The analysis of OMC methods and their impact in connection with the management of European Funds and the engagement of the regional and local governments

The analysis of OMC methods and their impact in connection

with the management

of European Funds and the engagement of the regional and local

governments

MA Thesis in European Studies

Graduate School for Humanities

Universiteit van Amsterdam

Adrienn Kovács

Student number: 11313358

Main Supervisor: Jamal Shahin

Second Supervisor: Michael Wintle

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Table of content

Introduction ... 3

The theoretical framework of OMC methods ... 6

1.1. Historical overview ... 7

1.2. The introduction of OMC methods’ different interpretations ... 9

Analysing the great variety of OMC instruments ... 11

The regional/local public authorities’ engagement and the efficiency of EU projects within the structure of EU Funds ... 18

3.1. Historical overview of EU Funds ... 19

3.2. The regional and local governments’ involvement from the beginning ... 21

3.3. The analysis of the efficient implementation of EU projects from the beginning ... 25

The application of different OMC methods and their potential impacts on EU Funds... 28

4.1. The emergence of OMC methods from the beginning ... 29

4.2. The assessment of the DG REGIO’s current initiatives ... 32

The application and effects of OMC methods regarding EU Funds in Hungary ... 38

5.1. The Hungarian regional and local actors’ involvement in the coordination of EU funds 38 5.2. The efficient implementation of EU projects in Hungary ... 42

5.3. The application of OMC methods in Hungary and my recommendations... 44

Conclusion ... 49

3

Introduction

The current political situation of the European Union (EU) is endangered by the increasing nationalist movements, unpredictable measures of international political regimes and the growth of its legitimacy crisis. That is why giving emphasis towards collaboration and collec-tive approaches has never been more essential to the EU’s operation. In the past years, thou-sands of EU funded projects were implemented which intended to improve a wide range of policy problems that Member States (MS) are meant to deal with. These projects always had the intention of improving the EU’s economic growth, employment proportion and the general life quality of the EU citizens. Moreover, the implementation of these projects takes place in touch with EU citizens which provides a great opportunity for strengthening the EU’s transpar-ency and its legitimization. In order to create unity within the European continent, the regional disparities and the great distance among the EU institutions and citizens needs to be lessened. As the significance of the EU’s Regional Policy was emphasised, the development of the policy field is essential (European Commission, 2011). As a result of this, a certain approach needs to be applied, which stimulates stronger collaboration, flexible and consistent answers and an ef-ficient operation of the policy field.

The Open Method of Coordination (OMC) encompasses a set of instruments aiming at involv-ing a wide range of actors, allowinvolv-ing the decision-makinvolv-ing processes to be more transparent. One of its characteristics is the establishment of common targets and the collaboration of the MS by exchanging information and knowledge. Furthermore, OMC methods provide a comparative analysis of different national policies and they aim for the application of the best possible ap-proaches, in order to achieve EU-wide objectives. A thorough research about OMC methods in Regional Policy is therefore significant, because these instruments aim at reinforcing an essen-tial feature of this policy sector, namely the involvement of wide range of actors, through the process of exchanging information, mutual learning, and thus allowing for bottom-up initia-tives. In this manner, the exchange of knowledge and experience among the actors and coordi-nators of EU Funds could contribute to a policy of added value, because successfully imple-mented EU projects and greater engagement of regional and local actors ensure the achievement of MS’s thematic objectives and thus the fulfilment of the EU 2020 targets. Moreover, it is also essential to make additional research about OMC methods, because their application could re-inforce the use of common solutions focusing on efficient management and implementation of EU projects.

4 In this manner, my research question focuses on the following matter: To what extent does the Open Method of Coordination present an opportunity for greater sub-national and local involvement and better implementation and regulation of EU projects?

It is important to note here that the scope of the research will entail EU Funds, more specifically Structural and Cohesion Fund that will be additionally elaborated in Chapter 3. It is vital to address in the beginning of the chapter, among all the perspectives, how I perceive the various tools attributed to the OMC because that will determine the essence of my research and the hypothesis itself. In relation to the coordination of EU Funds, OMC methods will be considered as policy tools, which intend to tackle distinct, current challenges of the policy sector that will be elaborated in Chapter 4. However, it is also fundamental to address, that in accordance with Búrca and Scott’s hybridity theory (De Búrca & Scott, 2006, 7-8), tools attributed to the OMC are able to coexist alongside with traditional EU legislative acts (directives, regulations). The hybrid feature indicates to its complementary function, in which they are able to exist along additional policy tools, legislative acts. According to Búrca and Scott’s distinction among base-line, developmental and default hybridity, I attempt to inspect the baseline hybrid feature of these methods, as they are able to exist in parallel with the EU’s traditional legislative tools. Moreover, their interaction is able to detect the specific problems of the policy field and tackle them effectively (De Búrca & Scott, 2006, 7-8). The European Commission also stated that these tools are able to reinforce the traditional legislative actions, but they cannot substitute them (European Commission, 2001). Their parallel existence and cooperation are viable be-cause they are heading in the same direction from different approaches, in order to accomplish common objectives (European Commission, 2001). In this manner, the hybrid character of OMC has also been highlighted by the EU that strongly supports the theoretical background of my research. My overall analysis and interpretation about OMC methods will entail this hybrid feature, in which they cannot substitute any legislative acts, therefore, the essence of their func-tion is rather a complementary one.

Considering the sources of the research, the methodological approach to be used is two-fold. Primary research will be conducted by interviews with experts and decision-makers at EU in-stitutions and Hungarian public authorities. Desk research, also called secondary research will include literature on OMC methods and their appearance in different scholars’ work, in order to provide a general comprehension of the theoretical chapter. Furthermore, EU and Hungarian policy documents and regulations will be analysed, such as the Common Provisions Regulation (1303/2013/EU Regulation on the implementation rules of ESI Funds, henceforward: CPR),

5 ex-post evaluations of EU Funds, the Hungarian Partnership Agreement and Hungarian acts on the regulation of EU Funds.

Primarily in the 1st chapter, I tend to provide a theoretical background for the OMC methods, in which I will present several interpretations of the phenomena from different scholars, in order to grasp the main elements of these instruments. Furthermore, in the 2nd chapter, I will provide a brief introduction to all the OMC methods, that had been applied so far at the EU level and I will analyse them regarding their appearance in different EU policy fields by determining their advantages and disadvantages. As a fundamental segment of my thesis, Chapter 3 will encom-pass the analysis of EU’s Regional Policy that is one of the most significant policy sectors of the EU. One-third of the overall EU budget contributes to the objectives of Regional Policy, in which EU’s economic competitiveness, employment and better life quality of EU citizens are the most fundamental objectives (European Commission, 2016a). Its significance can also be enhanced by the fact that a wide range of actors and their interests are taken into account not only during the negotiation of strategic documents which lay down main development objec-tives in the MS, but during the implementation of EU Funds as well. The CPR has enhanced the importance of partnership principle, and it generally expects its completion by the MS. Fur-thermore, in accordance with the 2014-2020 programming period’s objectives, EU Funds’ ef-ficiency, i.e. the reduction of the administrative burden of the beneficiaries and the simplifica-tion of the management processes need to be addisimplifica-tionally addressed in my research. Thus, my intention is to make additional research of two specific subjects in Chapter 3: the engagement of regional and local governments in the coordination of EU Funds and improvement of the efficiency of EU projects’ implementation.

