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Tuesday, 18 July, 2000, 11:32 GMT 12:32 UK
Wales's windfall worry
European Welsh graphic
The prospect of around 1.5bn of European aid for Wales has proved as much of a worry as a windfall for Welsh politicians.

It was announced at the end of the EU's Berlin Summit in March 1999 that the Valleys and western parts of Wales were eligible for aid worth 1.85 billion euros over six years to 2006.

Objective One is the highest level of European regional aid and only the poorest regions of Europe are able to claim it. The fact that so much of Wales qualifies for it is an indication of the poor condition of much of the Welsh economy.

Map
Large areas of Wales stand to gain
The money cannot be spent on social services, health or education, but must be spent on projects aimed at producing a long-term improvement in the economy, such as business development, skills training, tourism and improving the existing infrastructure.

Securing Objective One status for Wales was seen as a huge political coup for Labour, as the Tories, during their 18-year rule, had refused to make a case for Wales to qualify for Objective One.

However, instead of being able to reap the political benefits of a giant public spending handout, Labour's Welsh leadership quickly hit a series of damaging problems, particularly over the issue of match funding.

For the money to be released from Europe, similar amounts of funding have to be secured from other sources, including the UK Government and local authorities.

Alun Michael
Objective One was Alun Michael's downfall
During Alun Michael's period as First Secretary of the National Assembly, concern grew among opposition parties that Westminster was lukewarm about providing match funding.

Mr Michael's selection as First Secretary had been dogged by the perception that he was a Downing Street appointee. As time went on there was an increasing feeling that he was unwilling to press the Treasury for a commitment on Objective One.

The issue came to a head in February 2000, when the opposition parties tabled a motion of no confidence in Mr Michael. This forced his resignation as support for his leadership within his own party in the Assembly collapsed.

He was replaced as First Secretary by Rhodri Morgan, who had been the grass-roots Labour members' choice to lead the party in Wales. In February 1999, he had been narrowly beaten by Mr Michael in the vote to lead the Welsh party, but only because several big unions cast their block votes for Mr Michael without balloting their members.

Looking to Ireland

Mr Morgan was widely seen as a more independent character than Mr Michael, and more likely to argue Wales's case with the Treasury.

However, he too has faced pressure to make sure the government delivers on Objective One.

The pressure is increased by the fact that many economic and political leaders in Wales have long regarded with envy the way that Ireland has used its own Objective One status to transform its economy.

Ireland has been held up as an example to Wales of how a country with a weak economic base can be turned into a "Celtic tiger" economy by a co-ordinated strategy of shrewd targeted investment in hi-tech growth industries.

There is a widespread desire for Wales's Objective One money to produce the same kind of turnaround.

Once-in-a-lifetime chance

But there is also widespread concern that the Assembly's strategy for spending the money lacks the vision of the Irish model.

The Welsh plans have been criticised as being fragmented and vague, and there are fears that Wales might not experience the economic transformation achieved by its Celtic neighbour.

Even with the match-funding from London, there will be continued pressure on Mr Morgan's minority assembly administration to make sure that the opportunity given by Wales's once-in-a-lifetime windfall is not thrown away.

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See also:

26 Jun 00 | Wales
Wales's Euro aid go-ahead
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