EU Financial Perspectives 2014-2020 – IInd Part

EU Financial Perspectives 2014-2020 – Ist Part

POLICY
A healthy marine environment is an important source of biological diversity which provides a wide range of economic, social and environmental benefits. It is also the source of the nutritious and safe seafood we in Europe enjoy as an important part of our diet. Coastal communities, where fishing plays an important role – with their lifestyles, cultures, tradition and knowledge accumulated over time – depend on fisheries-related jobs – in the fishing fleet, in aquaculture, in the food processing sector or fishing ports. Fisheries and coastal zones are also particularly vulnerable to climate change impacts, including flooding, coastal erosion and a rising sea-level.
The EU is committed to achieving sustainable, ecosystem-based management of its fisheries. Following a comprehensive review, the Commission will shortly propose a radical reform of the Common Fisheries Policy (CFP) which will lead to fundamental changes in the way fisheries are managed in order to ensure the sustainable exploitation of fish resources and the future of fisheries in Europe. This reform will be accompanied by a major reorientation of funding for the Common Fisheries Policy (CFP) and Integrated Maritime Policy (IMP), which will include:
•Re-deployment of inefficient direct fleet subsidies in line with the objectives of the Europe 2020 Strategy, including the provision of incentives for the fishing industry to reform, to innovate and to fish sustainably;
•Closing the innovation gap between fisheries and other sectors of the economy, allowing EU fishing fleets to became viable and competitive and to contribute to growth and jobs in fisheries dependent communities;
•Facilitation of the transition towards low impact fisheries, with the elimination of discards and low impact on marine ecosystems;
•Contribution to sustainable management of marine ecosystems and ecosystems dependent on aquaculture;
•Reinforced support to collective actions including marketing and production, with a strong role for Producers Organisations;
•Increased focus on the viability of coastal and inland communities depending on fishing, including through adding more value to fisheries-related activities and diversification towards other sectors of the maritime economy;
•Competitive and sustainable aquaculture providing EU consumers with healthy and high nutrition products.
•Reinforced control and data collection, thus ensuring better compliance and a fully-fledged knowledge-based policy
•An Integrated Maritime Policy focused on promoting sustainable growth in maritime sectors and regions.

INSTRUMENTS
The reformed maritime and fisheries policy will be centred on a new European Maritime and Fisheries Fund (EMFF), which will be structured around 4 pillars:
•Smart, Green Fisheries (shared management) to foster the transition to sustainable fishing which is more selective, produces no discards, does less damage to marine ecosystems and thus contributes to the sustainable management of marine ecosystems; and to provide support focused on innovation and value added, making the fisheries sector economically viable and resilient to external shocks and to competition from third countries.
•Smart, Green Aquaculture (shared management) – to achieve economically viable, competitive and green aquaculture, capable of facing global competition and providing EU consumers with high nutrition value products.
•Sustainable and Inclusive Territorial Development (shared management) – to reverse the decline of many coastal and inland communities dependent on fishing, through adding more value to fishing and fishing related activities and through diversification to other sectors of the maritime economy.
•Integrated Maritime Policy (direct centralised management) to support those cross cutting priorities which have real potential to generate savings and growth but which the Member States will not take forward on their own – such as marine knowledge, maritime spatial planning, integrated coastal zone management and integrated maritime surveillance and adaptation to the adverse effects of climate change on coastal areas.
In addition to the four pillars, the EMFF will include accompanying measures in the areas of data collection and scientific advice, control, governance, fisheries markets (including outermost regions), voluntary payments to Regional Fisheries Management Organisations (RFMOs) and technical assistance. It will build on the actions relating to fisheries and maritime policy that will be supported under the Common Strategic Framework for Research and Innovation.
The policy will be complemented by two international instruments:
•Fisheries Partnerships Agreements (FPAs) which establish a legal, economic and environmental framework for fishing activities carried out by EU fishing vessels in the waters of third countries which are not in a position to fully exploit their fish stocks sustainably by themselves.
•Regional Fisheries Management Organisations (RFMOs), which are international bodies composed of States, Regional Economic Integration Organisations (the EU) and fishing entities established to ensure the conservation and sustainability of fishery resources in the high seas.

