THE opening shots in a battle over who controls Gwent's job-creating structural funds were fired yesterday.

The Assembly's European Affairs Committee heard from the European Commission and the UK Treasury, who are fighting for the right to distribute the cash after 2006.

At the moment the Gwent Valleys are halfway through the six-year programme of Objective One funding. The money from the European Commission has already created and safeguarded thousands of jobs in a bid to regenerate the area.

In May ten new poorer countries join the European Union, pushing the Gwent Valleys out of the most- deprived bracket.

However, the EC is offering around 80 per cent of the current funding for up to seven years beyond the programme's finish in 2006.

Now a row is brewing because the UK government want to leave the whole programme after 2006 because they give more money than they get back in aid.

The Treasury's Mark Parkinson told the committee that the government would continue to fund West Wales and the Valleys, but directly from Westminster, rather than via Brussels.

But Mr Parkinson was unable to guarantee an amount or the length of time funds would continue.

Manfred Beschel, head of UK and Ireland structural funds unit at the European Commission, says that if money continues to come from the EC Gwent will get guaranteed long-term assistance.

Mr Beschel also said he was convinced that the Assembly administration was using the money to get maximum benefit for Wales.

Mr Beschel told the Argus: "Wales is definitely on the right track. Some parts of the area have advanced more quickly than others, but the system has flexibility to adapt."

South Wales East Assembly Member Mike German says the best way for Gwent to achieve long-term benefits is for the money to continue coming from Europe.

Mr German said: "The UK Treasury want to repatriate the structural funds from 2006. The trouble with that is that no UK government can guarantee any funding after the next election.

"What we need in Wales is long-term stable investment, and only the EC can guarantee that."

Negotiations begin in May, with a decision expected to be made late next year.