THESIS SLOVAKIA AND STRUCTURAL FUNDS 2004-2006. By
THESIS SLOVAKIA AND STRUCTURAL FUNDS 2004-2006. HOW TO APPLY AND TO BE SUCCESSFUL? By Kristina Hagarova Advisor: Matthias C. Suthe BSc. CEM MBA A Thesis to Be Submitted to The College of Management In Partial Fulfillment of the Requirements for the Degree of Bachelor in Business Administration (Bc.) Submitted by ______________________________________Date_____________ Candidate Signature Approved by ______________________________________Date_____________ Thesis/Project Advisor Approved by _______________________________________Date_____________ Rector(or his representative) 1 Table of Content Thesis Cover Page …………………………………………………………… Table of Content …………………………………………………………… Introduction …………………………………………………………... 1.0 Establishment of the Structural Funds in Europe ………………....... 1.1 Year 1957 …………………………………………………… 1.2 Year 1960 …………………………………………………… 1.3 Year 1962 …………………………………………………… 1.4 Year 1975 …………………………………………………… 2.0 Development of the Structural Funds in Europe after 1975 …………… 2.1 Year 1987 – Delors Packages …………………………………… 2.1.1 Delors I. Package …………………………………… 2.1.2 Delors II. Package …………………………………… 2.1.3 Agenda 2000 …………………………………………… 2.2 The Objectives …………………………………………… 3.0 Four Community Initiatives ………………………………………….... 3.1 EQUAL …………………………………………………… 3.2 Interreg III. …………………………………………………… 3.3 Urban II. …………………………………………………… 3.4 Leader+ …………………………………………………… 4.0 ESF, EAGGF, ERGF, FIFG …………………………………………… 4.1 Years 2000-2006 …………………………………………… 4.1.1 Objective 1 …………………………………………… 4.1.2 Objective 2 …………………………………………… 4.1.3 Objective 3 …………………………………………… 4.2 European Social Fund …………………………………………… 4.2.1 European Employment Strategy …………………… 4.2.2 Projects which can apply for the ESF …………………… 4.3 European Agricultural Guidance and Guarantee Fund …… 4.3.1 The Common Agricultural Policy …………………… 4.4 European Regional Development Fund …………………… 4.4.1 Innovative measures …………………………………… 4.5 Financial Instrument for Fisheries Guidance …………………… 5.0 SLOVAKIA …………………………………………………………… 5.1 Evolution of Slovak integration …………………………… 6.0 Slovakia and Pre-Accession Assistance of the EU …………………… 6.1 PHARE …………………………………………………… 6.2 ISPA …………………………………………………………… 6.3 SAPARD …………………………………………………… 6.4 Criticism of the Pre-Accession Assistance Funds …………… 7.0 Structural Funds in Slovakia after joining the EU in May 2004 …… 7.1 National Development Plan …………………………………… 7.2 The Territorial Systemization …………………………………… 7.3 Operational Programs …………………………………………… 7.3.1 SOP Industry and Services …………………………… 7.3.2 SOP Human Resources …………………………… 7.3.3 SOP Agriculture and Rural Development …………… 7.3.4 OP Basic Infrastructure …………………………… 7.4 Financial Plan …………………………………………………… 1 2 4 5 5 5 6 6 7 7 8 8 8 9 10 10 11 12 13 14 15 15 16 17 19 20 21 22 22 24 25 26 27 27 29 29 30 32 33 35 35 36 37 37 38 40 40 41 2 8.0 9.0 10.0 11.0 12.0 13.0 Criticism of Structural Funds ………………………………………….. Benefits of the Funding from the EU ………………………………….. Application process ………………………………………………….. 10.1 Advance Preparation ………………………………………….. 10.2 Projects Development ………………………………………….. Recommendations ………………………………………………….. Definition of terms ………………………………………………….. References ………………………………………………………….. 42 44 47 47 50 52 54 56 3 INTRODUCTION Slovakia and the Structural Funds do not have a long history. The European Union has much longer association with the idea of eliminating economical and development differences within the regions of Europe. The disparities were the main reason for the structural help. The representatives of the countries which formed the union at that time realized that only balanced development can bring the prosperity also to the countries which are not dependent on the foreign help. There were four Structural Funds in the programming period of 2000-2006. All of them were designed in order to help the projects which are perspective for the region development and thus make sure that the region makes progress towards the desired economic level. Slovakia did not take part in the whole programming period 2000-2006; however, the country took an opportunity to use the financial resources from the Structural Funds in its pre-accession period by using pre-accession funds of Phare, ISPA, and Sapard. After the country joined the European Union in May 2004, the possibilities of financing from the Structural Funds became real. Slovakia, as a new member of the EU could use the experience from the pre-accession period when the country was supposed to prepare its administration and legislation for the EU finance options. The funding instruments are still a great challenge for the new EU countries. When using them well, the country as well as its inhabitants can benefit from them. 4 1.0 ESTABLISHMENT OF THE STRUCTURAL FUNDS IN EUROPE 1.1 Year 1957 The idea of Structural Funds or other economic help for the less developed European regions was established together with the European Economic Community (EEC) on 25 March 1957 (Redirecting Urban areas development towards Sustainable Energy [RUSE], n. d.). The European Economic Community was an ancestor of today’s European Union (EU). There were six founding countries, and most of them located in the Western Europe – France, Belgium, Germany, Luxemburg, Netherlands, and Italy. The main aim of these countries was to help each other first of all economically, so the economy was growing in the Western Europe at that time and thus, a prosperous and important world region was created. The development would not be successful in the long run if there were major differences between the diverse regions and areas in these countries, therefore the plan was to provide them with economic resources and thus the less favored and developed regions can get a potential advantage on the market. In the year 1957, when by the Treaty of Rome the basics for the today’s European Union were established, also “explicit reference is made to the need to consolidate economic unity among the Member States and to reduce disparities between regions” (Regional Policy – Inforegio, 2006). That is why the Treaty of Rome can be considered as the preliminary document for the establishment of the Structural Funds. 1.2 Year 1960 After the EEC’s establishment, the prerequisite of the Treaty of Rome allowed the first of the Structural Funds to come to its existence – the European Social Fund (ESF) (Europa, n.d.a). 5 As the Article 123 of the Treaty states the reason for the ESF’ establishment was “to improve employment opportunities for workers (…) and to contribute thereby to raising the standard of living” (RUSE, n. d.). 1.3 Year 1962 The European Agricultural Guidance and Guarantee Fund (EAGGF) is introduced this year, based on the Common Agricultural Policy (CAP) (Europa, n.d.b). CAP’s goal is “to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve our rural heritage” (Europa, 2006). EAGGF enables financing the goals of CAP (European Parliament, 2000a). 1.4 Year 1975 The third of the Structural Funds, the European Regional Development Fund (ERDF) was established after the enlargement of the European Union by accession of three more states – Denmark, Ireland, and the United Kingdom. These countries were accepted by the EEC in January 1973 in so called first round of enlargement (McCormick, 1999, p. 131). This instrument aims its help the industrial development (Regional Policy – Inforegio, 2006). 6 2.0 DEVELOPMENT OF THE STRUCTURAL FUNDS IN EUROPE AFTER 1975 Development of the system of the Structural Funds is closely linked to the continuous enlargement of the EC. Until 1973 the six founding countries had to deal with the regional differences within their limited area. With the UK, Ireland, and Denmark accession in 1973 the area has become much larger and the issues with the differences between developed and less-developed areas expanded. The situation changed again when the countries of the southern Europe were accepted by the EEC – Greece in 1981, Spain and Portugal in 1986 (McCormick, 1999, p. 231). This was the time when the Structural Funds started to exist with an organization and direct plans of help. “For the first time programmes were defined to benefit particular areas over a multiannual period (6 years), within the framework of which Community funds were used in a coordinated manner based on common development objectives” (RUSE, n. d.). 2.1 Year 1987 – Delors Packages In 1987, the Single European Act introduces “the establishment of a genuine integrated structural policy in favour of regions facing difficulties” (RUSE, n. d.). Jacques Delors was President of the European Commission who developed a study about necessary future modifications in the CAP, the Structural Funds, and the concern of the EC’s financial plans (Szemler, n. d.). Results of this initiative are Delors I. and II. Packages which had a positive impact on the organization of the Structural Funding. 