The European Commission yesterday set about reducing eligibility for two thirds of structural funding. From half of the EU population availing of it now, this will drop to 35-40 per cent.
The balance of non-geographically based structural funding, largely for training, will also be spread more thinly.
Concentration, simplification, and clarification of responsibilities are the key themes of the Commission's approach, its President, Mr Jacques Santer, told journalists, while acknowledging the difficulties involved in getting support from the member-states for the package by next spring.
That political challenge means countries like Ireland, well outside the eligibility limits for maximum grant aid under the Objective One funding category, have to be offered a "transition" withdrawal period of six years.
The budget outline makes it clear that the first two of these years are likely to be fairly painless but will be followed by sharp falls to probably no more than 20 per cent of current funding levels.
And the political challenge has secured a "safety net" for those regions in industrial decline ( Objective Two), who no longer qualify. They will now be assured that their eligible areas will not fall by more than 30 per cent. A sigh of relief is breathed in London.
But the publication of the new regulations for the structural and cohesion funds leaves as many questions unanswered as it answers. Although Commission sources suggest the share-out of cohesion funding to the four poorest countries is likely to mirror the last budget round (9 per cent in Ireland's case), the breakdown of structural funding by country is not even attempted. That will be for heads of government to negotiate.
Yet while the cash share-out will attract most international media attention, the politics of reforming structural funding and the Common Agricultural Policy is just as important.
The Commission is mainstreaming employment, environmental and equality concerns in its programmes and national governments must involve local communities and the social partners in planning and monitoring projects.
The Irish Commissioner, Mr Padraig Flynn, has even persuaded the colleagues that all major social fund projects should involve direct payments, although small, to local community groups through non-governmental intermediary funding bodies.
Such approaches in the Northern Ireland Peace Fund have led to a flourishing of grass-roots community contact and involvement with the EU. The Commission has initiated a major decentralisation of decision-making - "decentralisation in a community framework" is how Mr Santer put it - to make the point that this is no dismantling of a collective EU approach to issues.
The Commission will no longer vet every national project, but agree a strategic approach with member-states, letting them take the day-to-day decisions.
In a speech to the parliament yesterday, Mr Flynn described the new role of the Commission as no longer "co-manager" but "guarantor of the strategic choices agreed in partnership".
Other innovations include a funding reserve of 10 per cent to be allocated in the mid-term review to those whose use of funding has been most efficient - an opportunity if ever there was one for Ireland.
The funds are simplified, with three "Objectives" instead of seven, and three "community initiatives" instead of 14.
Objective One funding will remain largely as it is for the poorest regions - less than 75 per cent of EU GDP - and will receive two thirds of funding.
Objective Two combines restructuring industrial regions and rural regions in decline. Objective Three concentrates on developing human resources through education and training across the rest of the Union.
The total allocation to structural funding rises from ú130 billion in 1994-1999 to ú174 billion for the 2000-2006 period (although the latter is seven years and includes funding for the acceding countries).
