very much, Chairman. If
you will allow me, I would like to outline four conclusions I
feel I am able to draw from the Spanish experiment. As an introduction,
Spain is a very interesting example. It can be looked at as one
of the success stories we have recorded in the last 20 years or
so. Even if the case study on Ireland might look more impressive,
please remember that on the European scale Ireland remains a relatively
small country whereas Spain now tends to belong to the biggest
countries and to that extent the weight of the Spanish experiment
is higher. The first conclusion is convergence in nominal and
real terms has taken place over the 20 years at a rate which is
quite constant and regular, a little less than one per cent convergence
per year on the long-term average, which is very significant.
This means that Spain has been able to develop from a level of
roughly 90 per cent of the GDP per head indicator at the beginning
of the 1990s up to 102 per cent this year. Spain is very proud
of the fact that recently they have overtaken Italy. When you
travel to Spain you come across that information all the time
because for them it is a signal that they have achieved an important
step. The second conclusion is if it is true in general terms,
in macroeconomic terms at national level, comparing member countries
to other countries, within Spain at regional level you see that
there is a more differentiated picture. This is not really a surprise
when you have growth phenomenon. If you refer to the growth theory
of somebody like WW Rostow that explains that as well. It increases
the original disparities. It means that in Spain there are winning
regions everywhere and every region has developed but to different
extents and there are some that have been winners more than others.
What is obvious is that the strongest regions, like Catalonia,
Madrid, the Basque countries, which are the strong pillars of
Spanish growth, have grown more than others, and you still have
regions, like Extremadura, which is a remote part in the south,
which have development difficulties. However, there are also intermediate
stories like the Canary Islands, which was always recorded as
part of the Objective 1 region and ultra-peripheral region, that
has now become a phasing-in region so they are in the process
of joining the competitiveness. That in itself is a very good
signal. I have other examples I could quote. This is something
we need to observe and differentiate the processes of intervention.
The third conclusion is that the growth which took place in Spain
over 20 years was primarily based on the construction sector and
the development of infrastructure and the result is very visible.
If you travel to Spain you can see big panels everywhere with
the blue flag and the 12 stars: "Co-financed with ERDF".
It is possible to say for the road system, the rail system, some
of the port system and other basic infrastructure the network
is now up and running and this is one of the requirements of a
modern economy. You can record that and check that is physically
present and useful, not only to the country itself but to all
of Europe, whether for the purpose of tourism or investment. To
that extent it is a good move. Of course, this is not sufficient
and in Spain they talk about deceleration of the growth, which
means they have moved from a rate of four per cent a year to maybe
2.5. That is still more than countries like Germany and France
but it is less. They are confronted with a necessity to find a
second path of growth which inevitably, if they want to join the
club of more developed countries, has to be reoriented towards
research and development, technology and innovation. This is where
we are now and what we are trying to achieve with the assistance
of Structural Fund programmes 2007-13 in Spain. The European Council
has decided to attribute a special allocation to Spain as political
agreement to compensate for the loss of the Cohesion Fund, but
the negotiators have tried to make the most of it and are saying,
"Okay, you are attributing money and this is to create a
so-called technological fund and with that money in the range
of €500 million, please see what you can do with your undertakers,
with your universities and laboratories, your public administration",
the so-called triple helix model, "and build clusters, foster
innovation, especially in the field of small and medium-sized
undertakings because this is where it is critical". Just
to mention one figure: when the Lisbon Strategy speaks of a target
for 2010 which is three per cent of GDP in terms of expenditure
in the field of research and development, at the current moment
Spain records a level of 1.2 per cent, which is extremely low
even compared to other countries like Germany and France, so clearly
there is a need. If you do not look only at the publicly financed
research but, more important perhaps, the research which is privately
financed, which is to say the research which takes place within
the companies, then the figures are even smaller. I do not have
the details here but we could find that out. That figure is not
satisfactory now. We have a success story that we can show and
demonstrate more in physical terms. We, together with Spain, are
confronted with other challenges of a new type if they want to
grow as a modern economy. Those are my four conclusions. There
is convergence, there is terrific improvement in the environment,
like the sewerage system or cleaning the water, things like that,
and also a huge reduction in the indicator of unemployment which
culminated at the levels of 18 or 20 per cent and now is in the
range of eight or nine per cent, like France or Germany and other
Member countries, and like the United Kingdom, but you make us
jealous. However, there are still huge environmental problems
in Spain relating to water management, among others. Drought is
an issue and how not to ensure the transfer of water from one
river basin to another and how to mitigate using agriculture,
tourism and so on is still an issue that we want to look at because
we are going not only for the Lisbon but the Gothenburg Strategy
which is environmental sustainability.
Q254 Chairman: I have two questions
before I pass on to my colleagues. Could you remind me what the
Spanish allocation under the Regional Development Fund is for
2007-13?
Mr Dufeil: Yes. Altogether, which means ERDF
and Cohesion Fund, we are talking of figures in the range of €35
billion, an annual average of €5 billion.
Q255 Chairman: Obviously, with all
respect to the European Commission and the efforts on regional
development, this growth was not achieved solely by our efforts.
Have you done any work on separating out the effect of growth
by becoming a member of the EU and by the trading opportunities
from this? It is a question, I do not know that you should have,
I am just asking.
Mr Dufeil: We do bear that in question in mind,
of course. I am not sure we are able to do that because it is
very difficult. I would like to quote another fact which in my
opinion is very relevant in the case of Spain, which is a demographic
fact. If you look at the population of Spain at the beginning
of that period it was very comparable to Poland, in the range
of 40 million people, and whereas Poland's population has diminished
to 38 million, Spain has grown to 44 million inhabitants, which
is a growth of ten per cent, and that is a lot. You could partly
explain Spanish growth by the demographic factor, which is due
to immigration from Africa, Sub-Saharan countries and Latin America.
Q256 Chairman: That I did not know.
Mr Dufeil: Very important.
Mr Ahner: In answer to your question, we have
done some model analysis where, with the help of economic models,
we tried to identify which part of the growth in Spain could be
attributable to the Cohesion Fund money. This analysis was carried
out in Nicola's unit. Nicola, perhaps you could say a word on
this. I think it was around one percentage point a year in growth
terms which was directly attributable to the European funds.
Q257 Chairman: I see the difficulties,
that was why I was wondering whether you had done that.
Mr Ahner: This is a model analysis so it must
be taken with caution.
Chairman: I think that leads us on very nicely
to the second question which, Lord Woolmer, perhaps you would
address.
Q258 Lord Woolmer of Leeds: Mr Ahner,
you are going to respond to the question here but can I frame
it in a slightly different way. Remind me, how many regions are
there in the EU?
Mr Ahner: 268.
Q259 Lord Woolmer of Leeds: That
is the Eurostudy, is it?
Mr Ahner: Yes.
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