7 2.1.1 Delors I. Package This document was officially approved in June 1988 and its help towards the Structural Funds was the establishment of the system of Objectives: 1, 2, 3, 4, 5a, 5b (Szemler, n. d.). Delors I. Package deserved to double economic grants for the Structural Funds until the year 1992 and also planning the allocation of the resources was changed from annual to multiannual (Regional Policy – Inforegio, 2006). 2.1.2 Delors II. Package Delors II. Package was issued in February 1992 and contained the proposals of the EU budget (Leonard, 1998, p. 94). “Financing [the Structural Funds] increased by 75% until 1999 (1992: 17 bn ECU, 1999: 30 bn ECU). Concentration becomes more important in structural operations (the weight of Objective 1 increased). The Cohesion Fund has been created, with the objective to help the less developed member states (Greece, Ireland, Portugal and Spain) in developing their infrastructure in the period of preparation (including the fulfillment of the Maastricht criteria) for the Economic and Monetary Union” (Szemler, n. d.). 2.1.3 Agenda 2000 Agenda 2000 was a document issued in 1997 which proposed strategy for the years after 1999 when the previous period finishes. Agenda 2000 was specified in suggestions made in 1998 and then finalized in1999. This final version counts on Structural Funds’ reformation which is formally known as Regulation 1260/99 of 21 June 1999 (European Parliament, 2000b). 8 The part of the reformation included also the aid to the 10 Central and Eastern European Countries (CEEC) in a form of the pre-accession funds which would mean their better preparedness for the entry to the EU and also smaller expenses for the member countries after the CEECs will become a part of the EU (McCormick, 1999, p. 225). The financial aid would be done by three pre-accession funds. The first one already exists and would be allowed more finances – PHARE. The other two pre-accession instruments mentioned were ISPA (Instrument for Structural Policies Pre-accession) and SAPARD (Special Accession Programme for Agriculture and Rural Development) (Szemler, n. d.). 2.2 THE OBJECTIVES With the Delors I. Package, also the term Objective appeared. The function of the Objectives is to define the strategies of allocations of the funds. “The assistance from the Structural Funds was concentrated on the areas or social groups in greatest difficulty according to socio-economic criteria which lead to the assignment of five priority objectives to the Structural Funds” (RUSE, n. d.). For the period 1993-1999 the Objectives were designed in this way: • “Objective 1: Develop slower less developed regions. • Objective 2: Reconvert regions affected by declining industry. • Objective 3: Insertion of unemployed in the labour market. • Objective 4: Adaptation to industrial mutations. • Objective 5a: Foster the adjustment of the agricultural and fishing sectors. • Objective 5b: Adapt agricultural structures and promote the development of rural areas. 9 • Objective 6: Low demographic density regions.” (Gipuzkoa, n. d.). With the Agenda 2000 the objectives’ number was decreased into 3: o Objective 1: Eliminating the differences between more and less developed regions. It concentrates on infrastructure. o Objective 2: “Supporting economic and social conversion in industrial, rural, urban or fisheries-dependent areas facing structural difficulties. o Objective 3: Modernising systems of training and promoting employment”. (European Commission, 2004). 3.0 FOUR COMMUNITY INITIATIVES To deal with the specific problems which are present in the entire EU, four Community Initiatives (CI) were founded for the period of 2000-2006. They are financed from the Structural Funds resources and take about 5.35% of SF finances (North Lanarkshire Council, n.d.a). 3.1 EQUAL As the name suggests this program deals with equality and discrimination issues which occur in the EU. EQUAL is defined as “The European Social Fund Community Initiative concerning transnational co-operation to promote new means of combating all forms of discrimination and inequalities in connection with the labour market in Europe” (European Commission, n.d.d.). The CI EQUAL operates in 25 countries and during 2001-2008 uses € 3,27 billion to finance 3,400 projects through ESF (European Commission, n.d.d.). 10 Slovakia started with the program Equal in 2004 and from 2005 this program carried 100 missions which totaled to more than € 31,4 million. (Community Initiative EQUAL, n.d.). (Source: European Commission, February 2006). According to the table above, Slovakia’s difference between unemployment rate of men and women increased from the year 1999 to 2004. On the other hand, the EU-25 trend is different as the difference between the unemployment rates between genders decreased from 3% to 2.1%. The European Community Initiative EQUAL has a task to decrease the difference and make the opportunities to employment equal for both genders. 3.2 Interreg III. “This new phase of the Interreg initiative is designed to strengthen economic and social cohesion throughout the EU, by fostering the balanced development of the continent through cross-border, transnational and interregional co-operation. Special emphasis has been 11 placed on integrating remote regions and those which share external borders with the candidate countries” (North Lanarkshire Council, n.d.b). Interreg III is a program financed from the ERDF Structural Fund (75%- in Objective 1 regions, and 50% in other regions). The second part of the program is to be financed from the national budget. In 2000-2006 the Interreg III was assigned € 4,875 million (1999 prices). Slovakia, as a part of CADSES (Central Adriatic Danubian South-Eastern European Space) was assigned € 36 million (Regional Policy – Inforegio, 2006, June 6). (Source: Regional Policy – Inforegio, 2006, June 6) 3.3 Urban II. “The URBAN II Programme aims to encourage the design and implementation of innovative social and economic regeneration strategies. It also aims to support the exchange 12 of knowledge and experience on regeneration and sustainable urban development” (North Lanarkshire Council, n.d.a). Urban II covers 70 projects in the EU which deal with several issues and problems in the urban areas, for example unemployment, crime and immigration – all three are a double of the EU average in the Urban II projects. More than €1.6 billion will be provided for this program from ERDF together with other sources of financing (Regional Policy – Inforegio, 2006, November). 3.4 Leader+ Leader+ is a way of financing the projects which are concerned about supporting “natural and cultural heritage, reinforcing the economic environment to aid job creation, improving the organizational ability of the rural community” (North Lanarkshire Council, n.d.a). This program was allocated € 5,046 million in the period 2000-2006 with the main contribution of € 2,105 million from the EAGGF Guidance section (European Commission, n.d.e.). 13 4.0 ESF, EAGGF, ERGF, FIFG (Source: European Commission, 2004). GDP pe r capita, 2005 Index EU-25 = 100 140 120 247.8 Average EU-25 100 80 60 40 20 0 LU IE DK NL AT UK BE FR SE FI DE IT ES CY EL PT MT SI CZ HU SK PL EE LT LV RO BG (Source: European Commission, 2007). The Tables above compare the values of GDP per head in the years 2002 and 2005. In 2002 all the applicant countries had GDP under the EU member states’ average. The Preaccession funds together with the Structural Funds are the policy tool to change that and to decrease the differences in the regions of Europe. The 2005 statistics reveals that the situation changes positively in the countries after their entry to the European Union. Still, none of the countries which accessed the EU in 2002 (Romania and Bulgaria in 2007) are not on the level of other EU countries. 14 4.1 Years 2000-2006 (Source: European Commission, 2004). For the period of 7 years from 2000 to 2006 all four of the Structural Funds were assigned almost EUR 195 billion (European Commission, 2005). These finances were used within the three Objectives: 4.1.1 Objective 1 Support for improvement of problems in these regions: - where per Capita GDP is less than 75% of the EU average, - outlying regions (e.g. Azores, Canaries, Madeira), - sparsely populated regions –less than 8 inhabitants/km² (e.g. In Finland or Sweden) (European Commission, 2004). 