MEP Novakov: EU Cohesion policy needs a tough lady like Elisa Ferreira to defend it

Andrey Novakov at the hearing of Elisa Ferreira, Commissioner-designate, Cohesion and Reforms. [European Parliament media library]

Rule of law should be a matter of respect everywhere, not only in the Cohesion Policy. But ordinary beneficiaries should not be held responsible for the action of the whole country infringing common EU standards, MEP Andrey Novakov told EURACTIV Slovakia in an interview.

Andrey Novakov is a Bulgarian MEP from EPP/GERB and the co-rapporteur of the European Parliament on Common Provisions Regulation for Cohesion Policy for 2021-2027) In an interview with EURACTIV Slovakia’s Marián Koreň, he explains the Parliament’s position on a new set of rules on how Cohesion Policy funding should be spent from 2021 to 2027.

At the hearing of Commissioner-designate for regional policy and reforms, Elisa Ferreira, you had a chance to ask the first question. Overall, how do you rate her responses? Did her commitment to fighting for an ambitious Cohesion Policy sound convincing?

Her performance was good. She was well prepared, and she answered most of the questions, including the one I asked. I am satisfied with the message she sent during the hearing, supporting Cohesion policy and willing to fight for the maximum budget possible. She performed well, she is experienced as she has been a member of parliament and has occupied important positions in Portugal. The European Cohesion policy needs a tough lady like her to defend it.

Unsurprisingly, MEPs present at the hearing focused mainly on Ferreira’s views on the future of the EU Cohesion Policy. Of greatest concern are the proposed 10% cuts in Cohesion funds after 2020. Are the cuts the most pressing problem in the Commission’s proposal?

It is just one of our concerns. I admit I was concerned when I saw the Commission’s proposal to cut the Cohesion fund by half and the general budget for the Cohesion policy by 10%. Therefore, Parliament ’s position is that we have to recover the funds. Let’s be honest: we can reassure the regions that the EU is right behind them only if we can prove that our policy is covered with budgets. It can’t be just about resolutions, wishes or dreams, it is about concrete actions with commitments in our budget.

So, yes, cuts are a problem, but another concern is the low implementation rate that we are monitoring now.

MEPs want to maintain EU Cohesion Policy funding at the 2014-2020 level. How do you want to achieve this, since the EU cannot count on UK’s net contributions to the EU budget after Brexit?

From my point of view, it is manageable. I don’t believe that the new priorities and challenges that lie ahead of the EU should be in contrast with our traditional policies. Unfortunately, there are still regions which are depending on the Cohesion Policy to develop their basic infrastructure.

Brexit is a hard hit for the EU, but not only for its Cohesion Policy. The gap in the budget will be roughly €80 billion for seven years. That is a significant portion which we will be missing. However, the UK should pay some compensation after Brexit, which should be used as a contribution to the EU budget. Member states should agree to adopt their fees to the EU budget in order to at least maintain a significant level of finances at different fields: cohesion, common agricultural policy, youth education, innovation. So, it will be tough to fulfil this, although not impossible. Moreover, we should do it as fast as possible.

What will be the consequences of these cuts? Do you see it as a political or rather economic threat?

It is easy to answer that it’s both, but it’s true. First, the signal that the EU is sending to those member states which will be hit the most by the cuts is negative and very hard to explain to the local people, SMEs, family businesses and mayors. Secondly, we are talking about roads, railways, airports, hospitals and support for job creation. Of course, this will have a very negative economic impact, especially if the cuts are severe. But we have adopted a very strong position in the Parliament – and I’m not talking just about numbers – by a large majority, which gives us the strength to defend it in the Trialogue.

At the hearing, Ferreria emphasized several times that it is up to the member states and the European Parliament to decide what will be the size of the EU budget and thus also the Cohesion Policy. She called for the adoption of new EU budget own resources. Do you agree?

I believe there should be a way to reach a budget to the extent we need. Saying that we need new taxes is a quite strong statement for me. As I said, national contributions should be optimized, and I don’t think it will be so difficult to contribute more money to the EU budget, especially for the large member states.

As regards the new own resources, I believe that the budget of the EU will be truly independent only if it is made up of the own resources and not the payments of the different governments.

The European Parliament already approved the proposed reform of the European Union’s system of own resources which includes common consolidated corporate tax base (CCCTB), plastic tax and a contribution based on the EU emissions trading system. Do you think new taxes should be introduced in the new MFF?

I would be very careful before saying that I agree with new taxes, particularly about new aviation taxes. A lot of people who weren’t able to fly within the Union – even though the freedom of movement is one of the basics freedoms we have – will have problems to deal with it. Hence, I am not in favour of creating new financial burdens for airlines.

But when it comes to the environment, that’s a different thing. In any case, before making my own judgment, I would like to see more details concerning, for example, what will be the object of plastic taxes. Basically, however, I don’t think the EU should create more burdens and fees for its citizens and businesses.

Besides the cuts, what other sticking points do you expect in the ongoing discussions on common provisions regulation?

Although we are moving on thanks to the Romanian and Finnish presidency, there are still a lot of issues pending. Out of eight blocks, just three have been a matter of debate. I believe that we can close these three issues at the end of the year. At the moment, we are debating programming, monitoring and control and to the same extent enabling conditions. These are not politically sensitive issues. But when it comes to the co-financing rate or categories of regions, that will be very tough political trialogue.

Ferreira was quite clear in supporting the new conditionality linking EU Funds to the respect of the rule of law principles. How do you see the European Commission’s proposal to cut funds to EU countries that do not uphold the rule of law?