In Chapter 4, I will analyse how OMC methods commenced to evolve within Regional Policy and within the implementation of EU Funds. Moreover, I will critically examine, whether the current OMC initiatives are able to increase the efficient implementation of EU projects and the involvement of regional and local governments in the coordination procedures, as I have elaborated additional research about it in Chapter 3. Recently, many innovative approaches of Open Method Coordination (TAIEX REGIO PEER 2 PEER, Task Force on Better Implemen-tation) appeared in the policy field, in which, the analysis of their appearance, their objectives and their possible achievements will be an asset to my research. Within this chapter, I will also summarise the main outcomes of interviews, that were conducted with representatives of the Directorate-General for Regional and Urban Policy (DG REGIO).

6 In order to examine the concrete effects of OMC methods on the engagement of the subnational level and the efficient coordination and implementation of the EU funded projects, a case study of a selected MS will be prepared, which will be presented in Chapter 5. The Hungarian case study will provide an ideal example due to the historical background of its Regional Policy and its administrative and legal transformation towards EU regulations, in order to gain access to EU Funds. I intend to examine the regional and local levels’ dominance in the coordination and implementation of EU projects and whether different OMC methods are being applied, in order to empower these territorial levels. As a conclusion, I will represent the main findings of my conducted interviews with senior experts of the Hungarian public authorities, who are respon-sible for the coordination of EU Funds. Eventually, my goal is to propose additional recom-mendations, how the scope and impact of OMC instruments could be extended in the case of Hungary, in order to improve the efficient implementation of EU funds and the engagement of regional and local actors. Finally, I will make a conclusion of the outcomes of my research, in order to provide a sufficient response to the research question and hypothesis of the paper.

The theoretical framework of OMC methods

The vocabulary of OMC tools entails an extensive scope of literature, in which from a theoret-ical aspect, OMC methods are located within integration theories, a normative approach anal-yses them, as a deliberative, certain type of soft law, a more practical method attempts to ex-amine them, as a new modes of governance, compared to the EU’s traditional legislative frame-work (directives, regulations etc.), while critical views are focusing on the weakness of its measurement and potential impacts (Citi & Rhodes, 2007, 3).

I do not wish to analyse in depth all the interpretation forms of OMC methods however, it is vital to remark their distinct comprehension, in order to completely map out their essential characteristics. I incline to provide different theoretical conceptions about these methods, in order to grasp their significant features and principal definitions. In this chapter, primarily, I will simply provide a brief historical overview since its appearance in the EU integration pro-cess and additionally, I will explain distinct interpretations, in which OMC methods were men-tioned by different scholars.

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1.1. Historical overview

The extending scope of globalisation, new technologies set many challenges for the EU, due to its lack of responsiveness, in order to adapt to these recent innovations and use them for ex-tending its economic growth (Dehousse, 2002, 2). In this manner, the European Council issued a new decentralised way of policy-making, the so-called Open Method of Coordination in 2000, in order to accomplish the designated objectives of the Lisbon Strategy (Zeitlin, 2011, 135). Therefore, the EU could become a competitive, knowledge-based community and it could in-tensify its employment and economic advancement (Zeitlin, 2011, 135). Although, the Lisbon summit did not have a pioneering role in the invention of OMC methods because approaches based on cooperation have already been used under soft law mechanisms in the EU, such as recommendations, action plans, reviews, that were similar to former OECD procedures (Borrás & Jacobsson, 2004, 4). Additionally, they have already been applied in several policy fields, prior to the Lisbon European Council meeting, such as in the Broad Economic Policy Guide-lines, the Code of Conduct within business taxation area (Radaelli, 2003, 17) and in the Euro-pean Employment Strategy, that was introduced as a result of the Amsterdam Treaty (MacPhail, 2006, 60). Within this programme, the MS accepted to monitor the implementation of their programmes based on the observations of the Commission, to create national action plans and a joint report (Larsson, 2002, 11). Following to the Lisbon summit, the application of OMC methods started to affect a great variety of policy sectors, such as pension and health care, as an outcome of the Laeken summit meeting in 2001 (Radaelli, 2003, 17).

In the Lisbon European Council meeting, the importance of subsidiarity and partnership had been enhanced, which takes the national and regional differences into consideration, when joint targets and indicators are launched (European Parliament, 2000). The OMC methods are essen-tially promoting the establishment of different benchmarks, indicators, best practices, in order to MS can develop their own policy, compare them and eventually, the EU can evaluate them, in accordance with the objectives of the Lisbon Strategy (European Parliament, 2000). It only determines the ultimate objectives and it leaves enough space for implementation within the MS who will transform these goals into actual national plans, regarding their own interests. Besides the national level’s autonomy in determining a certain strategy, in order to achieve the EU’s long-term objectives, a few EU institutions also contribute to the coordination of OMC methods and the overall accomplishment of these objectives. The Lisbon summit guaranteed

8 an active role for the EU Commission (European Parliament, 2000), and the EU Council’s com-petence has also been confirmed within the application of these instruments (Borrás & Jacob-sson, 2004, 199). Therefore, EU institutions tend to play a coordinator and mediator role be-tween the participants, and they also provide a feedback on the achievements of the MS. Within the application of OMC methods, the existence of a strong political approach can also be as-sumed, due to the lack of the judicial branch (Borrás & Jacobsson, 2004, 199). However, the dominance of the political approach is being hindered by a wide range of actors, who are in-volved in the actual implementation processes. The concept of OMC methods entails that no political position or power display is accepted, solely gaining knowledge and experience in relation to a subject.

Dehousse precisely described the intention of launching OMC methods: „The objective is ‘more Europe’, but also a different Europe.” (Dehousse, 2002, 7). The different feature can refer to innovative instruments that could make a balance between centralised and decentralised policy making. In accordance with Dehousse „different Europe” phenomena, OMC methods could leave space for national sovereignty and the implementation of EU policy programmes, while the EU Commission and Council are still able to act, as the guardian of the common EU goals. The open phrase indicates to distinct flexible policy making activities, where the engagement of multiple levels (regional, local, civil) are prevailing (MacPhail, 2006, 62). Therefore, these actors are able to form prompt reactions and adjust to contemporary policy challenges. These methods are innovative because they provide a new aspect in overall, how to solve implemen-tation deficits and coordination issues in different EU policy fields, and how to encompass a wide range of actors in the policy making procedures. In this manner, OMC methods are able to create an additional link between domestic and EU policy-making and they tend to merge supranational cooperation and national interests on an extended level (Borrás & Jacobsson, 2004, 5). It builds upon the common clarification and comprehension of policy related prob-lems, common values, techniques and mutual learning (Dehousse, 2002, 10).

