EU Regional Policy

Institutional Background of European Funds in the Czech Republic

The Ministry for Regional Development is a central coordinator regarding the use of EU funds in the Czech Republic. In order to discharge this function, the National Coordination Authority (NCA) was set up at the Ministry for Regional Development (MRD); it is parallel to similar central coordinating institutions in other EU Member States.

The powers of the MRD included preparation of the National Development Plan, National Strategic Reference Framework and other official documents for the years 2007 to 2013. The Management and Coordination Committee (MCC) is in charge of monitoring the process of National Strategic Reference Framework (NSRF) objectives implementation at the national level. The Committee is chaired by the Minister for Regional Development and the activities of the MCC secretariat are carried out at the Ministry by the Department for Management and Coordination of NSRF.

Regions for Regional Policy

In order to ensure effective acquisition of finances from the European funds, cohesion regions were established on the territory of our state and consist of one or several Czech regions. The fact is that the European Cohesion Policy is focused in particular on territorial units with population ranging between 800,000 and 3 million people. With regard to the fact that Czech regions in most cases do not reach these numbers of population, the cohesion regions North-West, North-East, South-East, South-West, Central Bohemia, Moravia-Silesia and Central Moravia managed by regional councils of cohesion regions were created. This structure of cohesion regions that are, in accordance with the European terminology, also called NUTS II, covers the whole Czech Republic except for its capital.

The map shows the organization of 14 regions (NUTS III) into 8 cohesion regions (NUTS II).

By its economic indicators, Prague is markedly superior to other parts of our republic and due to this fact, it does not meet criteria for receiving finances from the cohesion policy objective Convergence that is the largest one in terms of finances and that is to be used to transform economies of the less developed regions and states of the Community into more productive ones and to converge the development levels of various parts of EU.

Prague, being a territory, the GDP of which is higher than 75 percent of the EU average, is authorized for drawing from the objective Regional Competitiveness and Employment. This objective is supported by operational programs Prague Competitiveness and Prague Adaptability. A smaller portion of finances from the European funds flows into the capital of the Czech Republic than to the rest of our state as Prague enjoys considerable economic dynamics and a low unemployment rate even without the EU incentives.

Definition and Financial Volume of Regional Policy

The regional policy of the European Union, also called the economic and social cohesion (ESC) policy, represents a reflection of the solidarity principle inside the European Union as the richer states contribute to development of the poorer states and regions in order to improve the living standard of citizens in the whole European Union.

According to the European regulations, the task of the ESC policy is to support harmonic and sustainable development of economic activities, a high level of employment, protection and improvement of the environment on the territory of EU. The third pillar of ESC is represented by territorial cohesion, i.e. support of territorial interconnection and cohesion of the Union. In this connection, a significant role is also played by the cross-border, transnational and interregional cooperation. In accordance with the third and the fourth cohesion reports of the European Commission, the regional policy is focused on implementation of the Lisbon strategy. Hence one pursues in particular innovations supporting sustainable development, competitiveness and employment while fulfilling the ambitions to make Europe an even more attractive place for investments and work.
 
In the period 2007–2013, the amount of EUR 26.69 billion from the European funds is offered to the Czech Republic. On top of that, for the successful drawing, our state has to add approx. four billion euro as the European Union finances the maximum of 85 percent of the expenses on activities carried out within the regional policy.
 

Current Situation

In order to receive finances from the EU funds, the Czech Republic created, just like other Community members, a system of program documents and the necessary institutional background. The highest strategic document for implementation of the ESC policy at the European level is called Community Strategic Guidelines on Cohesion (CSGC), which defines the main priorities of this common European agenda for the period 2007–2013. On the basis of CSGC, in consideration of their own priorities, the Member States prepare their National Strategic Reference Framework (NSRF) describing the global objectives and plans, manner of cohesion policy management and coordination on their territory.