Rule of law should be a matter of respect everywhere, not only in the cohesion policy. Each country should apply to the procedures and rules of law and should be object of very strong EU reservation. But the devil is in the detail. I think that responsibility of following these procedures should be on managing authorities and institutions controlling EU funds and not on farmers, students or family companies. Another side of the coin is that errors in EU funding sometimes don’t have any financial impact. For example, you don’t comply with some procedure, but you don’t harm European budget. Here we need to distinguish. Can you imagine a small beneficiary of EU funds held responsible because of the action of his whole country infringing the principle of rule law? So, we need instrument ensuring that our countries follow common understanding and standards, but it shouldn’t be used on the carrot-and-stick principle. Ordinary beneficiary should not be held responsible for complying with these standards, except those who are personally responsible.

So, are you in favour or against the European Commission’s proposal?

There has already been one vote and I voted in favour of it.

The Parliament and the Commission disagree over a new set of rules concerning macroeconomic conditionality. Why? What impact could this have on the member states?

Macroeconomic conditionality is still a matter of very passionate debate. Traditionally, it is a debate between the left and right wing of the Parliament. During the crisis, we need a mechanism restricting or at least preventing the member states from overspending and creating unsustainable debts. I believe macroeconomic conditionalities are helpful for the strength of our economies – it is kind of a handbrake for those member states, which are more likely to contract more debts and spend more than they receive. I’m in favour of that. Of course, when it comes to the calculation of debts and co-financing of the cohesion policy, that’s another whole new story.

You have already mentioned that EU-funded programmes are being implemented very slowly. In the second half of the programming period, the implementation rate in Bulgaria stands at 34%. What are the greatest obstacles to the absorption of EU Funds?

I remember the last programming period, which we concluded at more than 99% rate. Except for 2007-2008, Bulgaria is among the countries which perform very well. Now, what gives me more confidence, is the amount of contracted funds. That is a significant portion, moreover, we have another year and several months to reach a maximum of contracts possible. Here, I am positive, but I’m much more worried about the EU average. The main reason for this delay is the postponement of the beginning of the programming period. The European Commission approved the Operational Programmes very late in 2015. I would like to finish our job as fast as possible. Managing authorities and beneficiaries know in advance what are the exact rules and requirements in order to receive EU funds.

In recent years, Slovakia has been unable to draw all the financial allocations and have even lost tens of millions in decommitment. Is Bulgaria, too, in danger of losing available means from the Cohesion Policy?

No, I don’t think such a scenario will happen in Bulgaria. I already know very well the administration dealing with EU funds. It can handle the situation. Of course, it depends on what numbers we are considering, but I believe that the absorption curve will go up sharply in the upcoming months.

Where do you see the most tangible benefits of EU funds to the regional development in Bulgaria?

There is a broad variety of projects implemented in Bulgaria – in almost every sphere you can imagine. Traditionally, we started with roads, highways and high-speed railways. This has been our priority since 2010 and there are very good results. And it isn’t just about cars, environment, road safety – which is extremely important – but you can see jobs created, rising number of companies willing to invest there, increase of wages and living standards. These investments have a multiplying effect. Then education: I don’t believe there are many schools or kindergartens in Bulgaria which are not renovated with the aid of the Cohesion policy. As regards the environment, I can’t count how many wastewater treatment facilities have been built with EU funds. But this is just a traditional part.

And where else?

It is also very important for companies. A lot of Bulgarian companies are dealing not only with European funds but also with financial instruments. Recently, thanks to EFSI (the European Fund for Strategic Investments, also known as ‘the Juncker plan’) there has been €200 million investment in the city of Peshtera creating jobs in one of the local companies. The Cohesion Policy is touching almost every aspect of people’s lives, mainly in a positive way.

The Bulgarian region North-West is still the poorest region in the EU despite the financial support from the Union. Is the Cohesion Policy helping this region catch up the rest of the EU?

This region shares a border with probably the poorest region in Romania and with probably the poorest region of Serbia, which is not helping this situation at all. It is a very complex problem we have been facing since the fall of communism and we have struggled to solve it. Slowly but surely things are getting better. A bridge between the North-West region and Romania was built, and I have a big hope that it will bring more investments. The government is now investing in a road which would speed up traffic between the region and Sofia. I can see that more and more companies are making the decision to invest there. I think that the time when people decide to come back (to the North-West region) is not that far away.

And what is the general opinion about the Cohesion Funds? Last Eurobarometer on citizens’ perception of Regional Policy shows that only 43% of Bulgarians have heard about EU co-financed projects in the area where they live. It is quite surprising given that Bulgaria is among the biggest beneficiaries of the EU Funds.

I am surprised as well because more than 75% of Bulgarians are pro-European. So far, a lot of effort has been made to increase awareness of what the EU is doing in Bulgaria. My personal impression is that most of the Bulgarians know about investments made by the European Union. Partly it is because EU funds receive very good media coverage. Secondly, it is also thanks to the project visualisation because every bus, school or hospital which is co-financed by the EU is heavily branded with the EU requirements and flag. EU funds

Is the European financial support perceived as the greatest benefit of being part of the European Union in Bulgaria?

No, I wouldn’t say that. Although I don’t have the confidence to speak on behalf of the whole population, I think it is not just about funds, but the freedom we regained after 45 years of communism. There are people in Bulgaria who can compare it very well. And they also understand what it is to travel only with your ID. And mostly those who are more economically active are aware of what it is to have access to a 500-million people market. Now, especially because of Brexit, a lot of Bulgarians have recognized how important the European Union is. They have relatives and friends living in the UK, who are under big stress because they have no idea what will happen next month.

[Edited by Zoran Radosavljevic]

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