Besides the original intention to achieve the objectives of the Lisbon Strategy, the EU had a different angle with the application of OMC methods. Initially, these instruments emerged typ-ically in policy fields, such as information society, social policy, and the education field (Dehousse, 2002, 5), where usually negotiations were doomed, due to the MS’s protective be-haviour over their sovereignty (Héritier, 2003, 105-106). According to Dehousse conclusion, OMC methods are rather applied to such policy fields, where the traditional, centralised mode of decision making is not an option (Dehousse, 2002, 20). In this manner, the EU attempts to

9 strengthen the decentralised way of policy making and intensify the negotiations, and acquire an indirect power in the discussed matters and policy areas (Héritier, 2003, 105-106). It is ob-vious, why OMC methods have been applied initially in the employment and social areas, be-cause these policy sectors typically entail the most sensitive national issues, in which MS expect to have full competence. In comparison, OMC methods represent a high political capacity be-cause they have an aspiration for choosing the most effective possibility method, in order to reach consensus in a matter rapidly (Héritier, 2003, 108).

1.2. The introduction of OMC methods’ different interpretations

Several perceptions have been defined about OMC methods, in which they were examined as policy coordination tools, a certain mode of governance, soft law, a new mode of learning and a specific form of institutional setting (University of Wisconsin, 2014). Moreover, there are certain views, in which OMC methods are considered to be a third type of European governance among the supranational and intergovernmental approaches (Dehousse, 2002, 4), where the competence is only partially handed over from MS to the EU itself (Borrás & Jacobsson, 2004, 13). However, the overall length of the paper does not allow to elaborate all the theoretical perspectives of OMC methods. In the followings, I will give a brief explanation about how OMC methods can be interpreted, as new modes of governance and what is the difference be-tween old and new modes. of governance. Secondly, many scholars enhanced the soft law fea-ture of OMC methods and the possible impact and measurement of these instruments, which will be enhanced within this subchapter.

Extensive literature exists about the emergence of new modes of governance and the interpre-tation of their transformation from the old methods (MacPhail, 2006, 62). In comparison with the so-called Community method, where the EU institutions play a fundamental role in the policy making processes, the new instruments shift these procedures towards additional actors and channels. The new ways of managing policy issues are especially diverse, due to their broad emergence in different institutional settings and policy fields. However, they attempt to enhance the multi-actorness feature of the EU, and in this manner, they are able to represent a more transparent and democratic way of policy making, where the participants rather have an equiv-alence relation with each other, than a hierarchical one. It is an important feature that there aren’t any hegemonic actors in the decision-making process, who are empowered with formal authorities (Dehousse, 2002, 10).

10 The traditional Community methods are indicating to traditional forms of governing with bind-ing legislative acts, such as regulations, decisions (MacPhail, 2006, 62). However, it is crucial to differentiate OMC and other new governance instruments from the general EU legislative varieties by all means because these new concepts do not have any legally binding effect (De Búrca & Scott, 2006, 2-3). Their flexibility is highlighted by the regular reviews, discourses, knowledge and information sharing (De Búrca & Scott, 2006, 3). Their variable structure is also shown by the fact that the actors do not have any predetermined obligations, which are engraved in Treaties (Borrás & Greve, 2004, 330-331). It only provides certain guidelines for its participants but no formal rules or sanctions are required, because these methods are built upon result-oriented processes. Regarding the fact, that the only significant factors are the spe-cific objectives or indicators, the chosen method and discourse is not the EU’s sole responsibil-ity, so MS cannot apply a so-called blame-game idea (Borrás & Greve, 2004, 332).

From another perspective, it is important to analyse OMC methods, as a variant of soft law, where the outcomes of the knowledge exchanges, peer reviews etc. do not have legally binding effects on the participants (Trubek, Cottrell & Nance, 2005, 65-66). Within the legal frame-work, soft law has several interpretations, it generally includes a soft responsibility and soft instruments of monitoring and enforcement (Fajardo 2014). The framework of soft law instru-ments facilitates the efficient and prompt regulation of certain policy related problems (Trubek, Cottrell & Nance, 2005, 77). In spite of the fact that the distinct forms of hard law have their own regulative framework and permanent actors, soft law tools empower additional actors from national, regional and civil sector, which foster the legitimacy of the EU. Regarding their non-binding effect, the enforcement of the soft law in the MS can be problematic. However, the EU is able to motivate the implementation of national action plans, by adopting country-specific recommendations, establishing ad-hoc organisations or arranging peer reviews (Dehousse, 2002, 12-13). Since its emergence, the instruments of soft law arose significantly, which is represented by the application of hard law reduced with 2,8%, while the application of soft law approaches escalated with 18,1% at the EU level (Boussaguet, Dehousse & Jacquot, 2011, 193). Ultimately, I provide a brief outline about the general observations of the impact of OMC meth-ods. On the one hand, in accordance with Citi and Rhodes’ (2007, 10) analysis, the interpreta-tion of the impact phrase is already problematic because it could refer to the MS domestic policy achievements, or it can be analysed through the common benchmarks of the EU. The measure-ment of these tools’ impact had been debated since their launch because they had been applied

11 in employment and social policy fields, where it takes decades to sense and analyse actual pol-icy outcomes (Larsson, 2002, 15-16). Furthermore, a certain progress in the employment ratio encompasses factors, such as the possible effects of economic development or the domestic political agenda, in this manner, the explicit impact of OMC methods cannot be concluded promptly (Borrás & Greve, 2004, 331-332).

The outcomes of specific indicators can represent a certain achievement albeit, other circum-stances can also easily influence these accomplishments. That is why the valid impact of OMC methods is hard to grasp because the actual positive or negative outcomes of a policy field cannot be individually perceived, as the direct impact of OMC methods. Even though, their real impact is still waiting to be validated, in accordance with Armstrong view, OMC methods have brought a new era in the EU discourses with new forms of interactions (Armstrong, 2003). As a result of this, the greater engagement of private stakeholders and the subnational level, the actual transformations in the policy making are the concrete results of OMC processes (Zeitlin, 2005). Zeitlin also highlights the importance of working groups within these methods, where a stronger horizontal cooperation emerged among national, regional and local levels (Zeitlin, 2011, 142-143).

Analysing the great variety of OMC instruments

The theoretical background of OMC methods has already indicated the wide range of forms, in which they are able to emerge in distinct policy sectors. This chapter seeks to introduce all the collection of its instruments, that made an impact on EU policy fields, such as social protection, social inclusion, pension and healthcare, innovation, research and development, education, en-vironment, immigration (Prpic, 2014, 2). Various levels of classifications had been created, such as enforcement strength, whether they include sanctions or not (Hatzopoulos, 2007). Their categorization can be also varied on the policy fields, whether it is the EU’s competency exclu-sively or it is shared with the MS. Furthermore, OMC methods can differ from the participants and their position, their potential outcomes, and naturally, they can be classified into their du-ration within the policy making processes. Based on the theoretical research, I will attempt to arrange OMC methods into a certain categorization, where their explicit techniques and used instruments will be enhanced. The specific categorization of mine will create a coherent and clear vision about OMC methods (Table 1), which will be an asset within the analysis of the EU’s Regional Policy field. The detection of each tool’s advantages and shortcomings will shed

12 a light on particular elements that will be taken into consideration in the analysis of the EU Funds.