IMPLEMENTATION
The architecture of the legal acts on which the programmes are based will be greatly simplified. A single EMFF will be created, integrating under one framework all existing fisheries and maritime instruments, with the exception of International Fisheries Agreements and EU membership in RFMOs. This approach will allow for greater synergies and reduction of administrative burden, in terms of programming, management, monitoring and evaluation, both for Member States and the Commission.
Furthermore, the Common Strategic Framework covering all structural funds will allow measures supporting Maritime and Fisheries policies to be programmed in the other funds covered by the Framework.
The number of expenditure areas under shared management will be increased, giving Member States greater flexibility and a longer term strategic perspective. The EMFF will be covered by the Common Strategic Framework and the Partnership Contracts covering all EU funds under shared management.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
European Maritime and Fisheries Fund (EMFF) and International Fisheries Agreements / RFMOs €6.7 bn

POLICY
The EU’s justice, fundamental rights, citizenship and equality policies are based on the EU’s fundamental values and principles, such as democracy, freedom, tolerance, non-discrimination and the rule of law. The policy supports the creations of a pan-European area of law, rights and justice, for the benefit of all citizens of the EU.
In today’s Europe, millions of citizens are involved in activities that span borders – in their private lives, through their work or studies, or as consumers. The Commission seeks to offer practical solutions to cross-border problems for both citizens and business: for citizens to feel at ease about living, travelling and working in another Member State and to trust that their rights are protected no matter where in the EU they happen to be; and for businesses to make full use of the opportunities provided by the single market.
The main tool for building an EU area of justice is legislation, and the Commission has an ambitious programme for setting EU-wide standards so that people can rely on the same, basic level of justice (for example if they fall victim to crime) and enjoy non-discriminatory treatment anywhere in Europe. The Lisbon Treaty offers new opportunities for judicial cooperation in criminal and civil matters and tasks the EU with facilitating access to justice across the EU. It also provides for the mainstreaming of gender equality and non-discrimination based on racial or ethnic origin, religion or belief, disability, age or sexual orientation in all EU policies and activities.
To make these rights and laws effective in practice, they need to be implemented correctly and people – from citizens to judges – need to understand and know how to use them. The Commission therefore runs a series of dedicated financial programmes to support its legislation and policies, focusing on cross-border issues that can only be adequately addressed by coordinated action at the level of the EU.

INSTRUMENTS
The Commission proposes to streamline the programmes in this area into a Justice programme and a Rights and Citizenship programme. This approach will simplify funding arrangements and provide more coherence and consistency across the full range of activities funded. The integrated programmes will focus on a series of thematic priorities and will finance activities offering clear EU added value, such as:
•Training for legal professionals (such as judges and prosecutors) to equip them with the tools to put EU rights and justice into practice and create mutual trust, which is the basis of the area of freedom, security and justice;
•Strengthening networks, i.e. EU-wide organisations to assist with the preparation of future initiatives in this area, as well as to promote their consistent implementation across Europe;
•Cross-border cooperation on enforcement, for example establishing missing child alert systems, coordination of operational and cross-border anti-drug co-operation; and
•Information and public awareness raising, including support for national and European campaigns to inform people of their rights, as guaranteed under EU law, and how to enforce them in practice.
Where possible the programmes will allow for the possible participation of candidate countries and potentially other third countries.

IMPLEMENTATION
Reducing the number of funding programmes and concentrating all funding priorities will allow for the same set of rules to be applied to all areas and for procedures to be streamlined.
This will lead to efficiency improvements both for the Commission and for the recipients of EU funding. The reduction of legal bases and budget lines will allow for greater flexibility, thereby allowing for an improved focus on EU policy priorities and improved budgetary execution.
The Commission proposes to continue funding the existing agencies in the field of justice and fundamental rights, as all bring significant added value to the development and implementation of policies in this area. These agencies include EUROJUST, the European Institute for Gender Equality and the European Union Agency for Fundamental Rights.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
Total proposed budget 2014-2020 €802 million
of which
Justice Programme €416 million
Rights and Citizenship Programme €387 million

