Commission set to approve Irish structural funds draft

The European Commission is expected to approve within a fortnight an important framework agreement with the Government on how Ireland's share of EU structural funds for 20002006 can be spent, The Irish Times has learned.

Total structural and cohesion funding for the period agreed in Agenda 2000 at Berlin last year was £2.9 billion and the Commission is now ready to give its support to the spending priorities set out by the Government in the National Development Plan, of which EU cash will account for some 7 per cent of investment.

Diplomatic and EU sources both confirm, in the words of one official, that "all that needs to be completed is the dotting of i's and crossing of t's" in the agreement whose draft is to be circulated to directorates on Monday.

The structural spending will be divided between four national operational programmes, two regional programmes, the Peace 2 programme for the Border areas, and a rural development programme funded from the CAP budget.

The national programmes, likely to total £1.5 billion, are for economic and social infrastructure, employment and human resources, the productive sector, and technical assistance.

Although the precise allocation to each is still not finalised, the Commission expresses some reservations in its draft agreement about proposals to increase total resources devoted to the productive sector in the light of almost full employment. Structural funding will therefore be concentrated on increased competitiveness rather than employment creation, significantly reducing the Commission allocation to the productive sector from the £335 million suggested in the plan.

The EU funding for the South's share of the Peace 2 programme will amount to £83 million. The two regional programmes, likely to total some £840 million, reflect the splitting of the State into two under the regionalisation proposals, one receiving Objective One maximum assistance - the Border, Midlands and Western region (BMW) - and the other, the Southern and Eastern region (SE), classified "Objective One in transition" and where support will taper off over the period.

The Commission's draft agreement notes the relative performance of the two regions, with the SE going from 83 per cent of the EU average GDP per capita in 1988 to 105 per cent in 1996, while the BMW has grown from 60 per cent to 74 per cent.

The weaknesses of the Irish economy singled out by the Commission, and reflecting the Government's own priorities in the National Development Plan, include infrastructure deficits in transport, environmental services and housing in urban areas, urban traffic congestion, a growing regional imbalance, emerging labour shortage in some areas, inflationary pressures, an underdeveloped indigenous industrial sector, and concentrations of urban and rural deprivation.

In assessing the National Plan's programme for £40 billion in public, EU and private investment of over seven years, the Commission says it agrees with the Government that the challenges facing the economy are radically different to those in earlier periods. The Commission approves the broad balance of the plan in emphasising the alleviation of supply-side constraints and in regionalising to give more emphasis to balanced development.

The Government has met one key concern of the Commission's environment directorate by giving an assurance that it will complete within six months the much-delayed designation of natural sites for protection under the habitats directive. The Commission had been threatening to hold up structural funding for projects which overlapped with sites due for designation.