The classification of OMC methods General remarks

Benchmarking Entails a wide range of activities. Perfor-mance centered approach. Includes the com-parative analysis of the MS performance within a policy issue.

Mutual learning Exchange of information, knowledge deliver an impetus for new legislative proposals and initiatives. It can be carried out in various ways: centrally organised workshops, work-ing groups. In accordance with Zeitlin classi-fication, it can have a heuristic, capacity-building and reflexive effect.

Best practice Selecting the best option that will solve the policy-related problem. Its application can be problematic due to the national, regional, lo-cal levels different institutional settings. Indicators They aim to measure the productivity of an

actor, who established achieving a certain ob-jective under a specific period of time. They can have a quantitative and qualitative fea-ture. Their implementation is closely con-nected to other OMC methods, such as benchmarking, peer reviewing.

Guidelines, recommendations They strengthen the actual implementation of national policy activities, even though they are not legally binding. The vagueness of several recommendations and policy

guide-13 lines can be the explanation for poor imple-mentation results within the MS because they interpret them in an extended way.

National action plans They embody specific policy measures that lead to the accomplishment of predefined EU-wide goals. They have their own fixed structure and their aim is to increase commit-ment to meet indicators and goals on the EU level.

Evaluation, peer reviewing It evaluates the current results of national ac-tion plans periodically but also urges MS to foster their implementation process. It serves as a learning opportunity, in which the MS main challenges are mapped out and contrib-utes to the modification of common guide-lines and the advancement of the national strategy.

Table 1.

The brief overview of different OMC methods

The phenomena of benchmarking emerged as one of the primary instrument of OMC, which can entail a diverse range of activities, such as information provision, exchange of knowledge, mutual learning, comparative analysis, the detection of best practices, concluding targets and national documents, or peer reviewing a MS’s performance (Arrowsmith, Sisson & Marginson 2004, 313) The operation of benchmarking originates from multinational companies, which aspire to compare each other’s strategies, business plans through a structured learning process (Arrowsmith, Sisson & Marginson, 2004, 313). Moreover, it has already been acknowledged and applied in different reports of the OECD, where the policy functioning and actual outcomes of Western countries had been compared (Citi & Rhodes, 2007, 11). However, within this cat-egorization, benchmarking will be analysed as a performance centred approach. The notion of achieving a certain goal is in the centre of this OMC instrument however, there is only one significant element: the comparative analysis of the MS performance within a policy issue. The focus herein lies on the comparison of national policies and their action plans, in which distinct

14 indicators are settled down. Therefore, benchmarking simply accounts for the measurement of MS’s performances (Citi & Rhodes 2007, 9-10). Given this characteristic, the innovation policy sector demonstrates this specific tool, where the European innovation scoreboards and trend charts are annually examined, in order to determine the development of each MS. As put by Citi and Rhodes’s analysis, benchmarking can be only effective, if it is applied in such policy sectors, where the peer review and evaluation elements are also efficient in terms of the imple-mentation of the nation state’s action plans. Therefore, as I have addressed in the beginning of the analysis, benchmarking truly stands for many activities, which have a high reliance on each other. As a conclusion, this level of interdependency can be considered as a shortcoming, be-cause the dominance of peer reviewing, evaluation and selection of best practice will determine the benchmarking process itself.

Another instrument evolves from a learning mechanism, where deliberative actions are taken by the participants, in order to gain access to more information and knowledge within a policy sector (Zeitlin 2011, 136). The category of mutual learning builds upon the fact that policy officers wish to share their expertise and learn from each other. Therefore, the process of mutual learning does not highlight solely one solution (best practice), while excluding other models, because it embraces the aspiration for learning, and it lacks any politically driven strategies. A good demonstration of mutual learning is the establishment of the Common Implementation Strategy within environmental policy, which aspires to implement the Water Framework Di-rective with the mutual collaboration of the MS. In this manner, informal forums had been launched, in which national policy field experts, the Commission, the Council Presidency and the representatives of the private sector share their experiences and data about reaching a suffi-cient water quality level (Zeitlin, 2011, 138). One of the most important benefits of mutual learning is to feed policy experts’ knowledge and provide them innovative ideas from the dif-ferent point of views. Furthermore, the exchange of information is able to deliver an impetus for new legislative proposals and initiatives. In this manner, this specific OMC method is able to transform an informal knowledge exchange to actual, legally binding incentives. The mech-anism of mutual learning can be carried out in various ways: centrally organised workshops, working groups. They are the perfect platforms to share information directly with each other and gain knowledge about the concrete implementation of an EU Directive. Eventually, due to these brainstorming sessions, policy experts will take many ideas and data home, which will be additionally shared with their government. According to Zeitlin, it is important to examine the

15 mutual learning process’s impact on the negotiation itself (Zeitlin, 2011, 144-145). In this man-ner, she classified a heuristic effect, in which mutual learning can call MS’s attention on the common challenges, that is required to be tackled jointly and it promotes to discover the iden-tification of policy alternatives (Zeitlin, 2011, 144-145). Mutual learning has a capacity

build-ing effect, in which MS establish common statistic goals and databases together, which

facili-tates their comparativeness (Zeitlin, 2011 144-145). In this manner, their actual development within the policy field can be easily monitored and compared to each other. The final reflexive category of Zeitlin is connected to, how mutual learning is capable of stimulating MS activity in improving policy approaches (Zeitlin, 2011, 144-145). Diverse standpoints can have a gen-eral impact in rethinking and adjusting policy practises about a specific issue, which needs to be handled efficiently.

Mapping out the differences between OMC instruments, the selection of the best policy option can be assessed as an individual category. Therefore, a certain objective will be accomplished by selecting solely one option that will serve, as a best practice to a policy related problem. The major concern about selecting a specific solution is that the application part could be prob-lematic due to the national, regional, local levels different institutional settings, traditional pro-cedure in terms of policy implementation and legal culture. This specific element of best prac-tices entails many risks, due to the local circumstances, in which the chosen policy option could construct a completely different nature. It is also problematic, whether the approach is also capable of getting rid of heterogeneous solutions, which seems to be less working, than the best practise (Radaelli, 2003, 41). Focusing on the positive notion, as a policy option is able to op-erate in the best possible way, however, it is rather a blind way to approach a problem. In this manner, negative aspects, learning from mistakes (bad practice) should also be taken into ac-count when a policy issue needs to be solved.

