EU kicks off negotiations over regional funding budget

  

EU institutions officially launched negotiations yesterday (12 July) on the amount of regional funding that will come under the bloc's next seven-year budget (2014-2020). Tough debates lie ahead, including whether to subsidise oil and gas distribution networks.

In a prolonged voting session that lasted for six hours on Wednesday (11 July), MEPs in the European Parliament's regional committee threw their weight behind the EU's proposed funds regulation, which will change the way regional money is allocated for the 2014-2020 period.

The EU's so-called Cohesion Policy is the second biggest envelope in the EU budget, after agriculture. In its proposals tabled last year, the European Commission has asked for €336 billion to be injected into the bloc's regions over the next seven years.

The Parliament vote on Wednesday has given MEPs a mandate to negotiate the EU's Cohesion Policy component of the next multi-annual budget with the member states in the EU Council of Ministers. A political agreement is expected by the end of the year.

“The vote of yesterday was the result of the extremely intensive efforts of many colleagues,” Polish MEP Danuta Hübner (European People's Party), chair of the Parliament's regional committee, told a press conference on Thursday (12 July).

Indeed, several MEPs, commenting during the 11 July voting session, said that it was important to reach an agreement in order to start the so-called trialogue – the official negotiation on legislation between the Parliament, Commission and the Council – despite obvious differences between political groups and differences of interest between member states.

This law is the first one to enter the trialogue on the EU's next multi-annual financial framework (2014-2030), after eight months of discussions with MEPs, regions, associations and lobbyists from all over Europe and “endless meetings”.

“We did put ourselves under pressure,” said German Christian-Democratic MEP Joachim Zeller who worked on the directive on behalf of the centre-right EPP group of the Parliament.

Kick-starting economic growth

The two MEPs who drafted the Parliament resolution, Dutch Christian-Democrat MEP Lambert van Nistelrooij and German Social-Democrat MEP Constanze Krehl, managed to squeeze more than 3,000 proposed amendments to the text given by the Commission into around 100 compromise articles.

Putting hard figures on their ambitions will be their next key challenge. “We have to fight for it within the Council and Commission and we need the budget for this cohesion policy,” Krehl said. 

“You need a certain critical mass for investment, that’s why we expect a decent budget for cohesion,”  Hübner said. 

The EU's cohesion policy for 2014-2020 comes amid renewed calls for Europe to help re-start economic growth as the continent struggles with the worst economic crisis in decades.

“We need to have new driving forces for growth and jobs – but leaders just a year ago could not even spell cohesion policy,” Zeller said.

“These are special times and this is a special policy,” van Nistelrooij said, speaking after the first trialogue round of talks with the Council and Commission. “We are in a crisis. This regulation brings specific instruments to react and have a higher power than in the pas. We have instruments for all regions, not just the poorer regions.”

Oil and gas networks or clean energy?

Marking their support for the EU's 2020 goal of boosting low-carbon energy sources, MEPs rejected on 11 July what had become a controversial amendment, laid down by Polish MEP Jan Olbrycht, of the centre-right European People's Party (EPP).

Olbrycht had asked in his report to use regional funds for the “construction and modernisation of electricity, natural gas and oil transmission and distribution networks, natural gas and oil storage infrastructure, as well as liquefied natural gas infrastructure.”

Talking to journalists after the vote, Olbrycht said he was disappointed but did not give up hope of re-introducing his amendments later on. “We know the Council also has [in its version of the EU budget] the eligibility of gas [projects], so we will see what the final result will be,” the Polish MEP said, suggesting that tough negotiations with member states lie ahead.

Romanian MEP Victor Boştinaru, speaking for the Parliament's Social-Democrats, took the opposite view, saying “the cohesion policy is now very green”. Among other achievements, he mentioned that cogeneration – the simultaneous production of electricity and heat – will be subsidised in the future with cohesion money.

Pursuing their green inclinations further, MEPs introduced an obligation for member states to use at least 12% of cohesion funding for environmentally-friendly projects, with energy efficiency in buildings a top priority.

Under the amendment, a percentage of the European Regional Development Fund – which is part of the Cohesion Fund - will have to be earmarked for green projects. Poorer EU regions would have to use at least 6% of their ERDF funding for those while the more developed 'transition' regions and richer regions would have to use 20%.

Flexibility and accountability

Other changes are in the pipeline, with MEPs suggesting to introduce more flexibility in the way member states can access EU funds. But this will only come in exchange for more accountability and efficiency at national level.

“We made cohesion policy simpler, so people can use it in a easier, more efficient way – under a control system. We want to make sure we put EU money in really good projects,” Krehl said.

However, it is not yet clear how this will work in practice as the indicators to measure the results of projects are still to be discussed. MEPs rejected “common indicators”, prompting green groups to propose “tailor-made” indicators.

Thematic objectives

One far-reaching change is the so-called 'thematic concentration' of funds into certain categories. Under these rules, the EU's richest regions would be requested to spend 80% of their ERDF funds in at least three thematic objectives (plus one of their choice from an extensive list of options):

  • strengthening research, technological development and innovation;  
  • enhancing the competitiveness of smal-l and medium-sized enterprises, the agricultural sector and the fisheries and aquaculture sector;
  • supporting the shift towards a low-carbon economy in all sectors and sustainable transport.

These requirements would be less stringent for transitional and poorer regions, with minimum spending percentages there falling to 60% and 50% respectively.

Positions: 

FEAD, the European Federation of Waste Management and Environmental Services, was pleased with the fact that MEPs adopted provisions on ex-ante conditionality in the accessing of EU funds. This will lead to an increased performance of regional policy and an effective use of the different EU regional policy funds. FEAD said in a statement.

"The possibility to suspend payments in cases of failure to fulfil an ex ante conditionality is also of utmost importance. It guarantees that Member States and relevant authorities at regional and local level have stronger incentives to ensure the correct transposition and implementation of EU waste legislation," FEAD added.

Commenting on the final vote Sébastian Godinot, Economist with the WWF European Policy Office, said: “We are still worried that in the Cohesion Fund support for cogeneration systems, that produce both heat and power, will be subsidized thus further undermining the carbon market. Commission and Council have rightly rejected it. This will have to be corrected in the next steps of the negotiation.”

"The European Parliament's message today is clear: the cohesion policy, representing over a third of the EU budget should be used as a tool to stimulate economic growth and bring it closer to the citizens, in particular by involving regional authorities . This position resembles that of Francois Hollande, which offers a decentralized management of EU funds in France, " said social-democrat MEP Patrice Tirolien in a statement after the vote.

"Experience shows that some Member States share the funds to projects in their area, without cooperation or real European added value. So I fought for the allocation of funds is done, not by member state, but for each program of cooperation," said French centre-right MEP Marie-Thérèse Sanchez Schmid.

"We also broadly welcome thematic concentration and support the list of investment priorities proposed by the Parliament" he noted. "But it remains to be seen if this concept will also be applied with sufficient flexibility and involvement of local and regional authorities," said Polish centre-right MEP Jan Olbrycht, who followed the legislation on behalf of the European People Party's Group in the European Parliament. 

Timeline: 
  • 24 July: General Affairs Council to discuss MFF;
  • 30 August: Informal GAC to discuss MFF;
  • September: Cyprus Presidency will “test some figures"
  • 18-19 October: EU summit to discuss MFF
  • 13 December: EU summit to reach agreement on MFF.
  • 31 Dec. 2012: Negotiations on the EU's next seven-year budget expected to wrap up
  • 1 Jan. 2013: Ireland takes over presidency of the EU
External links: 
  • Friends of the Earth Europe: Website
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