The European Commission approved the Czech National Strategic Reference Framework on 27 July 2007. Thereafter, the Czech operational programs were approved, which are already fully active at the moment. Their managing authorities receive projects from applicants like businessmen, municipalities, nonprofit organizations as well as state administration, they assess the projects and assign financial support to them. At the moment, there are enough projects filed, which creates the basis for successful drawing of the allocation intended for the Czech Republic for the current program period. For the latest news about the numbers of filed and approved projects and their administration by the managing authorities, please refer to the link State of Drawing, where are monthly monitoring reports located as issued by the National Coordination Authority ((NCA) as well as an up-to-date summary of them.
 

Structural Funds and Cohesion Fund

The ESC policy is fulfilled through the structural funds and the Cohesion Fund.

Structural funds (SF) are intended for the poorer or otherwise disadvantaged regions (for example rural and problematic city regions, declining industrial regions, regions with a geographic or natural disadvantage, for example islands, mountainous regions, sparsely populated regions and border regions). There are two structural funds:

• European Regional Development Fund (ERDF): it supports investment (infrastructure) projects like for example construction of roads and railways, removal of ecologic burdens, development of sewage systems, building of polders and river-basin adjustments, support of entrepreneurs' innovation potential, support for starting entrepreneurs, development and reconstruction of sports premises usable by the tourist trade, reconstruction of cultural monuments, use of renewable power resources, planting regenerating greenery, ecological and energy-effective reconstruction of tenements, construction or repairs of the infrastructure for provision of health care, investments into the transport and technical infrastructure of industrial zones, implementation of electronic public administration services, strengthening cooperation of entrepreneurs in border regions, modernization of the crisis management system, etc.
• European Social Fund (ESF): it supports non-investment (non-infrastructure) projects, for example retraining of the unemployed, special programs for handicapped people, children, young people, ethnic minorities and other disadvantaged groups of citizens, creation of innovative educating programs for employees, support for starting self-employed people, development of employment service institutions, development of educational programs including distance forms of education, improvement of the conditions for use of ICT by pupils as well as teachers, increasing the skills of the managing employees at schools and educational facilities in the area of management and personnel policy, implementation and modernization of the combined and distance forms of studies, short-term attachments for students, pedagogues and research workers in the private and public sectors, etc.

In contrast to the structural funds, the Cohesion Fund (CF) is intended to support development of the poorer states, not the regions. Just like ERDF, it supports investment (infrastructure) projects, nevertheless only with a focus on transport infrastructure of a larger volume (motorways and roads of class I, railways, water transport, management of road, railway, river, sea and air transport) and environmental protection.
 

Regional Policy Objectives

In the period 2007-2013, the regional policy pursues three objectives, for the achievement of which it has reserved EUR 347 billion in the European mid-term budget framework (the so-called financial perspective) via the structural funds and the Cohesion Fund.

• The objective of Convergence: support of economic and social development of regions at the level of NUTS II with gross domestic product (GDP) per citizen being lower than 75 % of this indicator average for the whole of the European Union. In addition, those states, are qualified to draw finances from this objective that have a gross national income (GNI) per citizen lower than 90 % of this indicator average for the whole of the European Union. This objective is financed from the ERDF, ESF and CF and in the Czech Republic, it covers all cohesion regions except for the Capital City of Prague.
• The objective of Regional Competitiveness and Employment: support of regions at the level of NUTS II or NUTS I, which exceed the limit indicators for classification under the the objective of Convergence. This objective is financed from the ERDF and ESF and in the Czech Republic, it covers the Capital City of Prague.
• The objective of European Territorial Cooperation: support of cross-border cooperation of regions at the level of NUTS III located along all inner and some outer ground borders and all regions at the level of NUTS III along the sea borders that are generally no more than 150 km far from one another. One further supports interregional and transnational cooperation of regions. This objective is financed from the ERDF and in the Czech Republic, it covers all regions.

Distribution of EU Funds Finances among the ESC Policy Objectives in the Period 2007-2013:

^{Conversion of currency according to exchange rate € 1= 28.20 CZK.}
 

Purpose and Contents of Operational Programs

The economic and social cohesion policy (ESC) implementation is governed by the programming principle, according to which the projects are not selected for financing on a random basis but according to whether they help to remove problems identified in the strategic documents. The operational programs with priority axes pursuing the cohesion policy objectives form a guarantee of this approach. This helps the economy and the society in the specific region and at the same time also at the all-European level.