The additional form of performance related OMC instruments are indicators, which are the pioneering platforms of benchmarking in the EU’s employment policy field. These quantitative and qualitative instruments are also built upon a performance rationale, because they aim to measure the productivity of an actor, who established achieving a certain objective under a specific period of time. Indicators do not contain any precise guidelines about possible policy programmes, that should be carried out. Therefore, they are closely intertwined with other OMC instruments, in which the accomplishment and implementation of indicators can be solely con-firmed through the comparative analysis and evaluation process. Setting up common indicators is also problematic among the MS, due to the national diversity in their policy systems and

16 institutional arrangements. (Zeitlin, 2011, 136). Within the social inclusion policy field, MS were asked to follow jointly assessed indicators that were adopted by the Social Protection Committee, however, a flexible indicator type was also adopted, in which MS distinct national aspects were taken into account (Radaelli, 2003, 34). The example refers to a certain loophole when flexible indicators can be modified in case of any implementation difficulties.

Considering the indicators’ regulative feature, MS require prompt guidelines, recommenda-tions, which demonstrate the necessary path towards the final goal. The EU institutions’ role is to ensure suitable recommendations, which are able to provide assistance through the imple-mentation process. Primarily, this specific OMC instrument emerged in macroeconomic policy (Citi & Rhodes, 2007, 13). The Broad Economic Policy Guidelines provided general assistance and it encompassed a great enforcement power on the MS, due to the strict authority of the Commission and Council. The MS based recommendations and general guidelines are able to strengthen the actual implementation of national policy activities, even though they are not legally binding. In case of the Stability and Growth Pact within fiscal policy, the EU has the ability to make several recommendations, in case of the MS cannot keep their obligations that arise from the concluded agreement (Citi & Rhodes, 2007, 13-14). Even though, there are no legal consequences, MS can literally pay a big prize for the violation of the pact. However, the vagueness of several recommendations and policy guidelines can be the explanation for poor implementation results within the MS. If the designated common policy goals and the EU’s guidelines are unclear, the national level can easily take advantage of these soft goals and in-terpret them in an extended way. That is why the determination of explicit instructions is ex-pected to be given by the EU institutions.

National action plans are additional OMC instrumentsand they are acknowledged, as the con-crete strategies of the MS. They embody specific policy measures that will lead to the accom-plishment of the predefined EU-wide goals. These action plans have their own fixed structure, which is determined by each MS, and their aim is to increase their commitment to meet their indicators and goals on the EU level. Domestic action plans emerged primarily in the employ-ment policy area that was already addressed in the previous chapter. MS were entitled to for-mulate their own strategy and specify concrete goals adhere to the European Employment Strat-egy’s guidelines. In this manner, the nation states were forced to remain within a framework however, they possessed the right to launch objectives linked to their own needs and interests (Citi & Rhodes, 2007, 13).

17 The ultimate element of OMC instruments entails the peer reviewing process, in which the EU not only intends to evaluate the current result of national action plans periodically but also urges MS to foster their implementation process by peer pressuring them. This specific phenomenon reflects a negative sense, because MS are being shamed by the EU via public lists and policy papers, in which they are mentioned about their weak performance (Citi & Rhodes, 2007, 10). Naturally, negative publicity never promotes the nation state’s personal interest and growth, that is why this method can have an effect on MS, who are not motivated enough. This process could serve, as a learning opportunity, in which it could promote to map out main challenges and contributes to the modification of the common guidelines and the advancement of the na-tional strategy and the policy field itself. Furthermore, peer reviewing MS contemporary achievements does not entail any comparison, the EU will only provide country-specific rec-ommendations subsequent to the peer reviewing. In terms of the disadvantages, according to Radaelli’s (2003, 35) view the applied peer review method can be different in every policy field, whether it accounts, as major part of the MS autonomy or not.

The most significant advantage of OMC methods is that they engage in a wide range of subna-tional and local actors, who provide a local input with their own priorities and needs. These methods also provide a decentralised, transparent platform for policy making and decision-making processes. The exchange of best practices and knowledge stimulates the policy makers and trigger a new way of thinking, which can contribute to new legislative acts. Moreover, during these exchanges, the participants can also exchange their views about the implementa-tion of specific EU regulaimplementa-tions that could improve a coherent approach in all the MS. The coun-try-specific recommendations and guidelines provide an EU input for the national level, in order to guide them into a certain direction towards the adoption of an EU regulation and policy. Regarding the OMC methods’ shortcomings, there are still a various level of debates among scholars, which focus on their efficiency, transparent operation, the participants’ role within the processes and their actual implementation and integration into national policy making (Zeitlin, 2011, 146). OMC methods have a high reliance on each other, such as national action plans, indicators, peer reviewing. If the guidelines and recommendations are not narrow enough, the whole implementation process and the achievements of the indicators can go into a different direction. Mutual learning can also entail negative aspects, because it depends on the partici-pants, what knowledge and information they will transfer to the national level and what kind of proposal they will make. The most significant problem is connected to the implementation

18 phase, when the MS attempt to achieve their ultimate goal trough their national plans. Gener-ally, the EU leaves a greater space for implementation, which can result in the misinterpretation of guidelines, recommendations. The measurement and more importantly, the comparison of MS’ activities and achieved indicators is problematic through the establishment of common indicators due to the national differences in their policy systems and institutional settings. Not-withstanding, several instruments of OMC entail disadvantages, that does not imply their inef-fectiveness in the Regional Policy field, because their disadvantages derive from the concrete procedural and organizational deficiencies of each policy field.

The regional/local public authorities’ engagement and the efficiency of EU

projects within the structure of EU Funds

In this chapter, the efficient management and implementation of EU funded projects and the participation of regional and local governments will be analysed. Primarily, I will provide a brief introduction to the evolution of EU Regional Policy with the intention of providing an insight into its operation. Following to the historical description, I will continue analysing the current position of the partnership principle by delving into the CPR of EU Funds. There have been several criticisms about the weak engagement of the regional and local governments in all the MS (The Council of European Municipalities and Regions, 2014, 6-7). In order to under-stand the current involvement of subnational and local levels, I will look at the gradual growth of their power and examine how the EU guaranteed their participation within its legal frame-work. The analysis of their engagement is crucially important, in order to fulfil the principle of partnership and safeguard the representation of local interests within the policy field.

The second half of the chapter is going to elaborate the implementation and management defi-ciencies of the funds prior to 2014-2020 programming period and the current difficulties that need to be tackled. Primarily, I will examine the ex-ante analysis of all the programming peri-ods, in order to find out the potential weaknesses, in connection with the implementation and management activities. The efficient operation of Managing Authorities, who are responsible for the implementation process of the EU projects, is a significant element, in order to guarantee a successful implementation and ultimately, to complete the absorption of the EU funds and to strengthen the economic and social cohesion of the EU.