15 Objective 1 uses financial resources from all four Funds: ESF, EAGGF, ERDF, and FIFG. This objective takes more than two-thirds of total Structural Funding expenses – 69.7%. For the period of 2000-2006 it means €135.9 billion for the EU population of more than 83 million (European Commission, n.d.a). The regions of Objective 1 still experience several hinder which make it difficult for them to progress, such as: • “a low level of general investment; • unemployment rates often higher than average; • a lack of services for businesses and communities; • a lack of the basic infrastructure necessary for economic activities” (European Commission, 2004). • Regions qualified for Objective 1 NUTS II Bratislava (Source: National Agency for Development of Small and Medium Enterprises, 2004). 4.1.2 Objective 2 Objective 2 means support for improvement of problems in these areas: • “Areas adjusting to change in industrial and service sector, • rural areas in decline, • urban areas in difficulty, 16 • economically depressed areas heavily dependent on fisheries” (European Commission, n.d.a). This Objective uses financial resources mainly from ESF and ERDF and corresponds to 11.5% of total SFs' expenses which is €22.5 billion for the corresponding period, and covering 68 million people (European Commission, n.d.a). 4.1.3 Objective 3 The goal for the Objective 3 is to “[h]elp [to] adapt and modernize education, training and employment policies and systems” (European Commission, 2005). “Objective 3 is financed by the ESF alone and represents 12.3% of total Structural Funds spending, a total of € 24.05 billion from 2000-2006” (European Commission, 2005). 17 (Source: European Commission, 2004). 18 4.2 EUROPEAN SOCIAL FUND The first mentions of the ESF appeared in the founding document of the EC – the Treaty of Rome in 1957, but came to the force in 1960 (Europa, n.d.a). It was explained under the Article 123 of the Rome Treaty: “To improve employment opportunities for workers in the common market and o contribute thereby to raising the standard of living… it shall have the task of rendering the employment of workers easier and of increasing their geographical and occupational mobility within the Community” (Leonard, 1998, p. 160). From the year 1986 it became of greater importance due to the high unemployment rate of 16 million people (12% of the work force). So, the year 1986 was essential for boosting up the ESF functioning as the investments through this fund increased and thus his Fund had merits helping 2.5 million people by using € 2,500 millions (7% of the EU budget) and “by 1997 the amount committed had increased to 7,639m ecus, or about 8.6% of the budget” (Leonard, 1998, p. 160). ESF’s objectives: - “Key financial instrument supporting the European Employment Strategy - Investing in people - Greater responsibility to Member States - Simplification of administration - Partnership, local action and evaluation of effectiveness - Encouraging local solutions to local issues” (European Commission, n.d.b). 19 4.2.1 EUROPEAN EMPLOYMENT SRATEGY European Employment Strategy was issued in the Luxemburg European Council in 1997 after the agreement of the EC the same year in Amsterdam. In Amsterdam the Council came to the decision that it is necessary to “better link employment and economic policy” (European Commission, n.d.a). The Member States were left their right for the creating and implementing the labor procedures but by the European Employment Strategy, the Presidents and Prime Ministers of the Member States agreed to follow “a more strategic framework for co-ordination of employment policies in the European Union” (European Commission, n.d.a). The EES was linked with the ESF also by the four key-phrases: - Employability - Entrepreneurship - Adaptability - Equality (European Commission, n.d.a). The 25 Member States are trying to fulfill these ambitions by following their individual annual employment strategies and the role of the Commission is to analyze the improvements all the Member States have made (European Commission, 2005). This attitude, dependent on both sides, guarantees the individual approach of each country backed up by the ideas of the Community. 4.2.2 PROJECTS WHICH CAN APPLY FOR THE ESF As the ESF is closely linked mainly with workforce, whether it is an actual or potential workforce, the projects which want to apply for the funding from the ESF should contain a goal of helping to positively improve the employment rate by developing: (a) “Education and vocational training: 20 - apprenticeships, pre-training, especially basic skills, rehabilitation in employment (e.g. for the disabled) measures to promote employability on the labour market, guidance, counselling, continuing training; (b) Employment aids and aids for self-employment; (c) Research, science and technology development: - post-graduate training and training of managers and technicians at research establishments and in enterprises; (d) Developing new sources of employment, including those in the social economy” (European Commission, 2005). For the projects applying for the ESF funding it is also important not to forget about: (a) “Developing and improving training, education and skills acquisition, including the training of teachers, trainers and staff, and improving the access of workers to training and qualifications; (b) Modernising and improving the efficiency of employment services; (c) Developing links between the worlds of work, education, training and research establishments; (d) Developing systems for anticipating changes in work and employment needs, particularly related to new patterns of work and work organization” (European Commission, 2005). 21 4.3 EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND “It [agriculture] employs just 5 per cent of the workforce and accounts just 3 per cent of EU GDP, yet it has variously been the biggest, most expensive, most complex and sometimes most contentious of all policy areas in which the EU has become involved” (McCormick, 1999, p. 188). Because of the intensity of the agricultural issue, the European Agricultural Guidance and Guarantee Fund had been set up. EAGGF is divided into two sections: Guidance and Guarantee section. The difference between these two is that: “Guarantee Section finances, in particular, expenditure on the agricultural market organizations, the rural development measures that accompany market support and rural measures outside of Objective 1 regions, certain veterinary expenditure and information measures relating to the CAP” (European Commission, n.d.c). In 1998 about 42% of the EU budget was used for the Guarantee Section of the Fund “to buy and store surplus produce and encourage agricultural exports” (McCormick, 1999, p. 192). On the other hand, the Guidance Section “is used to improve agriculture by investing in new equipment and technology and helping those working in agriculture with pensions, sickness benefits and other support” (McCormick, 1999, p.130). 4.3.1 THE COMMON AGRICULTURAL POLICY The Goals of CAP: - “increased agricultural productivity, - A ‘fair’ standard of living for farming community, - Stable markets, - Assured food supplies and ‘reasonable’ prices for consumers” (McCormick, 1999). 22 The CAP was first mentioned in the Treaty of Rome in the Article 39: “In working out the Common Agricultural Policy...account shall be taken of the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions” (Agra CEAS Consulting, 2005). Before the enlargement of the EU in 2004 the candidate countries could not use the finances from the Structural Funds which were assigned for the 2000-2006 period yet. Still, the member countries already counted on the membership of the countries which needed investments into their development so the differences in the regions could be decreased. That is why tow pre-accession funds came to the existence with the Agenda 2000. These preaccession funds are ISPA (concentrating on the environment and transportation) and SAPARD (supporting improvements in agriculture and countryside areas) (Agra CEAS Consulting, 2005). “In addition, a reserve of €40 billion was set up for anticipated structural funds measures following accession. Poland, Czech Republic, Hungary, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Bulgaria and Romania have been eligible for support under the SAPARD instrument. The main objectives of the programme are to: • establish an EU framework for supporting sustainable agricultural and rural development in the central and eastern European candidate countries during the pre-accession period; • solve problems affecting the long-term adjustment of the agricultural sector and rural areas; and, • help implement the EU’s acquis communautaire in relation to the CAP and related policies. 23 At the same time, Cyprus and Malta have had access to specific pre-accession funds to help them prepare to implement the acquis communautaire” (Agra CEAS Consulting, 2005). For the program period 2000-2006 the total finances in the EAGGF Guarantee section are € 32,9059 billion (Agra CEAS Consulting, 2005). 