Seven regions across Europe are facing the same situation as Ireland. Just as most of the State is due to wake up on January 1st, 2000 looking to a future not lagging behind the rest of Europe, so too are Hainaut in Belgium, East Berlin in Germany, Cantabria in Spain, Lisbon in Portugal, Corsica in France, Flevoland in the Netherlands and the Highlands and Islands of Scotland.

As in Ireland, the gross domestic product (GDP) per head in these regions has risen above 75 per cent of the European Union average.

Like Ireland, therefore, they are set to lose Objective One structural funding at the end of 1999.

As is not the case in Ireland, however, these are regions (Flevoland excepted) with longstanding historical as well as economic bases.

The only member-state to have redefined its regions in a way similar to that now being proposed by Ireland is the UK, which divided Cornwall and Devon into two separate areas last year.

This, however, was part of a huge national overhaul of local government structures initiated by the Conservative government in 1992. Its aim was to reduce bureaucracy and costs, and take account of cultural variations.

The final results of this revision were submitted to Eurostat for consideration in 1997 and came fully into being on April 1st, 1998.

According to Ms Hika Gurtsbrien, an EU spokeswoman for the Regional Affairs Commission, "It made more sense to separate Cornwall from Devon and the rest of south-west England."

Cornwall, she says, is sparsely populated and has its own culture, language and Celtic background.

Beyond Britain and Ireland, the EU recognises 173 regions. Although, like Ireland, Portugal and Greece have qualified in their entirety for Objective One funding until now, these are actually made up of seven and 13 regions respectively. If and when these pull themselves out of needing Objective One status it would be "unthinkable", according to a spokesman at the Greek embassy in Dublin, for his government to alter regional boundaries.

"There is a long tradition of administrative division," he says. "The regions have their own government assemblies. They are based on economic as well as historic and cultural criteria which in many cases go back to time immemorial.

"Thessaly, for example, goes back to ancient times and the Peloponnese was the first independent Greek state. These could not be changed if one day, hopefully, they could be as successful as Ireland."

In Germany, which has Europe's greatest income disparities (Hamburg's average per capita GDP of 195 per cent of the EU average sits alongside Thuringia's 40 per cent), five lander and East Berlin are regarded as needing Objective One funds from Brussels.

Germany's lander have existed as administrative regions since 1949. Their governments have competency over education, the local police force, infrastructure and local taxation, as well as sharing "mixed competency" with the Federal government over such matters as VAT collection. The historical and cultural dimensions to the lander, a German diplomat in Brussels told The Irish Times, "date from the Middle Ages and the Reformation".

Just one of the 12 Netherlands provinces has had Objective One status. The reclamation of Flevoland was completed 13 years ago. Although GDP per head is on a par with the rest of the Netherlands, the need to travel out of the province to Amsterdam to work enabled Flevoland to qualify for Objective One funding. Hank Kuiper, information officer with the Flevoland government, explains that the provincial governments have competency over local matters including roads, waterways and local taxation.

"Most of the provinces of Holland are very old," he says. "In fact there were provinces before there was Holland. In the mid-1600s they united to become Holland. They are very separate and individual."

Spain is anticipating the phasing out of Cantabria's Objective One status over the next eight years. Mr Javier Gonzalez, First Secretary at the Spanish embassy in Dublin, says that the 17 autonomous communities as set out in the Spanish constitution were established in 1978.

"Regional and national feelings are very important in Spain. Our history is one of the inclusion of several kingdoms and principalities under the sovereignty of the king.

"In the 18th and 19th centuries these were more centralised, though with the reluctance of communities. There are clear differences of language and culture between them."

The fervour with which loyalty to the communities is held varies, he says, the most intense being in the Basque country and Catalonia.

Each of the 17 communities has an elected assembly confronting vastly different problems. Madrid, for example, with its five million inhabitants, faces different issues from its neighbouring rural areas.

Legislation in Italy has, in the past few years, devolved increased powers to the 19 regione, including increased taxation powers, so as to decrease the amount of money going to the regions from central government. As with the Netherlands provinces, most of the regione predate modern Italy.

They were formally established in the 1948 constitution and their inhabitants are renowned for their local patriotism. Seven regione, mainly in the southern mezzogiorno, qualify for Objective One funding.

According to an Irish diplomat in Brussels who did not wish to be named, the Irish are better known for their antipathy to regional divisions and fierce loyalty to the nation. EU classification has, in part, been a recognition of this, he says.

The proposal to divide the Republic into two regions for the purposes of retaining Objective One funding for the west, Border counties and the midlands, will, he says, "require very intense discussion".

The initial 13-county proposal, he suggests, would have had a far smoother path through Eurostat than the current 15-county one, which detaches Kerry from Cork in the south-west and Clare from Limerick and North Tipperary in the mid-west. "It makes things a lot more complicated."

Such complications are unfortunate given the time constraints, he says. Negotiations with Eurostat must be completed early next year.

"It is very tight. The Eurostat people may well want detailed guidance on whether Ireland has enough devolved power to the regions."

In the Dail on Wednesday, the Taoiseach said that the proposal the Department of Finance was making to Eurostat would not require any primary legislation. If the model was not accepted, he continued, then there "could" be legislation.

This, he continued, might still not be sufficient to retain Objective One funds for the 15 Western and Border counties for another six years.

"So we may be back here with a different arrangement."