19

3.1. Historical overview of EU Funds

The EU Funds went through many transformations regarding their structure, institutional set-ting and assigned objectives. During my research, I will specifically focus on the Structural Funds that encompasses the European Regional Development (ERDF), European Social Fund (ESF) and the Cohesion Fund (CF), because these funding schemes have a great relevance in the operation of the Hungarian Regional Policy, which will be presented as the case study of my research. However, the overall structure of the EU Funds is needs to be introduced for a better comprehension. (Table 2)

Table 2.

The structure of EU funding schemes Reference: European Commission, 2015a, 8.

ESF aimed to develop the free movement of workers through education, in order to maintain a certain development on the labour market. (Brunazzo, 2016, 18). Nowadays, its main profile is to support businesses, creating job opportunities and supporting people in learning new skills. ERDF was established in 1975 and it only became a significant contributor to the development of EU regions, when its budget had been expanded to its double in 1979 (Brunazzo, 2016, 20). The focus lies in the economic and social cohesion and the advancement of a labour market.

European Structural and Investment Funds (ESI)

European Agricultural Fund for Rural Development (

EAFRD)

European Maritime and Fis-heries Fund (EMFF) European Regional and Development Fund (ERDF)

European Social Fund

European Cohesion Fund

Structural Funds

20 During this period, the Commission’s coordination role had also been strengthened by provid-ing guidelines for less developed regions, where funds needed to be allocated (Brunazzo, 2016, 20). The 1988 reform was a pioneering one in the advancement of Regional Policy because of its five fundamental principles (concentration, programming, partnership, additionality, finan-cial coordination), the growth of its budget and the reinforcement of regional authorities had been accomplished (Brunazzo, 2016, 24). Furthermore, the main objectives of the policy field had been established by the Single European Act (1987), where the inequality of European regions was addressed to be lessened and the economic and social unity to be strengthened through EU projects (Brunazzo, 2016, 20-21). As a result of the Maastricht Treaty, an additional EU fund (Cohesion Fund) was launched, which aspired to advance green growth and sustaina-ble development investments (Brunazzo, 2016, 24). The greatest transformation of the policy field can be acknowledged to the Eastern enlargement process, in which the highest amount of money had been allocated for the development of EU regions, the partnership principle had been expanded with the civil society, non-governmental organisations. Moreover, the propor-tionality principle was also reinforced, in order to ensure the MS financial contribution to the projects (Brunazzo, 2016, 29-30). The policy field’s legislative framework was strengthened, in this manner, the EU had a shared decision-making competence with the MS (Brunazzo, 2016, 31). Due to the shared competences and the huge economic gap between the countries, the next negotiation period of the budget took a long time, in which, eventually the EU Funds were launched with eleven thematic objectives, in order to fulfil the objectives of the Europe 2020 Strategy. Within this programming period, the categorization of the regions was modified to less developed, in transition and more developed groups, in which the allocation of the funds depended on the regions’ GDP in comparison with the general EU-27 GDP (European Com-mission, 2014a, 185).The explicit allocation of the funds had been specified within the Part-nership Agreements that are considered to be the recent national strategic plans. Furthermore, in accordance with the content of the Partnership Agreements and the objectives, the MS clarify their development plans in the Operational Programs (OP). However, within these procedures, the particular role of the subnational and local level, especially the public authorities, is not certain, that is why the following section of the chapter intends to find out the regional and local governments’ competency.

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3.2. The regional and local governments’ involvement from the beginning

The engagement of the regional and local public authorities, more specifically the adaptation of the partnership principle is one of the key values that underpin the EU’s Regional Policy. The principle entails the close collaboration of the national, regional, local levels and the private sector. It enhances the importance of subsidiarity that duties should be carried out at the right territorial level, in order to have the most effective effect. The principle had a quite limited interpretation by the EU, which only encompassed the national, regional and local authorities (European Commission, 1999, 2). Since then, the partnership principle shed a light on distinct economic and social partners, which will not be addressed in the chapter (European Commis-sion, 1999, 2). The analysis of the principle is crucial because it does not only ensure the im-plementation of the projects but also contributes to the accountable and transparent function of the policy field. My aim is to examine to what extent the EU safeguards the regional and local public authorities’ engagement in the operation of EU Funds within its legal framework. The legitimation of my research entails several factors, why it is beneficial if regional and local public authorities have a greater role in the coordination of EU funds. These actors tend to raise awareness on such local policy issues that are not conceived by politicians on the national level. In this manner, they are able to improve the allocation of EU Funds and identify the thematic objectives of the OPs more efficiently. Their engagement can also reinforce the fundamental principles of the policy field. Due to the fact that regional and local governments also participate as beneficiaries in the projects, the principle of subsidiarity is mainly highlighted, where deci-sions are implemented on the most competent level. Therefore, the application of partnership principle can be assessed, as a bottom-up approach, which provides an ideal platform for ex-changing information, in order to detect several issues within a MS (European Commission, 2005, 11). These exchanges could initiate learning processes among regional and local actors, that could improve local development (European Commission, 1999, 3). That is why the appli-cation of OMC tools and their impact can facilitate launching these learning processes and open platforms for the regional and local actors for a greater engagement. As the European Commis-sion grasped the beneficial perception of partnership:

„By contributing their specific knowledge on a certain subject or region, their awareness of potential project applicants, partners can improve pro-gramme effectiveness by raising the efficiency of project selection. Gen-erally speaking a widely drawn partnership leads to greater commitment

22 and ownership of programme outputs and hence to a direct interest in the

success of the programme.” (European Commission 2005, 4).

It is interesting how the Commission connects the overall success of the programming period to the partnership principle. That is why an inclusive analysis needs to be made about the en-gagement of regional and local actors because they possess the power to determine the effi-ciency of the whole policy sector.

As I have mentioned the importance of 1988 reform, it also had a significant role in reinforcing the regional and local participants’ competence. Under this regulative act, the MS had to submit Regional Development Plans, in order to represent their regional and local authorities’ goals. Besides the representation of their needs on the EU level, a new institution, the Consultative Council of Regional and Local Authorities was founded that functioned as an advisory body for the subnational authorities (Blom-Hansen, 2005, 633). As a result of this, the subnational level and its needs were represented by an official body on the EU level.

Council Regulation (EEC) No 2081/93 instituted several requirements for the MS on preparing their Regional Development Plans and choosing eligible regions for funding, but it did not de-termine any collective rules, whether MS should coordinate with regional and local actors in other processes (Official Journal of the European Communities, 1993a, 11). Thus, the first pro-gramming period (1994-1999) was less regulative on the regional and local actors. In addition to the partnership principle, the regulation only addressed that Monitoring Committees (MC) shall be established by the MS and the evaluation and monitoring processes should be carried out within the framework of the partnership (Official Journal of the European Communities, 1993b, 29). The Council Regulation on Cohesion Fund solely made a suggestion briefly about involving regional and local authorities in the MC if they also implement specific projects (Eur-Lex, 1994, Article F, 3).