4.4 EUROPEAN REGIONAL DEVELOPMENT FUND European Regional Development Fund was created in 1975 and became the fundamental part in the EU’s regional policy. The conditions for regions who want to apply for funds from ERDF: • “Those whose GNP is less than 75 % of the Community average, • very remote regions (French overseas territories, the Azores, Madeira and the Canary Islands”, • areas with low density of population (Katarova, 2007). ERDF finances also these activities: - “Productive investment to create and safeguard sustainable jobs; - Investment in infrastructure which contributes, in regions covered by Objective 1, to development, structural adjustment and creation and maintenance of sustainable jobs, or, in all eligible regions, to diversification, revitalisation, improved access and regeneration of economic sites and industrial areas suffering from decline, depressed urban areas, rural areas and areas dependent on fisheries. Such investment may also target the development of transEuropean networks in the areas of transport, telecommunications and energy in the regions covered by Objective 1; 24 - Development of the endogenous potential by measures which support local development and employment initiatives and the activities of small and medium-sized enterprises; such assistance is aimed at services for enterprises, transfer of technology, development of financing instruments, direct aid to investment, provision of local infrastructure, and aid for structures providing neighbourhood services; - Investment in education and health (only in the context of Objective 1)” (Katarova, 2007). 4.4.1 INNOVATIVE MEASURES “[T]he aim of the innovative measures (studies, pilot projects and exchanges of experience) to which the ERDF contributes is to reinforce competitiveness in Europe by reducing the gaps between regions and supporting innovation, RTD and the use of new information and communication technologies. It therefore forms part of the strategy approved at the European Council in Lisbon on 23/24 March 2000, which aims at boosting employment, economic competitiveness and social cohesion in the framework of a knowledge-based economy. In the period 2000-2006 the innovative measures must therefore concentrate on three priorities: • regional economy based on knowledge and technological innovation : helping the less-favoured regions to raise the level of their technology; • the information society at the service of regional development (e Europe-regio); • regional identity and sustainable development: promoting regional cohesion and competitiveness through an approach which integrates economic, environmental and social activity. 25 Implementing the innovative measures should also make it possible to: • improve the quality of assistance under the Objective 1 and 2 programmes to which the ERDF contributes; • enhance and strengthen the public-private partnership; • exploit the synergies between regional policy and the other Community policies; • have exchanges between regions and collective learning by means of the comparison and spread of best practice. The innovative measures have an annual allocation of EUR 400 million, or 0.4 of the ERDF's annual funding. Part-financing of their cost may amount to up to: • 80%, in Objective 1 regions; • 50%, or even 60% where the Community relevance of the measures justifies it, in Objective 2 regions” (Europa, 2005). 4.5 FINANCIAL INSTRUMENT FOR FISHERIES GUIDANCE FIFG is a special fund dedicated to reform the fisheries’ sector policies, it helps to adapt and modernize the fisheries industry. The finances coming from this Structural Fund will be allocated in the following fields: - help in adapting and modernizing fishery industry - support for regions, which are in socio-economic difficulties connected to restructuralization of fishery industry. (European Commission, 2004). 26 5.0 SLOVAKIA 5.1 EVOLUTION OF SLOVAK INTEGRATION 1993, October 4 European Association Agreement was signed between Slovak and EU Representatives, which created official basis for future co-operation between the European Union and Slovak Republic. 1995, June Slovakia officially applied for the EU membership on the EU Summit in Cannes. 1996, November 26 ‘Strategy of the Slovak Republic in implementing the EU law in priority fields (Determination of national priorities)’ was agreed by the Slovak Government 1997, July 16 European Commission published its opinions on the countries which applied to join the EU. “Slovakia was one of the five states (together with Bulgaria, Latvia, Lithuania and Romania) not recommended for EU accession talks. The Commission classified states into those that could be expected to meet the demands of EU membership in the medium term and those that could not, a distinction based largely on states' economic reform record and their acceptance of the EU’s ‘acquis communautaire’. In this respect, the Commission opined that “Slovakia should be able to cope with competitive pressure and market forces within the Union in the medium term, but this would require more transparent and market-based policies” (Oxford Analytica, 1997). 1998, March 30 “SR and EC mutually handed in the Partnership for Accession and the National programme for adoption of acquis communitaire in the SR 27 which are the key documents of the SR approximation to the EU” (The SR Government Office, n. d.). 2003, April 16 Slovakia signed the Treaty of Accession 2003, May 16-17 Referendum about national support to the membership in the EU was held. “52.15% of the country’s 4.1 million voters participated in the referendum, fulfilling the 50% voter turnout required to make the event valid. About 93.71% of the votes cast were in favor while 6.29% of the votes were against the integration” (The SR Government Office, n.d.). 2004, May 1 Slovakia became a member of the European Union. (Source: Mearns, 2006). 28 6.0 SLOVAKIA AND PRE-ACCESSION ASSISTANCE OF THE EU Co-operation of Slovakia and its use of pre-accession aid started back in 1990. The first help was gained through the PHARE, 10 years later, in 2000, two more European Union pre-accession assistance funds came to their existence – ISPA and Sapard. The main aim for all the pre-accession programs was to make sure that the country is ready to efficiently use the actual resources from the Structural funds of the EU (The SR Government Office, 2003). All three programs were aimed to help the Slovak Republic with a technical and administrative part of using the finances from the European Union structures and thus could also be perceived from the educational point of view – preparing the administrative resources which are important part of the successful project application. 6.1 PHARE Phare, as the first of the pre-accession aids concentrates on “support for institution building, investment to strengthen the regulatory infrastructure needed to compliance with the acquis, and investment in economic and social cohesion” and it also aims its help to “develop the mechanisms and institutions that will be needed to implement Structural Funds after accession” (European Commission, 2003). The Phare program was planned by year-to-year Financing Memoranda. The Phare help to Slovakia’s development accounts for € 356 millions for the period of 1992-1999 (European Commission, 2003). The programs of 1999 and 1998 Financing Memoranda were finished by December 2002 because of their longer execution period. The expenditures for the 1999 Financing 29 memoranda amounted to more than € 69 millions out of almost € 86 millions which were available. Thus, the portion Slovakia used is almost 82%. The 2000 Financing Memoranda had its due date stated on the 31st December 2002. The total finances available were little more than € 45 millions and Slovakia made use of 95%. The funds of € 55,5 millions were available from the 2001 Financing Memoranda due to 30th November 2003 (The SR Government Office, 2003). From the total funds available from PHARE, 84.8 % were contracted (Information Technologies and Public Administration [ITAPA], 2005). The 2002 Financing Memoranda had more than € 69 millions funds available for use (The SR Government Office, 2003). For this Financing Memoranda, 91.7% of the funds were contracted (ITAPA, 2005). The 2003 Financing Memoranda was the last one before the country joined the European Union in 2004. The amount of finances available for Slovakia was more than € 57 millions (The SR Government Office, 2003). By 31st December 2004 Slovakia gained more than € 46,6 millions from PHARE from European Commission (The SR Government Office, 2003). 