Agreement on EU regional funding: Germany gets less

The Castle Braunfels in the western state of Hesse. [EPA-EFE | Armando Babani]

After a tough struggle, the three-way negotiations on EU structural funding rules have been concluded and white smoke rose from the co-legislators. EURACTIV Germany reports.

The Parliament, Council and Commission were able to agree on how the regional funds should be distributed in the 2021-27 period. Relevant for Germany is a reduction for more developed regions, because all “old” federated states in the Western part of the country fall into this category.

The co-financing rates, the share of project costs that the regions themselves have to raise, were decreased for more developed regions. In the last seven-year budgetary period, the Union paid half of expenses. Going forward, West German states will have to bear 60% of the costs of EU-funded projects themselves.

“This has an increased impact on Germany” because there is a higher number of more developed regions here,” Green MEP Niklas Nienaß told EURACTIV Germany. During the talks, in which he was one of Parliament’s negotiators, he demanded that the rates be maintained at 50% but ultimately did not succeed.

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Safety net for Saxony

The lower co-financing rates could have affected one of the so-called “new” federal states: Saxony, which under the new rules would be the first East German state to move from a transition to a more developed region, but for the safety net created for regions that jumped categories.

Instead of the 40%, the EU will still pay half of the project costs here.

The rates for transition regions (including all eastern German states except Saxony) remain at 60%. The Commission originally wanted to reduce them to 55%, but the Council and Parliament agreed to maintain the status quo. The same applies to less developed regions (85%), although there are none of these in Germany.

Extra money is available for regions that involve their citizens more in project planning. So-called “community-led local development” (CLLD) involves civil society in decision-making. Brussels rewards this with an additional 10% in co-financing.

So if, for example, North Rhine-Westphalia, as a more developed region, launches a CLLD project, the EU will take over 50% of the costs “Now there are hardly any arguments against citizen participation; it is the cheapest thing to do,” said Nienaß.

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Opposition to digitalisation in administration

In one matter, Germany stood in vehement opposition, Nienaß said: the digitalisation of administration.

The Commission wanted to standardise the administration of structural funds, and to do so, all states should use the ‘Arachne’ system, which collects data on the whereabouts of EU funds.

There is currently room for improvement. For example, subsidies went to Hungarian universities, which were then privatised and converted into foundations. In Brussels, receipts were then received that only said “money went to the foundation,” but not what exactly happened to them, explained Nienaß.

The new system would have made comparisons between countries easier, and irregularities would have been noticed more quickly.

However, it was not Hungary that resisted the introduction of Arachne in the Council but Germany, together with Austria. This resulted in the programme not being part of the accord.

Nienaß suspects that the general problems with digitalisation in these two countries are behind their opposition, partly due to their federal structures. Federal, state and local authorities all use different systems, so an EU-led change would have been difficult to implement.

At the same time, the blockade of Arachne will keep transparency limited and play into the hands of those who use EU regional funding in ways not aligned with the programme’s original intent.

[Edited by Zoran Radosavljevic/Vlagyiszlav Makszimov]

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