POLICY
The use of innovative financial instruments offers an alternative to the traditional grant funding associated with the EU budget and can provide an important new financing stream for strategic investments. A key advantage of innovative financial instruments is that they create a multiplier effect for the EU budget by facilitating and attracting other public and private financing of projects of EU interest.
For projects with commercial potential, EU funds can be used in partnership with the private and banking sectors, particularly via the European Investment Bank (EIB), in order to help overcome market imperfections in the financing of projects and activities of strategic interest to the EU and its citizens.
There is potential for the greater use of such instruments to be deployed in support of a wide range of policies. For more than ten years, the EU budget has been using financial instruments such as guarantees and equity investment for SMEs. In the current financial framework, a new generation of financial instruments was put in place in cooperation with the EIB, such as the Risk-Sharing Finance Facility (RSFF) under the 7th R&D Framework Programme or the Loan Guarantee Instrument for TEN-T projects (LGTT). For activities outside the EU, the Global Energy Efficiency and Renewable Energy Fund was set up to provide equity investments in developing countries. In the area of structural funds, financial instruments have been set up to support enterprises, urban development and energy efficiency through revolving funds.
These instruments have been successful but they have been developed in an experimental way. Therefore, as part of the future financial framework, the Commission proposes to introduce a more streamlined and standardised approach to the use of innovative financial instruments, helping to ensure that EU funds are used most effectively to support the policies of the EU.

INSTRUMENTS
A rationalisation of the existing financial instruments is proposed to provide common rules for equity and debt instruments, so that there is an integrated vision of the use of financial instruments at EU and at national/regional level. They will streamline relations with financing partners, in particular the EIB and international financial institutions. They will provide transparency vis-à-vis the markets on how the EU intervenes with equity and debt instruments, ensuring higher visibility of the EU’s interventions.
The Commission proposes a new type of instrument, i.e. the EU project bond initiative which would be used as a means of securing investment resources for infrastructure projects of key strategic European interest. A contribution from the EU budget will be used to support projects through enhancing their credit rating, and thereby attract financing by the EIB, other financial institutions, and private capital market investors. Financial instruments do not imply more risk than grants, as the risk for the EU budget is in all cases strictly limited to the budgetary contribution. The EU budget cannot run a deficit.
In the external field, a specific EU platform for external cooperation and development is under development, combining the respective strengths of the Commission, Member States and European bilateral and multilateral financial institutions (notably the EIB) active in the external cooperation and development field, . The platform will contribute to fostering EU coherence, effectiveness, efficiency and visibility in external financing, while taking account of the specificities of the EU’s external partners.

IMPLEMENTATION
Financial instruments will form part of EU budget interventions in a variety of policy areas, in particular those pursuing the following objectives:
(1)
To foster the capacity of the private sector to deliver growth, job creation and/or innovation: support to start-ups, SMEs, mid-caps, micro-enterprises, knowledge transfer, investment in intellectual property.
(2)
To build infrastructures by making use of Public Private Partnership schemes to reinforce EU competitiveness and sustainability in the transport, energy and ICT sectors.
(3)
To support mechanisms that mobilise private investments to deliver public goods, such as climate and environment protection, in other areas.
The design of the instruments will be guided by the following principles:
•
Robust governance arrangements: the debt and equity platforms will have robust governance structures in place to ensure that the EU has effective oversight of the financial operations and investments as well as the achievement of policy objectives.
•
Financing through different budget lines: there will not be a specific envelope in the budget for financing such instruments; instead, the financial instruments will be financed through budget lines from the specific policy areas, combined in appropriate instruments providing equity or debt.
•
Established as part of the Financial Regulation: the key principles of the two platforms will be embedded in the Financial Regulation, which is currently under review in the Council and the European Parliament. This will contribute significantly to streamlining and standardisation.
•
Use of the common rules for equity and debt will be mandatory for internal policies and apply horizontally to instruments across these policy areas. Existing innovative financial instruments will be aligned to the common rules. In the case of cohesion policy, the principle of shared management with Member States will be respected and therefore the EU models will be offered as optional best practice models, coupled with strong incentives for Member States to follow the EU level approach. In external action, a greater share of EU grants (where appropriate through regional investment facilities) will be blended with loans or used in equity or risk-sharing instruments; This will help to mobilise additional funding – including from the private sector – in support of EU priorities and to cover the investment needs of our partner countries. This will be facilitated by the entry into force of the proposed new provisions in the Financial Regulation on financial instruments, and with the establishment of common principles for such instruments to the degree appropriate to the environment of external actions.
•
Management by financial institutions: the management and implementation of financial instruments would in general be delegated to the EIB Group, other international financial institutions or public financial institutions where at least one Member State is a shareholder. Management could also be delivered through an investment vehicle structure set up under national law and pooling resources from different public and private sector sources. Further delegation to private financial actors would also be possible.