The structure of the operational programs is as follows:

• Introduction
• Justification of the program's necessity (analysis of the current social and economic situation in the concerned area)
• Description of the strategy selected to remove the identified problems, definition of the operational program objectives, relationship to other operational programs, relationship to horizontal topics
• Specification of the operational program's focus (priority axes, areas of support, types of project feasible in the concerned area of support, specification of support beneficiaries, monitoring indicators, etc.)
• Financial provision of the program, distribution of finances among individual priority axes
• Description of the operational program management (roles of institutions engaged in the program management, method of monitoring, assessment, control, publicity)
• Enclosures

Key Strategic Program Documents of the Cohesion Policy

When implementing the cohesion policy, the European Union is governed by the approved Community Strategic Guidelines on Cohesion (CSGC), which define the economic and social policy (ESC) objectives for the period 2007–2013.
Each Member State creates its own National Development Plan (NDP) describing the main development problems of the country. As it may not apply in all cases that the priorities of state development correspond to the priorities of the all-European cohesion policy agreed by all EU Member States at the transnational level, one has to find a joint intersection of NDP and CSGC.

The document representing the accord of NDP and CSGC and thereby defining the form of the ESC policy realization on the territory of the Member State is the National Strategic Reference Framework (NSRF).

The Czech NSRF describes the strategic objectives, method of management and coordination of the ESC policy in the Czech Republic, it represents a system of financial flows of the EU funds in the Czech Republic and it determines the Czech operational programs for realization of the ESC policy.

National Strategic Reference Framework (NSRF)

The National Strategic Reference Framework (NSRF) represents the fundamental program document of the Czech Republic for the use of the European Union funds in the period 2007-2013. NSRF for download

• National Strategic Reference Framework Czech (pdf - 1,80 MB)
• National Strategic Reference Framework English (pdf - 1,67 MB)

The basis for preparation of the draft National Strategic Reference Framework was the National Development Plan of the Czech Republic that was taken into consideration by a decree of the Government of the Czech Republic No. 175/2006.

The analytical part of the National Strategic Reference Framework focuses on identification of the key strengths of the Czech Republic in order to strengthen its competitiveness as well as of the problematic matters and weaknesses that may prevent sustainable growth of the economy as well as the society.

The strategy rests on the key European (Community Strategic Guidelines on Cohesion) as well as home strategic documents (Sustainable Development Strategy, Economic Growth Strategy, Regional Development Strategy for 2007-2013 and other valid departmental and regional strategies).

The National Strategic Reference Framework determines the system of operational programs of the economic and social cohesion policy of 2007-2013, through which individual cohesion policy objectives will be achieved.

The preparation of the National Strategic Reference Framework of the Czech Republic of 2007-2013 is based on the Member State obligations defined in the Council Regulation (EC) No. 1083/2006 dated 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1260/1999.
 

Meaning of abbreviations NUTSI, NUTSII, NUTSIII

Each of the EU Member States has undergone its own specific development of territorial-administrative structure respecting natural needs of the state administration and citizens. For this reason, there are 27 different systems of administrative structure in the European Union, which restricts the options of mutual statistic and economic comparing of the regions for the purposes of the ESC policy.

For purposes of statistic monitoring and analysis of the economic and social situation in the regions, a uniform Nomenclature of Territorial Units for Statistics (NUTS) was implemented in 1998. On the basis thereof, three main levels of regional territorial structure are defined according to the number of citizens: NUTSI, NUTSII, NUTSIII.

The Czech Republic has been historically and traditionally structured into regions corresponding to the level NUTS III, nevertheless, due to joining the European Union, it was forced to establish one more level of the structure between the state and the regions, which corresponds to the level NUTS II: cohesion regions. It is the very level of NUTS II, to which the support of EU funds within the objective of Convergence and partly also from the objective of Regional Competitiveness and Employment is directed.

In addition to the three NUTS levels, there are two lower levels of the territorial-administrative statistic structure, which are however not determining for distribution of the finances from the EU funds. These are the so-called Local Administrative Units (LAU).

Territorial Structure of the Czech Republic