Brace for impact: Parliament starts scrutinising EU’s regional budget reform

Jean-Claude Juncker, President of the European Commission, reatcs before his speech at the European Parliament in Strasbourg, France, 13 March 2018. [Patrick Seeger/EPA/EFE]

EURACTIV gathered a first round of reactions to the European Commission’s proposal to reform the EU’s €373 billion regional funding programme as part of the bloc’s 2021-2027 budget. One thing is certain: the proposed cuts will be a major issue of dissent in the European Parliament.

The European Union’s executive proposed on Tuesday (29 May) to spend more of the bloc’s money on Italy and other southern states hit by the economic and migration crises, while giving less to the central European Visegrad Four countries.

With a budget of €373 billion for 2021-2027, the future Cohesion Policy can help bridge development gaps between the richer and poorer regions of the EU, the Commission said.

Commission proposes more spending on Italy and south, less on Visegrad Four

The European Union’s executive proposed on Tuesday (29 May) to spend more of the bloc’s money on Italy and other southern states hit by the economic and migration crises, while giving less to the Visegrad Four countries refusing to accept refugees.

In the European Parliament, MEPs are still sifting through the details of the Commission’s proposal. However, MEPs contacted by EURACTIV appear to be broadly supportive of what they have seen from the EU executive. They welcome in particular the Commission’s attempt at simplifying how money is distributed and the greater focus on five headline objectives.

But above all, MEPs are pleased that the Commission has maintained its existing three categories of regions, depending on their level of development. This means all regions are still eligible for the funds, which was a red line and a major concern for many in the Parliament.

Despite this, lawmakers say that the 4% budget cuts proposed by the Commission in constant prices (10% in current prices) are too deep.

“We can’t accept the decrease of the budget,” Constanze Krehl, a German social democrat MEP, told EURACTIV.

“The cuts are smaller than we feared,” but are still “higher than what the Commission said,” Mercedes Bresso, an Italian MEP and former Chairperson of the Committee of the Regions (S&D) added.

“I think it is absolutely necessary not to have any cuts on Cohesion Policy,” insisted Dimitris Papadimoulis, a vice-president of the Parliament. The Syriza MEP added that strengthening the “emblematic policy” could be a way to fight euroscepticism.

MEPs want to avoid the cuts and argue, instead, that the contributions of national governments should go up to 1.3% of GNI, alongside an increase to the EU’s ‘own resources’. “It is impossible to do more with less money,” Papadimoulis said.

A good starting point

But despite the cuts, there is much that the European Parliament welcomes.

“We will have to analyse the text but there are certainly positive elements,” Bresso underlined, “we can say that the Commission starting proposal is acceptable, even interesting, in a few questions”, the Italian MEP added.

“We need all regions on board to relaunch the European economy,” Bresso added.

The Commission’s attempt to further simplify the Cohesion Policy is another element MEPs are glad to see. “When it comes to simplification, the Commission has proved to be committed to move forward on this matter, we will see how is that translated and put in place”, Marc Joulaud (EPP, France) said.

“The bigger and the simpler the framework is, the easier is to access funds”, Andrey Novakov (EPP, Bulgaria), rapporteur for the Committee on Regional Development on this matter, told EURACTIV. Novakov praised that the fact that a single rulebook will now cover up to seven EU funds implemented in partnership with member states.

Fears of ESF centralisation

However, the proposed cuts to the European Social Fund (ESF) and its possible ‘renationalisation’ concern some MEPs. “There is a temptation to centralise this policy,” Joulaud warned.

“We fear that ESF becomes more a national rather than a regional policy, which has actually been the strength of the policy”, Bresse added.

According to Papadimoulis, this is just part of the “tricky presentation” of the structure of the funds to “to hide the existing cuts”.

The deep cuts to the Interreg programme also have Parliament’s attention, with Papadimoulis defending the scheme. “Those programs are creating links between regions and members states of the European Union,” he said

The question of conditionality is also likely to be an issue in the upcoming negotiations. “For me it is very difficult, and for my political group, to accept the macro-economic conditionality. This is for us a red line and we will fight against it”, Krehl alerted.

A wave of funds from the East to the South?

MEPs agree with the Commission in their assessment on the distribution of funds, pointing out that countries in the Eastern Europe have seen an important development of their economies in the past few years, partly thanks to the generous allocation of EU funds in previous budgets, MEPs underline.

At the same time, the Parliament acknowledges that the situation is far less rosy in member states hardest hit by the financial crisis such as Italy, Spain or Greece, which would benefit from increased cohesion funding.

“We see a strong restoration of the balance between the East and the countries in the South, which have been touched both by the economic crisis and the migratory crisis”, Joulaud underlined.

However, it might be dangerous to “to translate that debate into a fight between the European south and the European east”, Papadimoulis warned. It would be better joining forces against the cuts, the vice-president stressed.

The Parliaments acknowledges this might be a source of problems in the upcoming negotiation with the Council. “In places like Poland where the cuts are around 25%, you need a good explanation”, Lambert Van Nistelrooij (EPP, Netherlands) said.

The information, and even the leaks, coming out of the Commission on Cohesion Policy reform have been contradictory for a number of months. The Parliament believes that this has been the result of the tension within the EU executive, which they believe is divided on the issue.

These divisions could have an impact as the Parliament and the Council will have to negotiate on the final legislative proposal. The EU Cohesion Policy, Bresso says, is the only development policy that has ever worked, “so we must pay attention not to dismantle it”.

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