POLICY
Europe needs cutting-edge research and innovation that goes beyond national boundaries, combines different scientific disciplines, technologies and business competences, and attracts talent from all around the world. Research and innovation is essential to support the EU’s position in today’s rapidly evolving globalised markets and to meet the challenges of the future. Investing in research and innovation in Europe will create new job opportunities, and will ensure Europe’s long-term sustainable growth and competitiveness.
Scientific advances, new technologies and innovations are also needed to address pressing societal challenges, such as climate change, ageing population and resource scarcity. These are enormous challenges that need major research and innovation breakthroughs, some of which can only be achieved by coordinated action at the European level. Past EU-funded research has, for example, brought together expertise from leading centres across Europe resulting in an innovative way to detect and treat Alzheimer’s disease. Such breakthroughs will profoundly affect the lives of European citizens through improvements in the quality of health care, new patterns of work and private life, and more secure livelihoods. Successful innovations that address these challenges will provide huge opportunities for companies to grow and create new jobs.
Yet despite its fundamental importance, Europe’s performance in research and innovation lags behind that of the US and Japan, and China, Brazil and India are rapidly catching up. To reverse the current trend, the Europe 2020 Strategy sets a target of raising spending on R&D to 3% of GDP by 2020. A particular priority is to increase business-driven research and innovation through, for example, the use of public funding to leverage private investments.
In conjunction with national and private sector funding, the EU budget can make an important contribution to hitting these targets and to boosting Europe’s research and innovation performance.

INSTRUMENTS
A key step to modernising EU programmes for research and innovation is to bring together within a single Common Strategic Framework for Research and Innovation (CSF) the three main existing initiatives and sources of funding:
–the 7th Framework Programme (FP7);
–the innovation part of the Competitiveness and Innovation Framework Programme (CIP); and,
–the European Institute for Innovation and Technology (EIT).
The CSF will set out the strategic objectives for all EU research and innovation funding actions. It will be more streamlined than current funding schemes, and will be implemented through harmonised rules and procedures. In this way, research and innovation activities will be coupled together coherently, and the impact of EU funding will be increased. The CSF will increase the added value of EU interventions through generating the critical level of resources, expertise and excellence for research and innovation that cannot be achieved at national level.
By making EU research funding simpler and more coherent, the CSF will also be more SME-friendly and open to new participants. It will improve the dissemination of the know-how needed for innovation and policy making. It will allow the Joint Research Centre to contribute more effectively to policy making. It will give a more strategic orientation to international cooperation and it will underpin the European Research Area.
Within this overall framework, the CSF will cover direct and indirect research, each structured around three distinct but mutually reinforcing blocks in line with the Europe 2020 priorities:
(1)Excellence in the science base. This block will strengthen the EU’s world-class excellence in science by developing talent within Europe and attracting leading researchers to Europe. The emphasis will be on: stronger support for frontier research (through the European Research Council); future and emerging technologies; skills, training and career development of researchers (Marie Curie Actions); and networking of, access to, and development of priority research infrastructures (including e-infrastructures).
(2)Tackling societal challenges. To respond directly to the challenges identified in the Europe 2020 strategy, this block will support activities covering the entire spectrum from research to market. It will integrate innovation actions (pilots, demonstration, test-beds, support to public procurement and market uptake of innovation), cross-disciplinary approaches, and socio-economic and humanities research. The focus will be on: health, demographics changes and well-being; food security and the bio-based economy; secure, clean and efficient energy; smart, green and integrated transport; supply of raw materials; resource efficiency and climate action; and, inclusive, innovative and secure societies (including cyber-security and making the Internet a safer place). The EIT will, through its Knowledge and Innovation Communities, strongly contribute to addressing the challenges, with a significantly increased budget.
(3)Creating industrial leadership and competitive frameworks. To support and promote business research and innovation in enabling technologies; services and emerging sectors with a strong focus on leveraging private sector investment in R&D; and, to address SME-specific problems. Priority actions will cover: increasing strategic investments and leadership in current and future enabling and industrial technologies and services, with dedicated support for ICT (including micro/nano-electronics and photonics); nanotechnology, advanced materials, advanced manufacturing systems; industrial biotechnology; space research and innovation and low carbon and adaptation technologies, with particular regard to ensuring an integrated approach to key enabling technologies; facilitating access to risk finance and venture capital (building on the FP7 Risk Sharing Finance Facility and CIP financial instruments); and, providing EU wide support for innovation in SMEs with high growth potential.
The approach will include both agenda-driven activities and more open areas for applicants to propose innovative projects and breakthrough solutions.

