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25/07/2016

Is cohesion policy under threat?

Euro & Finance

Is cohesion policy under threat?

Changes to cohesion policy post-2020 could have a devastating impact on the bloc's regions.

[josef.stuefer/Flickr]

Cohesion policy, the European Union’s main investment policy tool, is soon to face a struggle for survival. One that could threaten the core values of solidarity and convergence of regional disparities on which the EU has been built up, write Nikos Lampropoulos and Francesco Molica.

Nikos Lampropoulos is the Brussels Representative of the North Aegean Region and Francesco Molica is the Brussels Representative of Calabria Region.

While member states have been busy squabbling over the refugee crisis or the eurozone’s plight, another key pillar of the European project is quietly going to be called into question.

According to the official schedule, the European Commission is expected to outline reforms of post-2020 regional policy only next year. Formal legislative proposals to the Council and Parliament will likely ensue in 2018. However, the debate on the future of the European Structural and Investment Funds (ESIFs) has already begun.

Judging from the preliminary work underway at DG Regio as well as from the opinions that are taking shape within some national governments, the hints are that the Cohesion Policy after 2020 won’t bear any resemblance to the current one. In fact, there is a high possibility that it might face a radical revision implying either a severe cut in resources or scrapping them altogether with a range of financial instruments replacing the current form of grants. Both these scenarios could have a devastating impact on Europe’s regions and ultimately deal a serious blow to European integrity.

Conventional wisdom in several countries tends to look to the structural funds as a mere transfer of subsidies from rich to poor territories of the EU. It is true that out of €454 billion for the 2014-20 period, nearly 70% goes to less developed regions, i.e. with a GDP per capita less than 75% of the EU average. However, this is only one side of the coin, directly linked to the European Treaties, which explicitly state the goal of “reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions”.

Nonetheless, it is not only a matter of solidarity. The other side is the economic rationale. The convergence of regional economies is obviously a driver for growth within the EU single market, leveraging the European economy as a whole, growing the size of the internal market and increasing the competitiveness of European products and services.

The cohesion policy plays a pivotal role in incentivising regions to implement European strategies and policies and ultimately ensures that the promotion of regional development goes hand in hand with EU objectives. Cross-border cooperation programmes have contributed to the building of a European identity while preserving local specificities.

Looking at the multiple benefits of the EU regional policy the question that should be asked today to the European institutions is: Why fix what isn’t broken? The least we can say is that after the 2020 Cohesion Policy should be preserved in its current form, and possibly reinforced. Several studies, such as a recent analysis of CPMR, stress that regional disparities are again on the rise.

Against this background, European regions are in the process of launching a political initiative to make the case in favour of preserving the Cohesion Policy after 2020. It is important that European, national and regional decision-makers join their forces to support this action. For dismantling the cohesion policy would mean shaking the European building from the grounds at a time Europe is going through an existential crisis.