6.2 ISPA The ISPA pre-accession fund [was] designed to finance larger investments in the sectors of transport and environment; these projects add to the realization of the EU ecological policy, development of the trans-European transportation system, and performance of the EU transportation strategy (The SR Government Office, 2003). “Following the transformation of water companies and a clear identification of final beneficiaries for the projects dealing with the distribution of drinking water and treatment of 30 waste water (regional water companies), the process of programming and implementation of ISPA-funded projects in the area of environmental protection has accelerated quite significantly. Overview of ISPA programming in the period September 2002 – June 2003” (The SR Government Office, 2003): • Ecological missions: - “Financing memoranda 2000 – 2001: the first contract with the contractor for the “Trenčín” project was signed in April 2003 (Financing Memorandum 2000) -- the rate of contracting reaches 78.32%. For other projects approved under the 20002001 Financing Memoranda the tenders for the selection of contractors and site supervisors will be completed in September-October 2003, after which the rate of contracting in ISPA-Environment will increase considerably; - Implementation of the 2002 Financing Memoranda for ISPA-Environment: currently, the terms of reference for the selection of contractors and independent supervisors are being prepared, • Projects in Transport Infrastructure: from the total amount of eligible expenditures of € 313,979,000 (of which ISPA grant amounts to € 170,889,200), € 99,707,309 has been contracted so far” (The SR Government Office, 2003). 31 (Source: European Commission, 2004 February). 6.3 SAPARD Pre-accession help in the form of SAPARD is aimed to help the less developed regions concerned about agriculture and rural improvement. Financial resources from SAPARD are allocated “in the infrastructure of agricultural holdings, improved mechanisms of veterinary and phytosanitary control, renovation of villages, diversification of rural activities, development of rural infrastructures, creation of new jobs and support of environmentally friendly methods of farming” (The SR Government Office, 2003). The projects which applied for the SAPARD funding were chosen in 6 rounds and by the June 2003, 223 projects applied, but 22 were not accepted (The SR Government Office, 2003). Because of the interest in the projects funding from SAPARD, the SAPARD Committee agreed to increase the financial reserves for 2000 from € 906,667 to € 1,187,600 32 (increase by € 280,933) and from € 1,937,169 to € 2,342,703 for 2001 (increase by 405,534) (The SR Government Office, 2003). The division of the EU and national funding is as followed: - for 2000: the EU contribution for € 890,700 the SR contribution for € 296, 900 - for 2001 the EU contribution for € 1,757,027 the SR contribution for € 585,676 (The SR Government Office, 2003). 6.4 CRITICIZM OF THE PRE-ACCESSION ASSISTANCE FUNDS “There is a joke comparing pre-accession funds with the Loch Ness Monster – everybody is talking about it, but nobody ha ever seen it” (Zackova, n. d.). The previous quote can give the basic idea of the main disadvantage of ISPA and Sapard funds use of which is being discussed in the same article. The problems stated in the article are: - “ pre-accession funds have been generally viewed as supporting individual projects rather than Slovakia’s complex preparation for joining the European Union, - The potential beneficiaries did not know how to use [PHARE 2000, Ispa, and Sapard], - information was late in reaching the public, - the competent administrators themselves were not sure about the rules of the game”. (Zackova, n. d.). The pre-accession funds were available for the countries also to learn how to use the Structural Funds. So, they could be considered as a training tool and the training mode can 33 also include mistakes. The goal was to help the country as much as possible by using the preaccession resources as well as to get used to the system of the ‘real’ structural funds. When talking about the individual projects rather than complex preparation of the country for the EU accession, another point should be thought about. The regions are diverse and deal with different problems and issues. The individual projects can thus address the help more appropriately. The projects which applied for the funding from the pre-accession resources needed to be planned in detail, which also concerns applying for finances from the Structural funds after joining the EU. The budget needs to be planned for all the finances, which is easier more realistic to do for the small individual projects rather than for the wholenation projects. Also, if the individual projects were able to be completed successfully, then the preparation for the EU access was successful as well. The actual use of the pre-accession funds was closely linked to the information provided about the potentials of the financial resources. The potential applicants and beneficiaries could use the Internet or regional agencies which should have all the information needed. Plus, the national newspapers and media were also the source of the information. The problem of information reaching the public late was visible on the situation when the European Commission allocated some “additional sources for the PHARE Programme on May 2000. The responsible government institutions had not properly informed possible beneficiaries nor civil society representatives about the possibility to request for additional funds from PHARE” (Friends of the Earth Europe, 2000). The reasons for that situation could also be that the administration channels were not well managed as they were just being built. Competent administrators who did not know about the rules are a question of training. The pre-accession funds were also the training tool for the accessing countries to get used and acknowledged to them, so the country is ready for the accession to EU in 2004. 34 7.0 STRUCTURAL FUNDS IN SLOVAKIA AFTER JOINING THE EU IN MAY 2004 Based on the conclusion of the Copenhagen Summit in December 2002, the sum of EUR 1.560 billion was approved for allocation to the Slovak Republic in the first programme period (2004 – 2006). A Total of €1.050 billion represents the share of structural funds. An additional €509.7 million is expected to be contributed by the Cohesion fund (CF). According to the decision of the Slovak government adopted in January 2003, structural funds will be divided by the following ratio: - European Regional Development Fund (ERDF) 42.62%; - European Social Fund (ESF) 28%; - European Agriculture Guidance and Guarantee Fund (EAGGF + FIFG) 24%; -- and community initiatives (Interreg AND Equal) 5.38 (Kluvankova-Oravska, n. d.). 7.1 NATIONAL DEVELOPMENT PLAN NDP is the principal document of the regional development and also the most important document for planning the usage of the Structural Funds resources. “Under the NDP, the main task of the regional policy of the Slovak Republic is the progressive adjustment of differences between regions, social and economic cohesion and the systematic improvement of the living standard of the population. Therefore, the strategic objective of NDP SR is to ensure GDP growth, while maintaining long-term sustainable development, enabling the Slovak Republic to achieve more than 50% of the average per capita GDP of the EU countries by the 2006” (Kluvankova-Oravska, n. d.). 35 The specific priorities of the regional policy of the Slovak Republic, set up by NDP are: • To support the competitiveness of production processes and services; • To support a labour market constructed on a flexible and qualified labour force; • Multi-functional agriculture and rural development; • Infrastructure development to balance regional development. The NDP priorities will be implemented by means of 4 separate Operational Programmes each will be funded by one of the Structural Funds, post-accession. The Operational programmes are: o Industry & Services (ERDF); o Human Resources (ESF); o Agriculture & Rural Development (EAGGF); o Basic Infrastructure (ERDF) (Ministry of Construction and Regional Development of the Slovak Republic, 2003). 7.2 THE TERRITORIAL SYSTEMISATION NUTS is a classification system of statistical territorial units introduced by the Statistical Office of the European Union (EUROSTAT), in co-operation with national statistical offices. The valid territorial systemisation pursuant to this Government decision is as follows: 36 Unit Number Territorial unit NUTS I NUTS II 1 4 Slovakia Bratislava region Western Slovakia Central Slovakia NUTS III NUTS IV NUTS V 8 79 2 883 Eastern Slovakia Regions of Slovakia Districts of Slovakia Municipalities of Slovakia (National Agency for Development of Small and Medium Enterprises, 2004). 