Divisions over economic criteria in cohesion policy negotiations

Berlin is one of Germany's largest beneficiaries of EU structural funds. [EPA-EFE | Clemens Bilan]

The latest round of negotiations on cohesion policy between the European Parliament, Commission and Council will take place on Thursday (15 October), focusing on how strictly the flow of money is regulated and whether it should be distributed according to economic criteria. EURACTIV Germany reports.

A new EU budget also means new rules for cohesion policy. A law will regulate how exactly the money from the structural funds will be distributed to the regions. This “Common Provisions Regulation” or “CPR” is currently being negotiated in the trilogue between the EU’s institutions.

If economic criteria are taken into account, this would mean whoever can show good economic data will receive more structural funds.

“This is the most difficult point of negotiation,” Green MEP Niklas Nienass, who represents the Parliament in the trilogue negotiations, told EURACTIV Germany. The parliament is against it because this way wealthy regions receive more than poorer ones, he explained.

On this issue, Nienass sees little room for compromise.

The question is binary: either economic indicators are consulted or not. It is mainly the so-called “net contributors,” countries who pay more into the budget than receive in support, who are in favour of this and they can block any change to the Council’s negotiating mandate.

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Compromises possible

In other areas, however, compromises could be reached on Thursday. The terms are unwieldy, but the challenges are increasingly clear. In addition to the conditionalities, transfer payments and higher co-financing percentages are also being negotiated.

The possibility of transfers is one of the Council’s requests. This is a question of softening the rules that govern how money can be shifted between the various structural funds. Countries could then shift some of the money, for example, from the European Social Fund (ESF) to the European Regional Development Fund (ERDF), which could mean more support for companies.

The second point of contention, co-financing rates, is related to this issue, as the Commission and Council want to see EU funds cover a lower portion of a project’s costs. Project partners would then have to provide higher amounts in order to be eligible for cohesion funding at all.

Both demands could also lead to a shift from social projects to the economy, the Greens fear. Organisations like Diakonie, a charitable organisation of Protestant churches in Germany, have less budget than large companies. The Commission, on the other hand, argues that in this way more money is invested in regional development overall.

However, there are already compromise proposals on these issues, and it will be possible to agree on figures, Nienass thinks.

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Missed opportunity in climate policy

These issues form “block six” of a total of eight in the CPR negotiations, and the contentious point of climate protection is looming on the horizon.

The Greens demand strict climate conditions for the distribution of structural funds. However, the MEPs are bound by their negotiating mandate, decided by the previous European Parliament in spring 2019, before the Greens made a strong showing in the EU elections. The mandate is therefore more reserved than Nienass would want.

In addition, the Commission’s proposal for the CPR comes from a time before Greta Thunberg provided an impetus for a revival of the climate movement and was therefore less ambitious than the current Commission might have been.

But Commission President Ursula Von der Leyen did not have a new proposal drawn up, which Nienass considers a missed opportunity.

It is likely that, for example, the “Do No Harm” principle will be included in the final agreement to prevent climate-damaging investments. “But there is a world of difference between ‘doing no harm’ and active climate protection,” he said.

[Edited by Zoran Radosavljevic, Vlagyiszlav Makszimov]

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