3.3.3. Rural development policy on 'vertical level' (New Objectives 1 and 2)

The choice of territorial level in analysing the differences in performance of regions is of crucial importance. NUTS 2 remains the basis for selection of the new Objective 1 areas. There are vast differences in development between the core and peripheral regions and these problems are not always properly addressed. The new Objective 1 areas should cover a smaller proportion of overall population (20% instead of today's 25%). The GDP calculation for the previous Objective 6 areas and for the new German Länder remains an open question. There is also a possibility of different interpretations of the GDP calculation, especially in the regions that are likely to lose their eligibility (Ireland, Highlands and Islands...).

The new Objective 2 areas will cover 15-20% of the population, but only 5% in rural areas (as compared with 9% covered by Objective 5b). Criteria for designation of Objective 2 and 5b areas were too loose, and are being tightened up. However, there are certain difficulties about the criteria for the new Objective 2 areas and some open questions remain unresolved:-

• Does the designation basis on the territorial level NUTS 3 offer enough information about the local specific needs and development potentials?
• There are large differences in the share of agricultural employment between the member States. How will the Commission address that problem in order to find equitable criteria?
• Population decline is not a typical rural problem. The figures in many regions show a strong cyclical trend and not every type of migration pattern has the same characteristics (e.g. migration of retired people to rural areas vs. migration of young families, daily migration (commuting) from rural to urban areas).

Although the assumptions of the model used are not specified, the first estimates of future designation of the new Objective 1 and 2 areas, according to the criteria proposed by the Commission, reveal very interesting results:

Table 2: Distribution of the eligible areas by member state

In practice, the Commission has introduced a 'safety net' to limit the effects of loss of present Objective status suffered by any one country. Nevertheless, the fact remains that the proposals inevitably mean that fewer rural areas will be eligible under Objectives 1 and 2 than are currently eligible under Objectives 1, 5b and 6. There will also be transition measures for areas losing status and the importance of this should not be underestimated. Outside the 'Objective' regions, there is an option for member States to build rural development policies around the horizontal measures in the new rural development regulation. This provides for the combination of the 1992 CAP reform's Accompanying Measures (agri-environment, afforestation, early-retirement), existing Objective 5a measures and the new horizontal 'Article 31' ⁵ rural development measures into 'Single Rural Plans'. Since only agri-environment is compulsory, the other measures may be combined in different ways according to regional and national needs (the so-called 'menu approach').

It can be anticipated that regional policy framework as proposed in Agenda 2000 will if anything increase the urban emphasis in Structural Funds spending. This emphasis was already evident in the two previous planning periods.

5. Article 31 of the draft Regulation implementing the rural development elements of Agenda 2000, which deals with a menu of items concerning farm and rural diversification, village renewal, rural infrastructure, etc. formerly funded by EAGGF under Objective 5b and 5a.