7.3 OPERATIONAL PROGRAMS Operational Programs within the Slovakia are the detailed plans of what the Structural Funds are able to offer to Slovakia in order to improve the conditions of Slovak regions and thus to approach to the desired state and goals. 7.3.1 SECTORAL OPERATIONAL PROGRAM INDUSTRY AND SERVICES The objective of the SOP IS is the growth in competitiveness of industry and services, in particular: • support for sustainable structure of industrial production, • connection of research, innovations and knowledge potential with the needs of business practice, • increasing energy efficiency of acquiring, transforming and use of energy resources and orientation towards energy savings, 37 • use of natural potential for development of tourism and spa industry. SOP IS is co-financed from the ERDF and for the period of 2004-2006 it was allocated € 151,210,683 from the ERDF (in current prices) (Ministry of Economy of the Slovak Republic, 2003). Labour productivity in industry and services in thousands SKK per employee (on the basis of indexed prices) – reference scenario Year 2002 2003 2004 2005 2006 Total 340.3 349.3 361.2 374.0 Industry Total 354.4 366.3 380.4 395.0 Services Total 365.5 376.8 390.5 404.7 Slovakia Note: GDP per employee. Indexed prices (1995=100). Source: (Ministry of Economy of the Slovak Republic, 2003). 387.5 410.6 419.4 Both, industry and services, should experience the increase in the labour productivity also after the joining the EU in 2004. 7.3.2 SECTORAL OPERATIONAL PROGRAM HUMAN RESOURCES The objective of the SOP HR is the growth of employment based on qualified and flexible workforce. SOP HR set up its priorities which are: - development of active labor market policy (support for development programs, projects, measures, and activities for reducing the rate of unemployment in long term, and also support for he development of job consultancy systems, growth in information spread on labor mobility), - Strengthening equal opportunities in labor market and social inclusion (support of employment groups threatened by social exclusion, support for equal opportunities for women and men and harmony of family and work life), 38 - Development of life-long education and adaptability of workforce. Comparison of social situation in regions NUTS 2 Bratislava Western Slovakia Central Slovakia Eastern Slovakia Slovakia Rate of unemployment 1999 2002 2005 7.4 8.7 5.2 14.2 17.5 12.4 18.6 21.3 19.4 21.3 22.2 23.0 16.4 18.6 16.2 Relations of average monthly wage Slovakia = 100 1999 2002 2005 129.1 130.5 134.4 89.6 88.9 87.5 88.6 87.7 86.1 89.7 88.7 87.2 100.0 100.0 100.0 (Source: Okali, 2006, p.12). According to the Table, the unemployment rate significantly decreased in Bratislava and Western Slovakia (except for the year 2002) and there was an increase in unemployment rate in Central and Eastern Slovakia. The Western Slovakia was able to decrease its unemployment rate even after the large increase in 2002. This could be associated also with the foreign investors which set up their operations in Western Slovakia in a great measure. The second part of the table indicates the differences in average monthly income. The disparities are not very big among the regions of Slovakia but are significant when compared to Bratislava. Income in Bratislava is much above the income in the rest of the country. 7.3.3 SECTORAL OPERATIONAL PROGRAM AGRICULTURE AND RURAL DEVELOMENT The objectives of SOP A&RD are: - increasing the efficiency of agricultural production while adhering to environmental protection and care for animals, improving the processing structure of agricultural and fish products, to ensure food quality, 39 - improving quality of life of rural population through a growth in life standards, creating adequate social environment, developing activities of rural areas and protecting cultural heritage and values of the country, - 7.3.4 increasing the absorption capacity through vocational education and consultancy. OPERATIONAL PROGRAM BASIC INFRASTRUCTURE This program may be described as efforts to increase attraction of the territory with the aim to improve conditions of competitiveness of regions. The objective of OP BI is the development of transport, environmental and local infrastructures. The priorities of this program are: - modernization and development of railway transport, road, and air transport infrastructure, - achieving compliance with the EU directives relating to the protection and rational use of water, atmospheric protection, waste management, protection, improvement and regeneration of natural environment, - establishment and development of a civil, social, healthcare infrastructure and information society. (Ministry of Construction and Regional Development of the Slovak Republic, 2003). 7.4 FINANCIAL PLAN The draft version of the NDP financial plan is based on the conclusions of the Copenhagen summit, which took place on 12-13 December 2002, and ended the accession negotiations with the European Commission. 40 It was confirmed that the Slovak Republic will receive EUR 1,560 million from the Structural Funds and Cohesion Fund, for the abbreviated programming period of 2004 – 2006 (6.9% of the total obligation to candidate countries). Of that amount, EUR 1,050.3 million has been allocated to the Structural Funds and EUR 509.7 million to the Cohesion Fund. During the abbreviated programming period in 2004 – 2006, the limitation shall apply to the candidate countries, whereby the sectoral operational programmes may only be funded through a single structural fund. Assistance for the amount of EUR 447.64 million provided by the European Regional Development Fund (ERDF) should be disbursed among SOP Industry and services, OP Basic infrastructure and SPD Objective 2; as follows: SOP Industry and services - 29.88%, OP Basic infrastructure -62.75%, and SPD Objective 2 - 7.37%. SOP Human Resources and SPD Objective 3 shall be funded through the European Social Fund (ESF), as follows: SOP HR - 86.43% and SPD Objective 3 - 13.57%. The assistance from these funds shall amount to EUR 294.09 million. SOP Agriculture and Rural Development will be supported from the European Agricultural Guidance and Guarantee Fund + Financial Instrument for Fisheries Guidance (EAGGF + FIFG), to the amount of EUR 252.07 million. 41 The Structural Funds resources shall be disbursed by individual categories of assistance among Objectives 1, 2, and 3 - 92.66 : 3.32 : 4.02, respectively. Of the total volume of funds allocated to Objective 1, 69.5% shall be used in sectoral operational programmes and 30.5% in OP BI (Ministry of Construction and Regional Development of the Slovak Republic, 2003). 8.0 CRITICISM OF STRUCTURAL FUNDS The funds are mainly for larger and ‘wealthier’ companies that can co-finance the projects rather than smaller firms To get the investment back from the Structural Funds is possible only after the money was used. That means that the company has to first spend the money and then ask for them back. This rule is a disadvantage for smaller companies as they will not have to be able to find enough money for the beginning. The larger companies may have an advantage at this point as they may accumulate initial money easier than the smaller companies because of the general perception and attitude of the financial institutions towards the larger companies (Benka, 2007). The system of getting the finances from the Structural funds is too bureaucratic and thus slows down the projects. -The bureaucracy in the system of financing projects from the Structural Funds means many administrative levels and time consuming scheme of approvals and decisionmaking. This organization can mean that the company is lagging behind the competitors. As a person from management of the Vekaterm company in Nitrianske Pravno says, the whole process starting from application and finishing with getting the finances from funds 42 paid took a year and one year is to long for a company which wants to expand and keep up with the competitors (Benka, 2007). Also another example of disadvantage of the administrative processes may be a company which wants the funds to develop a new product. If the project is financed from the Structural funds as the only source of investment, it may slow down the company which may result in competition overrunning it by developing a similar competitive product. The system of applying for the project is too time consuming and complicated. All the administrative procedures may lead to the disappointment of the companies or individuals who could ask for the funding but all the procedures may take too long and the potential ending user can perceive this as disincentive. The example could be the Telco Systems company from Banska Bystrica, which applied for the funds, was rejected and the company is not going to apply again