The legislative framework of the next programming period (2000-2006) attempted to put a greater emphasis on the principle and the regional/local actors, in order to promote the im-portance of regional and local input in the accessing MS (Potluka, 2012, 1438). The Council Regulation (EC) No 1260/1999 acknowledged regional and local public authorities, as official participants of the MS partnerships, and it determined the expansion of these actors’ engage-ment in the preparation, monitoring and evaluation phases (Eur-Lex, 1999, 4., 11). By the end of the first programming period, the EU already urged to deepen the liabilities of the partner-ships within the MS and it provided a more strategic role for regional and local authorities, due to the expansion of regionalism and decentralisation to the regions and localities in all the MS

23 (European Commission, 1999, 19-20). However, the regulation avoided any interference and specific regulation about how subnational authorities should operate within the partnerships (Eur-Lex, 1999,11). Therefore, the EU did not provide any clear instructions for the MS, in order to facilitate the engagements‘ of the subnational and local authorities.

The general provisions on European Regional Development Fund, the European Social Fund and the Cohesion Fund for the 2007-2013 period retained the significance of partnership prin-ciple and it highlighted the crucial role of regional and local authorities within certain processes (Eur-Lex, 2006, 2). In order to stipulate the main investment priorities and thematic objectives, the MS were required to prepare individual National Strategic Reference Frameworks. In this manner, the regulation determined collaboration with relevant partners in connection with the preparation of the strategic document (Eur-Lex, 2006a, 19-21). Moreover, Article 11 also in-cluded partners into the formulation of the OPs that ensured additional tasks for the authorities (Eur-Lex, 2006a, 19-21). Besides the extended vision for the partnership principle, the EU still did not clarify the specific involvement of regional and local public authorities in accordance with Article 11.

The Commission Regulation (EC) No 1828/2006 called the Managing Authorities’ attention to disseminate publicity and information tasks to the regional and local public authorities (Eur-Lex, 2006b, 14) that recognised their close interaction with the local population. It can be con-cluded that the regulation attempted to reinforce a direct communication between the EU citi-zens and EU projects through these authorities that justify the significant role of regional and local public authorities within EU Funds. Therefore, OMC methods could reinforce this direct link that was initiated by the Regulation 1828/2006. The new generation of EU funds’ regula-tions intended to encourage bottom-up participation and advance the accountability of the pol-icy sector and democratise the coordination of EU Funds through regional and local authorities. The specific regulation on ERDF addressed a relevant connection between regional/local au-thorities and the efficient implementation of the projects (Eur-Lex, 2006c, 1) in which they emerged, as a necessity tool for them. The identification of their contributing role to the effi-ciency of the projects was certainly the first time that was addressed in the legislative frame-work of the EU. However, there was no legislative source of engaging regional and local public authorities into the operation of ESF projects. It solely enhanced the involvement of social part-ners, in which adequate opportunities for consultation should be provided by the MS (Eur-Lex, 2006d, 5).

24 The legislative framework of EU Funds for the 2014-2020 period had brought a new era, where the principle of partnership had been highly respected and reinforced to a large extent in com-parison to the previous programming periods. The CPR operates, as an umbrella regulation, that merges all the requirements of each fund together. The greater role of the partnership prin-ciple is intertwined with safeguarding multilevel governance that is highlighted in (11) of the regulation (Eur-Lex, 2006d, 5). The most fundamental and noticeable improvement is the foun-dation of Partnership Agreements, which are considered to be the latest version of national strategic documents. The greater emphasis on partnership is not only reflected by the Partner-ship Agreements, but the EU intends to strengthen the importance of partnerPartner-ship in each prep-aration phase of the document. The CPR also demonstrates the extent of the EU Commission’s influence, in order to facilitate the establishment of partnership between MS and relevant part-ners.

The detailed assessment of CPR shed a light on the fact, that the Article of partnership principle have been modified, and the regional and local public authorities have been replaced by com-petent urban and other public authorities, as the fundamental partners of MS (Eur-Lex, 2013a, 22). As the previous regulation already touched upon the importance of transparency, Article 5 of the CPR determines more precise requirements from the MS, such as providing a detailed list of the partners and reporting regularly about their activities in each programming phase (Eur-Lex, 2013a, 23). Moreover, Article 123 enables a regional and local input into the opera-tion of Managing Authorities, by allowing the MS to grant them with addiopera-tional responsibilities (Eur-Lex, 2013a, 79). In order to facilitate the establishment of partnerships, the EU launched a specific strategic document, the European Code of Conduct on Partnership (European Com-mission, 2014, 22).

In terms of OMC methods, the regulation addressed the application of several elements that facilitate the achievement of the designated priorities and fulfil all the commitments. In this manner, networking, cooperation and exchange of experience are considered to be the ideal forms of interaction between regional, local, urban public authorities, social and economic ac-tors (Eur-Lex, 2013b, 5). Moreover, the Commission intends to motivate MS for further cohe-sion and partnership by assessing the good practices of other states in creating partnerships and involving them in the monitoring and evaluation processes (Eur-Lex, 2013b, 23).

The establishment of EU Funds facilitated the mobilisation of the regional and local levels even though, there are various forms of cooperation in each MS (Bachtler & McMaster 2006,3). Through the analysed EU legislation, the encouragement of regional and local level started to

25 expand gradually. Primarily, their role solely encompassed a complementary duty in the prep-aration of the national programming documents, in which they could have had the possibility to express their needs. However, the CPR shifted several liabilities towards the subnational and local level in different programming phases. Their formal consultative rights were expanded, in which regional and local authorities may manage the advancement of OPs, be part of the MCs and have liabilities in implementation related tasks or they can simply apply for the Funds and become beneficiaries (Bachtler & McMaster 2006, 8). In conclusion, partnership principle and the involvement of the subnational and local level provided an added value to the coordi-nation of EU Funds and it functions, as a tool for close collaboration between different territorial levels. However, due to the great institutional and political differences of the MS, additional common initiatives are needed, in order to guarantee a regional and local input into the national coordination of EU Funds, which can be only promoted efficiently at the EU level.

3.3. The analysis of the efficient implementation of EU projects from the

beginning

The primary objective of all the EU Funds is, to ensure that the overall outcome of the projects will contribute to the achievement of Europe 2020 goals and will strengthen the economic and social cohesion of the EU. However, these ultimate objectives cannot be accomplished without the sufficient operation of EU projects’ implementation and coordination. The institutional framework, the enforcement methods of national regulations, the management of the projects and the beneficiaries’ activities are decisive factors regarding the projects’ efficiency. In order to find out, how the EU assessed the efficient operation of the projects in Structural and Cohe-sion Funds, the ex-post analysis of all the programming periods will provide an accountable source. The Commission provides an extensive analysis for evaluating the impact of each pro-gramming period, in order to make a final conclusion and propose recommendations for the next period. Due to the wide range of policy fields that are examined in each evaluation report, I will only elaborate observations about management, institutional or administrative bottle-necks, which could be improved on the EU and national level.