IMPLEMENTATION
In line with the concept of a CSF, implementation will be simplified and standardised. The simplification will concern both funding schemes and administrative rules for participation and dissemination of results. The new single set of rules will apply to the three blocks of the CSF, while taking account of the specificities of the EIT (and its needs for regulatory flexibility) as well as those of SMEs. The key operational features of the CSF will include the following:
•A rationalised set of funding schemes and instruments will be used across the CSF, taking forward those that work from the current programmes, merging those with similar objectives, and discontinuing those no longer fit for purpose. As well as grant funding, greater use will be made of innovative financial instruments. Consideration will also be given to pre-commercial procurement and prizes.
•A single set of rules covering eligibility, accounting, reporting, and auditing will apply across the board. A new balance will be struck between trust and control, and between risk taking and risk avoidance. To lighten the administrative burden for beneficiaries (grant-holders) a radically simplified cost-reimbursement approach will be introduced based on the broadest possible acceptance of the beneficiaries’ usual accounting and management practice and with greater use of lump sums and flat rates. Beneficiaries will be required to exploit the results or make them publicly available through appropriate dissemination channels.
•Projects will be able to start earlier because the selection and post-evaluation negotiation phases will be much shorter. Simpler guidance and advisory services to applicants and participants will be provided through a unique IT portal. Furthermore, support structures within Member States will be rationalised to establish a one-stop shop for all activities under the CSF in the national language. Specific measures will be introduced to assist talented researchers and innovators who lack experience in accessing EU funding. A single audit approach will be applied across the CSF.
•The quality, efficiency and consistency of implementation of the CSF will be enhanced through a major externalisation, building on the progress achieved in current programmes. The executive agencies established under the current programmes will be expanded to realise economies of scale. Further use will be made of Public-Private Partnerships with industry and Public-Public Partnerships with Member State programmes, including by using new possibilities foreseen under the revised Financial Regulations. These partnerships will rest on the strong commitment from all sides to pool resources in order to boost investments in strategic areas and overcome fragmentation of effort.
•Strategic alignment of EU, national and regional resources through Joint Programming with Member States will increase the added value and impact of overall investments.
•Increased use of innovative financial instruments will leverage private research and innovation investments, including venture capital investments for innovative, high-tech companies, in particular SMEs. These will be managed externally by the European Investment Bank Group or other international financial institutions or public financial institutions where at least one Member State is a shareholder, in accordance with the common rules for debt and equity.
In this way, it is anticipated that around two thirds of the CSF budget could be implemented externally (around a half in the present period), split between the various support mechanisms. The degree and nature of externalisation should be determined by, inter alia, the impact on efficiency and the overall budget under management and may entail further simplification of the rules applicable to externalised management. The Commission would, nonetheless, maintain direct management responsibilities in particular in areas linked to core policy competences.
Complementarity and synergies with research and innovation funding channelled through cohesion policy will be ensured by clearly differentiating between the objectives and the methods of intervention. Research and innovation are at the heart of the prosperity and well-being of all EU regions, and as such it is in the interest of all Member States to build excellent, strong and efficient research and innovation systems. CSF interventions will contribute to this through funding allocations based on excellence in research and innovation regardless of geographical location. Cohesion policy interventions will be enhanced as the most important instrument to tackle research and innovation capacity building at regional level, including the development of research infrastructures, through funding allocations based on pre-defined envelopes for eligible regions. The Partnership Contracts with Member States, together with the CSF, will support smart specialisation strategies addressing priorities set out in the CSF and based on the assessment of the regional/local situation. This should provide a ‘stairway to excellence’, and lead over time to a higher number of excellent researchers and innovators from the regions (notably the convergence regions) being able to establish programmes fully aligned with the CSF, but also to strengthen the capacity of all regions to make full use of their innovation potential. An appropriate interface will also be established with the CAP to support research and innovation in agriculture, and with relevant activities of education and other EU programmes, including security.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
Figures in constant 2011 prices
Common Strategic Framework for Research and Innovation €80 bn