because it sees applying for the finances as waste of time and energy it needs for doing business (Benka, 2007). The system is not flexible enough to finance expansion to serial production. This point is also connected with bureaucracy. The condition of getting the finances from the funds is that everything is planned properly and in detail and fulfilling all the very strict provisions. All the expenses must be planned precisely with every Euro having its place even before the start of the project. Every single change must be adjusted. For example, Bratislava company Digix Systems chose scheme of the National Agency for Development of Small and Medium Enterprises [NADSME] for financing their project and even the smallest changes must have been agreed by the NADSME. So if the company wanted to change just one name in one line, it took two months for the change to be done (Benka, 2007). The difficulties may appear if there is more than one change 43 which is very probable to happen with larger projects. If just the change of one name takes two months it can take much longer to adjust more significant changes, for example those concerning the budget. Expansion to serial production is less predictable than developing a single product and the expenses are difficult to calculate, that is why the Structural Funds are not very useful at this point for the company. 9.0 BENEFITS OF THE FUNDINGS FROM THE EU Financial help Probably the most obvious benefit of the Structural Funds is the most basic one – providing financial help to the regions and people and thus increasing their development. The funds represent the finances the company will get back after investing them to the project, which will be beneficial for the company itself as well as the community. So the money the company will receive can be used for the further development of the company, they can be reinvested; basically they will be available again for further use. This means that the company’s expenses will be settled. Lower enterprise risk To finance the development is very risky due to he changing market conditions as well as customers’ preferences and it may be s well costly. The funds may be a good help as they cover financing either the whole or at least a part of the project. The money provided from the funds is saved by the developers or companies. This would mean that if the project is not as successful as it was supposed to be, the company will not have to 44 necessarily lose all the money it would have had invested. Thus, the risk is lowered which is a positive advantage for the company. Administration Administration of Structural Funding is connected with bureaucracy and is not very welcome by the applicants and users of funds. Still, there is no other way of controlling the use of the money. The money in funds is provided from the public sources and the control of their usage is inevitable. Provide the money to the applicants needs to be transparent and there is no way the money can be wasted or misused. The administrative control makes sure that the funds will be used effectively and appropriately. Development The country’s development is not only the benefit of the drawing finances from the Structural Funds but also the result of it all. The country which is able to be efficient in using the Structural Funds to its benefit is increasing the standard of living of its inhabitants. A successful project is an advantage for the community and region. The more of the successful projects the better for the regions. If the country’s officials can put the attention on the least developed regions of the country or the regions which are lagging behind, then the development of these can begin. In this case, the differences between the regions will decrease. These differences in Slovakia are mainly visible in the unemployment as well as infrastructure. Bratislava as the capital is being well developed and on the level of other EU developed regions, unlike the rest of Slovakia. Now, the reason for the Structural Funds is to help the regions to develop themselves. Every single successful project which is financed from the Structural Funds helps the country and the regions in their development. 45 Serving the Objectives The help from the Structural funds can be gained only after a long and difficult administration reassurance that the project will serve its purpose and people or environment. Each project must have its goals clearly set up according to the objectives of any of the Fund it is about to draw the money from. Those objectives are stated as a vision for the future well-developed Europe, so serving them and trying to fulfil the requirements are helping step-by-step to achieve it. The range of the visions is wide, with every Structural tool concentrating on a different field. With the finances from the Structural funds it is easier to accomplish the better living standards for the people than if each country was left alone to deal with its problems. Structural Funds and their objectives are helping the goals to have their targets. Ecology The EU policies and the Structural Funds are closely connected to the environmental issues. The applicants for the finances from the Structural Funds make sure that their project does not harm the environment or ecology of the region, the project should actually help the environment. Protecting the environment is another tool for developing the level of living conditions. The Structural Funds provide finances to the projects which aim to help the application of the environmental policies. 10.0 THE APPLICATION PROCESS 46 The following material was gained via personal communication from the regional office for the help with the structural funding in Trencin. The material was prepared in the Slovak language as the PowerPoint presentation. It was adjusted so it could be use to present the system of application for funding from the Structural Funds. Another source which was combined and implemented in the following model is by authors: Krizansky, P., Odzgan, J., and Rybar, P. The actual process of applying for the finances from the structural funds has several steps: 10.1 Advance preparation This phase is divided into several parts which if completed should provide an applicant with the firm base to start the actual development of projects. The advance preparation should not be underestimated. Each step of the pre-preparation advances the applicant so the project is ready for the second phase. a) - recognition of needs and requirements, - determination of priorities, - searching for ideas, thoughts, resources, - analyzing the current situation – comparative advantages & disadvantages, - determination of the project’s goals, - determination of target groups which will be affected by the project, - project’s basic logistic, - design of main activities of the project. b) Creation of the Ideological Map (IM) which answers the following questions: ? Who is an applicant 47 c) ? Why what need will be satisfied by the project ? For whom will the project serve ? How what resources will be used ? With whom who are partners, co-operators and organizations ? Where is the project localized ? When project’s time plan ? What purpose name the particular impacts ? How much will it cost and from which resources Verification of applicant’s capacities - Qualification requirements – creativity and inventiveness, managerial skills, language skills, IT skills, planning skills, problem understanding. - Material, finance, and technical requirements – processing the project documentation, implementation capacities, resources for co-financing and financing the managing operations. - Improvement requirements – training, language courses, specialist station, new organizational structure, hiring new people, obtaining new financial resources, outsourcing d) Finding partners and key persons It may be an advantage of operating the project with the assistance of partners as there is a better chance of getting resources, but also the positives are the synergy effects, or long-term tenability. If the project is with partners, then the following must be done: - suitable partners must be retrieved, 48 - determine the frame of partnership, - determine the rules of partnership a rules for managing partnership projects. e) Finding the suitable type of a program This step could be done by retrieving the information from these sources: - official EU documents, guidance and intermediary organs and implementation agencies, private companies. The selection criteria: - selection according to: the theme, the area and region, costs, fulfilling the expectations. f) Project team creation. - Preparatory team: applicant, partners, experts - Managing team: leader, chief co-ordinator, chief manager, economist, experts, consultants. g) Purchase