Reform of the Structural Funds after 1999(1)

Article 2 of the Treaty on European Union (TEU) makes it clear that cohesion is one of the fundamental principles the EU seeks to respect. Cohesion, however, is not an easy concept to pin down, although it is linked (in Article 130A of the TEU) to disparities between regions. In practice, what constitutes cohesion is a political rather than an economic judgment; disparities tolerable today may be unacceptable in five or ten years' time. The principal instruments that the EU has to advance cohesion are the Structural Funds, the Cohesion Fund and the lending effected by the European Investment Bank (EIB). Member State policies also play an important role in assuring cohesion, both by institutionalized inter-regional income transfers and by explicit programs aimed at the economic development of less-favored regions.