POLICY
Europe’s economic future requires smart, sustainable and fully interconnected transport, energy and digital networks. They are a necessary condition for the completion of the European single market. They will also help meet the EU’s sustainable growth objectives outlined in the Europe 2020 Strategy and the EU’s ambitious “20-20-20” objectives in the area of energy and climate policy16.
While the market is expected to play a major role in delivering the required infrastructures through appropriate investment and pricing mechanisms, without proper public intervention (including from the EU budget) some investments in infrastructure will not take place or will be delayed far beyond the 2020 deadline.
In the energy sector, in 2010 the Commission defined priority corridors for the transport of electricity (four), gas (three) and oil. It is estimated that about €200 billion of investment is needed for gas pipelines and power grids by 2020. €100 billion of this total investment should be delivered by the market unaided, whereas the other €100 billion will require public action to source and leverage the necessary private capital.
In the transport sector, infrastructure has to be planned in a way that maximises positive impact on economic growth and minimises negative impact on the environment. Transport infrastructure has developed unevenly in the eastern and western parts of the EU, which need to be brought together. Europe needs a pan European ‘core network’ with corridors, carrying freight and passenger traffic with high efficiency and low emissions, making extensive use of existing infrastructure, completing missing links and alleviating bottlenecks and using more efficient services in multimodal combinations. This core network will be supported by the Connecting Europe facility and complemented by a comprehensive network of national infrastructures (which can be supported by the EU’s structural funds). The core network will be established using a pan European planning methodology. Beyond maintenance of existing assets, the comprehensive network would be based on the current TEN-T and encompass existing and planned infrastructure in Member States. The cost of EU infrastructure development to match the demand for transport has been estimated at over €1.5 trillion for 2010-2030. The completion of the TEN-T network requires about €500 billion by 2020, of which €250 billion would be for the removal of the main bottlenecks.
Digital networks, both physical and service-based, are key enablers for smart growth. As part of the Digital Agenda, every European should have access to basic broadband by 2013 and fast and ultra fast broadband by 2020. In September 2010, the Commission outlined the steps it and Member States can take to help trigger the €180 to €270 billion of investment required to bring fast broadband to all households by 2020. Focused public intervention is necessary to stimulate private investment where the market case is weak. As Europe modernises, common architectures for digital services will support increasingly mobile citizens, enable the emergence of the digital single market, stimulate growth of cross-border services, and to reduce transactions costs for enterprises, in particular SMEs in search of growth opportunities beyond their home markets.

INSTRUMENTS
Within the heading regrouping all actions supporting economic, social and territorial cohesion, the Commission is proposing to create a Connecting Europe Facility to promote the completion of the “transport core network”, the “energy priority corridors” and the digital infrastructure that the EU needs for its future sustainable competitiveness. It will support infrastructures with a European and Single Market dimension, targeting EU support on priority networks that must be implemented by 2020 and where European action is most warranted. Given the increasing complexity of networks, the effective co-ordination which will minimise the costs for all citizens can only be achieved at the European level.
Furthermore, the task is to build an environment conducive to private investment and develop instruments that will be attractive vehicles for specialised infrastructure investors. Member States and the European Union must set the conditions to stimulate private investment and must also step-up their own efforts despite, and because of the current financial difficulties facing all public authorities. To be most effective, such vehicles need to be multi-sector and multi-country to maximise diversification and thereby reduce risk. This can only be achieved at the European level and on the basis of well-defined corridors and targeted areas of investment. Attracting savings to long term, growth enhancing investments will stimulate the economy, create jobs, boost consumption and support the goals agreed by all as part of the Europe 2020 strategy.
The Connecting Europe Facility will support pan European projects where a coordinated and optimised approach will reduce the collective costs or address the issue of uneven returns. Furthermore, through the joint establishment of financial instruments, it will provide tools for attracting private sector funds from both within and beyond the EU. Project financing will thereby complement and enhance the use of EU funds. The ‘Connecting Europe’ facility will also exploit synergies in hard infrastructure (for example by realising jointly large transport and energy cross-border links) and by deploying smart information technologies in transport and energy infrastructure.