of necessary documents. All the possible documents and materials should be purchased to get the best overview of the operational program. Also information about expertise part of the problem should be gained from statistical information, specialized literature, EU materials, own database, own or outside surveys. h) Location of relevant financial resources 49 The financial resources could be: own resources, partners, other subjects taking part in the project, local or regional sources, third sector sources, loans. i) Ideological Map in-depth processing In this step any additional ideas’ proposals should be completed, actualized, and adapted according to the individual grants. This information includes schedules, activities, expenses, payment modes, etc. 10.2 Projects’ development After the Ideological Map was created in the first phase, the projects come to the starting point of the second phase. Now, it is important to: - search for the suitable appeal for the given type of projects and then tackle it together with all the attached materials. Also, the applicants should concentrate on: - time restrictions of the appeal, financial restrictions of the appeal, legitimate applicants, legitimate expenses and activities, way of paying back the expenses, way of projects’ evaluation, list of required appendixes. It is important to study the manual for applicants. An appeal is announced by the Managing Authority (MA) or Intermediary Body (IB). The information is most of all on the internet – web sites of ministries, MA, and IB. Another phase which comes after the starting point is the actual process of project development. Now, the Ideological Map needs to be adapted to the appeal. The rule is that an appeal will not be adapted to a project. 50 In the application process, the administrative part is significant and it is crucial to complete it correctly. It must be filled in consistently according to the specified schema. All the points of the application must be filled in, all the attachments must be enclosed, no signatures can be missed out, and the types and numbers of documents must be correct. Other factors which are fundamental for the projects’ success are: the legal settlement of the ownership relationships towards property which is a part of a contract between the final beneficiary and the Managing Authority, positive influence of the project on the environment, equality between men and women, contribution to the development of information society. Also, it is necessary to pay attention to the demand for the actual activity. The applicant should know whether the need for such a project was expressed publicly, whether the need is connected to the presence or future, and whether it resulted from the expert analysis. At the end, a final beneficiary should be aware of the obligations – a final beneficiary cannot: - finance a project from two sources of the EU, - completely change the purpose or result of the project within 5 years, - start with the project realization before the project was approved, - transfer property to third persons. 11.0 RECOMMENDATIONS 51 In the period 2004-2006 Slovakia had the chance to implement its knowledge it got from using the pre-accession resources for using the actual Structural Funds. Still, there are voices that the country did not use all the possible finances it could have used. In order to retrieve this, probably the most fundamental problem has to be solved and that is: the information spread. The information about the use of the Structural Funds in Slovakia is quite limited. There are agencies which offer their help when applying for the funds, but it is not enough for the basic spread of the information. When people are informed properly, they may help Slovakia to use the funds accordingly, for example in their local unit, village, city, or town. This would mean that the Structural Funds are not available only to those who have an opportunity of using the Internet as the most of the information can be found mostly there. Most of the projects are not possible to realize without partners. The individuals with good ideas which can help the region should first of all find the help in the unit which is closest to them – their town or city representatives. Not only regional units, but also the mayors of the small cities should be aware of the possibilities of gaining the finances from the Structural Funds. If they find the eventual project helpful or useful the city resources should be available for the applications. Not to waste the money or time, the town representatives should be familiar with all the legislation, rules, conditions, and possibilities of getting the finances. This could be done not only be sending the information brochures to the city halls but also by organizing seminaries and meetings for them. Seminaries could be organized by every Ministry which is in charge of the Structural Funding. This way, the support for the projects would be provided. Another subsequent recommendation would be to let the people know that the representatives of their city or town are capable of help and also that there are regional offices which were set up to help them with their questions. This could be done by distribution of 52 leaflets to mailboxes, for example. The leaflets would be more attractive than the TV discussion as people would have the information written so they can look it up anytime. Still, the TV discussions should not be underestimated. The initial information, which is marketing and advertising campaign, could be achieved through the television channels. Then, the Structural Funding should have been promoted in Slovakia. People probably know that there are Structural Funds available, but they either do not know what are they, how can they be used, or what are the procedures. Or the Structural Funds may seem too complicated so the people may give up before asking for them, which leads to the no effective usage of the Structural Funding. Even if the bureaucracy is needed, people should be offered any possible help with these issues. It is very difficult to find the description of the rejected projects even on the Internet. Some of the web pages have the possibility of looking up the successful projects or projects which are just in progress, but the recommendations to be successful when applying for the structural help are limited to few basic sentences: follow the rules, plan exactly the expenditure of every single Euro, and record everything. The information is not complete and is too wide. The documents which summarize the programming periods or process of funding is not complete. There are just minimal forecasts. The Internet is the only relevant source, except for the Regional Agencies, but still, it is not very satisfying to use it. There are several web sites which deal with the Structural Funding, which are helpful because they provide the reader with the information, still, the recommendation would be to update the web pages more often. 12.0 DEFINITION OF TERMS 53 CAP - Common Agricultural policy CADSES - Central Adriatic Danubian South-Eastern European Space CEEC - Central and Eastern European Countries CI - Community Initiatives EAGGF - European Agricultural Guidance and Guarantee Fund EC - European Council EEC - European Economic Community EES - European Employment Strategy ERDF - European Regional Development Fund ESF - European Social Fund EU - European Union FIFG - Financial Instrument for Fisheries Guidance IB - Intermediary Body IM - Ideological Map ISPA - Instrument for Structural Policies for Pre-accession MA - Managing Authority NADSME - National Agency for Development of Small and Medium Enterprises NDP - National Development Plan NUTS - Nomenclature of Territorial Units for Statistics OP - Operational Program Phare - Poland-Hungary: Aid for Reconstruction of the Economy (extended to other countries) RTD - Research and Technology Development Sapard - Special Accession Program for Agriculture and Rural Development SOP - Sectoral Operational Program 54 13.0 REFERENCES 55 Agra CEAS Consulting. 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I, Kristina Hagarova, do hereby irrevocably consent to and authorize the College of Management Library to file the attached paper, project and/or thesis (Slovakia and Structural Funds 2004-2006. How to apply and to be successful?) and make such paper available for use and circulation and internet by Library users at the College of Management Library and all site locations. I state at this time that the contents of this paper are my own work and all resources are indicated. __________________________________________________(Signature) __________________________________________________(Date) 61
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