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EU Cohesion policy 2007-13 and the implications for Spain : who gets what, when and how?

Institute of Fiscal Studies = Instituto de Estudios Fiscales (Funder), EPRC’s EoRPA (Funder) (2006) EU Cohesion policy 2007-13 and the implications for Spain : who gets what, when and how? [Report]

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The recent negotiation of the EU budget and the associated reform of EU Cohesion policy have had major policy implications for Spain, the country in receipt of most Cohesion policy support in the current programming period (2000-06). EU enlargement, combined with relatively rapid growth in Spain, impacted on the eligibility of Spanish regions for Cohesion support while also taking the country as a whole beyond the eligibility threshold for the Cohesion Fund. As a result, based on the original Commission budget proposals of February 2004, Spain was facing a reduced Cohesion policy budget of at least a half (to below €30 billion). This paper first reviews the budget negotiations from a Spanish (Cohesion policy) perspective, identifying the key negotiating goals and the extent to which they were achieved. It then looks at the outcome of the negotiations for Spain, initially at the national level and then in the regions. It highlights the significant differential impacts of the cutbacks in Cohesion policy allocations at the regional level and the pressures on the Spanish government to modulate the regional impact of the budgetary changes. Having considered the direct funding implications of the new Cohesion policy, the second half of the paper is concerned with the regulatory, institutional and economic impacts of the new policy regime. Many of the reform proposals fit with Spanish priorities, not least the new rationale for Cohesion policy (with its stress on the Lisbon and Gothenburg agendas) and the new policy architecture (with all regions eligible for some form of support and with a related shift from a geographic to more of a thematic focus). The retention of the key Structural Funds principles has also been welcomed in Spain, unsurprising given the wealth of experience and expertise built up over three (high-spending) programming cycles. As in most Member States, the main regulatory concern relates to the extent to which a more simplified and devolved approach to Funds' implementation will be achieved in practice. As regards policy and institutional impacts, the paper brings together regional views on the new budgetary and regulatory frameworks and reviews how the new regulations are being implemented in practice. A discussion of the developing National Strategic Reference Framework and the related Operational Programmes makes clear that the strong emphasis on the Lisbon agenda is not viewed as a constraint in Spain; rather, it is felt to fit well with recent Spanish developments and goals. Finally, the paper considers the economic implications of the reductions in Cohesion policy support. On the basis of evaluation studies, it highlights the positive impact the Funds have had in the past and the potentially quite varied regional impacts the reductions in funding may have in the future.