IMPLEMENTATION
The Infrastructures Facility will have a single fund of €40 billion for the period 2014-2020. Inside this amount, specific funding will be allocated for the energy, transport and digital networks. The Facility will be centrally managed by the Commission with the support of an executive agency (such as the current TEN-T Executive agency) and financial intermediaries. The actual technical implementation of projects on the ground (e.g. procurement and tendering) will be done by the project promoters. The Facility will be complemented by an additional €10 billion ring fenced for related transport infrastructures investments inside the Cohesion Fund.
Depending on the sectors, the geographical location and the type of projects, different co-financing rates will apply, balancing both the need to maximise leverage and to significantly accelerate the project’s implementation. Maximum rates of co-financing will be modulated based on a cost-benefit analysis of each project, availability of budget resources and the need to maximise the leverage of EU funding. For the three sectors, the impact of the applicable co-financing rate heavily depends on the economic/development status of the concerned countries17. As regards energy specifically, the European Economic Recovery Plan (EERP) has also demonstrated that a higher co-financing rate was necessary to trigger projects increasing security of supply18.
The Connecting Europe Facility will combine market based instruments and EU direct support in order to optimise the impact of financing. The high leverage effects of innovative financial instruments (e.g. which could be as high as up to 1:25 for project bonds) and the successful absorption of direct EU support (as experienced in the EERP or TEN-T programme) will contribute significantly to mitigating risks and to facilitating access to capital for the huge investment needs.
Key priority network needs covering all of Europe have been identified by the Commission in the revised TEN-T guidelines (to be adopted in September 2011), in the Energy Infrastructure package (COM(2010) 677) endorsed by the European Council on 4 February 2011 and in the Digital Agenda for Europe (COM (2010) 245) respectively.
A proposed list of the links to be funded is presented in annex.
PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
Connecting Europe Facility €40 bn
of which
•Energy €9.1 bn
•Transport €21.7 bn
•ICT/Digital €9.2 bn
Amounts earmarked in Cohesion Fund for transport infrastructures €10 bn
Total €50 bn

16) 20% reduction in greenhouse gas emissions, 20% share of renewable energy in EU final energy consumption and 20% improvement in energy efficiency by 2020.
17) For transport projects, the co-financing rates will vary across modes depending on the availability of project financing. Higher co-financing rates will be envisaged for cross-border projects. In convergence regions, the co-financing rates will be based on the co-financing rates for investments provided under the new regulations for the Cohesion and Structural Funds.
18) Based on the experience with the European Economic Recovery Programme, it is estimated that typically up to 30% of co-financing may be necessary to trigger the final investment decision and bring the difficult cross-border projects on track. In case a project is not commercially viable but aims at increasing security of supply or ending isolation of some Member States, the required rate of co-financing could even be higher (up to 80%).