According to the ex-post report of the EU about Cohesion Fund from the period of 1993-1999, a greater emphasis has been added to monitoring, audit and finance controlling elements, than the project selection or implementation processes (ECORYS Transport, 2005, 12). On the basis of the gained information from MS, one of the most crucial problem was the emergence of ad-hoc projects, which did not fulfil basic national quality requirements. The majority of these

26 projects failed to submit risk assessment studies or additional preparation documents (ECORYS Transport, 2005, 13), which caused major delays in the implementation process, that also im-peded the overall completion of objectives of each MS. In terms of the delaying projects, the EU conducted a research, in which they concluded that more, than half of the implemented projects experienced at least a one year delay and 29% of the projects presented approximately two years (ECORYS Transport, 2005, 58). The weak preparation and pre-organization of pro-jects are incentives for great amount of modifications, which can contribute to changing the overall concept, objectives or other essential elements of the projects that will also cause delays in the decision-making phase on the national level (ECORYS Transport, 2005, 35). According to the EU Commission’s report, the estimation of the projects and their approval are approxi-mately three months longer, that is supposed to be in conformity with the EU legislation (ECORYS Transport, 2005, 40). The ultimate observation of the ex-post analysis is when the project is eventually eligible for funding, usually the implementation and completion phases are endangered by cost deviations due to the preceding delays. Major economic changes, such as inflation are not taken into consideration in the budget of each project, that is why 17,5% is the general amount of cost differences in the expenditure of a Cohesion funded projects (ECORYS Transport, 2005, 9).

The evaluation report of ERDF and ESF shed a light on different management and implemen-tation related issues in comparison with the Cohesion Fund’s analysis. The central problem implies the division of power, diverse institutional settings and the different interpretation of EU guidelines, reports and regulations. In that sense, the MS attitude towards the regulation and extending the scope of EU funds is also distinct (Bachtler & Taylor, 1999, 34). In relation to management and implementation activities, additional difficulties emerged, due to profes-sional inexperience and the lack of institutional capacity at all levels (Bachtler & Taylor, 1999, 37). Initially, the communication between the EU, national and regional level was not clear about the implementation or common regulations of the projects. Therefore, certain gaps ap-peared across government departments at central, regional and local levels, how to implement projects in compliance with EU law (Bachtler & Taylor, 1999, 39).

Another challenge emerged within the 2000-2006 programming period when ten new MS had to adapt EU regulations to their policy system. The accession of Eastern European countries and their particular structure had a negative impact on the efficiency of projects, due to the fact, that most of them were constrained to not only adapt certain EU regulations but also to arrange their coordination and institutional structure in conformity with the EU’s prospects.

27 A study about the efficient implementation for Structural Funds provided a coherent overview about the shortcomings of the 2000-2006 programming period, specifically the implementation gaps among MS (Tödtling-Schönhofer, Colgan, Martinos & Sanches, 2003, 149). The great amount of transformations in the institutional settings, legislative acts and the distribution of responsibilities required a longer period, which also had a negative impact on the efficient im-plementation of the projects and the absorption outcomes (European Policies Research Centre, 2012, 9). The EU regulations and requirements led to a great load of responsibilities and burden for the implementing bodies, especially in relation to the monitoring procedures. According to the main outcomes of the study, MS were concerned that the cost of monitoring and controlling systems and their actual benefit were not balanced (Tödtling-Schönhofer, Colgan, Martinos & Sanches, 2003, 149). The key problem of the programming period was the wide range of ap-proaches within the MS without any common provisions on the EU level. However, the EU pointed out that in order to realise the demands of the MS on simplified rules, streamlining the common regulations and procedures on the national level is not the EU’s exclusive responsibil-ity (Tödtling-Schönhofer, Colgan, Martinos & Sanches, 2003, 27). In terms of implementation matters, the proportionality principle has also been abused over the programming period, due to the imbalanced efforts for monitoring and administration burden of small projects in com-parison to their small investments (Tödtling-Schönhofer, Colgan, Martinos & Sanches, 2003, 152). As put by the ex-post evaluation of Cohesion Fund, there also have been substantial pos-itive changes in the management and implementation processes, such as the application of mod-ern techniques, tools, close cooperation and exchange of knowledge between experts of the management authorities, the reasonable allocation of tasks in the national authorities (European Policies Research Centre, 2012, 50-51).

In terms of the programming periods’ delays, the Commission holds shared-responsibility for it, due to the complex amendments of the regulations (Hajdu, 2017). There is lack of continua-tion, that is why the MS are struggling with the interpretation and adaptation of new regulations in each programming phase, which also put a pressure on the Managing Authorities. As a result of this, by 2016 March, solely 90% of the Funds were used by the MS, that extended the closure of the programming period in overall (European Commission, 2016b, 12).

The disruption of the proportionality principle did not shift to a positive direction, because small-scale projects still required a large amount of administrative procedures. A question still exist about how the great variety of requirements should be in balance with the amount of the funding. The ex-post analysis of the 2017-2013 programming period also addressed how the

28 administrative burdens contributed to the majority of the implementation difficulties (European Commission, 2016b, 14). As a result of the complex EU regulations and their imposed require-ments, the misinterpretation of these acts at the national level, a lack of capacity at management level and the restricted usage of electronic data systems, several delays still emerged from pro-ject selection to the implementation processes (European Commission, 2016b, 14). Regarding the regulations of the monitoring and financial controlling procedures, the restrictive rules had brought their positive outcome for 2007-2013 period: the amount of evaluation reports in-creased significantly and the percentage of errors reduced to a marginal level (European Com-mission, 2016b, 114). However, the actual impact of these reports and the accountability of the context was especially weak. The tension between the necessary monitoring procedures and the demand for simplified rules remained to exist (European Commission, 2016b, 115), because reducing the implementation phase of the projects and the transparent usage of funds are both crucial factors.

Regarding the outcomes of the evaluation reports, the legislative framework of the EU caused several challenges for the MS, due to the diverse adaptation and implementation procedures. Therefore, as much as the common legislation attempts to harmonise the coordination of EU Funds, the explicit implementation and application of rules are still the MS ultimate responsi-bility, which causes implementation gaps, major delays in the overall programming period and a great load of administrative burden. The application of OMC methods could provide a com-mon platform for additional harcom-monization and it could lessen the implementation gaps between the MS and Managing Authorities of the MS. Instead of focusing exclusively on the monitoring and controlling processes, a financially beneficial and time-consuming procedure needs to be adapted. The need for simplification in the requirements, reporting, control is a necessity, that could promote the national implementation and the final outcomes in the policy field and it could lessen the administrative obligations of the authorities.

The application of different OMC methods and their potential impacts on

EU Funds

As I have addressed, I intend to apply De Búrca and Scott’s hybridity theory, in order to analyse the feature of OMC methods. My aim is to demonstrate how baseline hybridity of OMC meth-ods are acting as a complementary approach next to EU regulations. Baseline hybridity does not aspire to substitute traditional legislative acts, it rather enhances their effectiveness and