POLICY
The aim of the European Union’s home affairs policy is to create an area without internal borders where people may enter, move, live and work freely, confident that their rights are fully respected and their security assured.
The EU has a decisive role to play in addressing the threats of serious and organised crime, cybercrime and terrorism, and by ensuring the effective management of the EU’s external borders and responding swiftly to emerging crises caused by man-made or natural disasters. In the era of globalisation, where threats are growing and increasingly have a transnational dimension, no Member State is able to respond effectively on its own. A coherent and comprehensive European answer is needed to ensure that law enforcement authorities can work effectively across borders and jurisdictions.
Cooperation and solidarity at EU level have already enabled substantial progress in building a more open and secure Europe. The EU will continue to face important challenges, not least in the context of an ageing population and a declining labour force. A forward-looking legal immigration and integration policy is crucial to enhancing the EU’s competitiveness and social cohesion, enriching our societies and creating opportunities for all. We need to address irregular migration and combat trafficking in human beings and other forms of modern slavery. At the same time, the EU must continue to show solidarity with those in need of international protection. The completion of a more secure and efficient Common European Asylum System which reflects our values remains a priority.
Support from the EU budget can offer genuine added-value in this area. EU funding is a tangible sign of the solidarity and responsibility-sharing that are indispensable in responding to our common challenges. For example, control of the EU’s external borders is a basic condition for free movement and is carried out by some Member States in the interest of and on behalf of the entire EU. Moreover, in a situation where a Member State is confronted with exceptional pressures on its borders, the EU should be able to provide adequate support. Similarly, those Member States which, due to their geographical situation, incur disproportionate costs as a result of migration flows should receive appropriate financial support through the EU budget.
EU funding can also help to promote efficiencies through the pooling of resources and reinforcing transnational practical cooperation between Member States, and between Member States and third countries. This is particularly relevant in the area of internal security, where financial support for joint operations such as Joint Investigation Teams enhances cooperation between police, customs, border guards and judicial authorities.
In addition to support for the internal aspects of home affairs policies, sufficient EU funding should also be available to reinforce the external dimension of home affairs policy in full coherence with EU external action; for example, by providing support for implementing readmission agreements and Mobility Partnerships, by helping third countries to develop their border surveillance capabilities or by providing funding for the fight against international criminal networks, trafficking in human beings and the smuggling of weapons and drugs.

INSTRUMENTS
The Commission proposes to simplify the structure of EU funding in this area by reducing the number of financial programmes to two:
–The Migration and Asylum Fund will support actions in relation to asylum and migration, the integration of third-country nationals and return.
–The Internal Security Fund will provide financial assistance for initiatives in the areas of external borders and internal security.
Both funds should have a sizeable external dimension in order to ensure that the EU has the means to pursue its home affairs policy priorities in relations with third countries and to uphold the interests of the EU. Financial support will be made available to ensure territorial continuity of financing, starting in the EU and continuing in third countries. For instance, in relation to resettlement of refugees, readmission agreements, regional protection programmes, the fight against irregular migration, reinforcing border management and police cooperation with e.g. neighbouring countries.
The instruments will also provide for a rapid response in case of emergencies, with the fund(s) designed so that the EU can react appropriately in rapidly-evolving situations.

IMPLEMENTATION
The reduction in the number of programmes and their corresponding implementing rules will streamline procedures and allow for a better understanding of the rules by all stakeholders.
Moving to shared management rather than direct management where possible will remove unnecessary bureaucratic burdens. Direct management will be maintained for specific transnational or particularly innovative projects and to support non-state actors, as well as to promote events and studies. It will also be maintained for the flexible emergency response mechanism and the external dimension.
For the funds under shared management, it is proposed to move to a system of results-driven multi-annual programming, instead of annual programmes. This will contribute to a better focus on objectives and outputs, reducing the workload for all stakeholders and shortening the time needed for the approval of the national programmes, thereby speeding up the release of funds.
A number of agencies support the EU’s work in this area, including Europol, Frontex, the European Asylum Support Office, European Police College, European Monitoring Centre for Drugs and Drug Addiction and the IT Agency. There is scope and need for improving synergy and coherence between the activities of the Commission and its agencies in order to ensure that the agencies are effective in supporting practical cooperation among Member States.
Large-scale IT systems (such as SIS II and VIS) account for a significant share of the budget in this area. They bring a high EU added value. These systems are currently being managed by the Commission, but their management will gradually be transferred to the future IT Agency, which will begin operations in 2012. The IT Agency will also be responsible for developing and managing future IT systems in this area.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
Total proposed budget 2014-2020 €8.23 bn
of which
• Migration and Asylum Fund €3.4 bn
•Internal Security Fund €4.1 bn
•IT systems €730 million