Danish presidency scolded for neglecting EU regional policy

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As negotiations over the EU’s 2014-2020 budget move forward, the Danish EU presidency is being criticised in Parliament for paying little attention to regional policy in Europe's future financial framework.

Nicolai Wammen, Danish European Affairs minister, faced criticism in the European Parliament for paying little attention to regional funds, which represent the EU's second largest budget post after agriculture (see background).

Denmark is a net contributor to the EU budget and sees little money back from regional funds, which are transferred mainly to poorer regions in the South and East.

“Cohesion Policy does not play a central role for the Danish presidency," said Lambert van Nistelrooij (European People's Party), coordinator on the committee on regional development in the European Parliament.

"We so far have not been consulted or involved,” the Dutch MEP said.

Wammen said he would bring negotiations “significantly forward”, assuring the issue will be on the agenda of the April and June meetings of the General Affairs Council, which brings together the foreign ministers of the 27 EU countries.

The Danish presidency were to hold a first round of budget talks with foreign ministers today (27 January) to discuss the "priorities" and the budget "volumes" they are ready to consider, a diplomatic source said.

“Not all member states were happy, but we wanted to continue the tradition of the Polish presidency,” Wammen told the MEPs.

Poland, which was at the EU's helm during the second half of 2011, made regional funding a core element of its presidency programme. Poland is the single biggest net recipient of EU funds.

Danish-Polish presidency comparison

The MEPs complained that they had not received a schedule of ministerial meetings on regional funds, unlike in last year’s Polish presidency of the EU, which focused on the budget negotiations and on cohesion funds.

“The way we work may be a little bit different, but the aim is the same,” Wammen said, trying to assuage the MEP's concerns.

The Danish minister said he does not expect negotiations on the 2014-2020 EU budget to take off during the Danish presidency but said they will provide a solid basis for discussions to follow.

The negotiations should be completed in the second half of this year, when Cyprus is at the EU's helm, he said.

One of the Polish presidency’s priorities was to avoid any cuts in the amount of financial support that is provided to Central and Eastern European countries in the framework of the European Union's regional policy.

Like the other countries that joined in 2004 and 2007, Poland sees EU regional funding as a key topic as they count among the main beneficiaries of EU money. Denmark, like the UK or Germany, is a net contributor to the budget and benefits less from regional policy, which is designed to help the less developed regions.

Wammen said, however, that the Danish presidency will represent all the member states during the negotiations at ministerial level and will not lead talks governed by national interests.

Germany, France and the UK: ‘Net losers’

As negotiations move on, voices are being raised among the net contributing countries to make a better use of the regional funding.

Open Europe, a British eurosceptic think tank, published an analysis of how much the UK receives back from its EU regional funding contribution.

“Over the 2007-2013 EU budgetary period, the UK is contributing roughly £29.5 billion to the EU’s structural and cohesion funds, and getting back around £8.7 billion, making it the third largest net loser from the funds, after France and Germany,” the report says.

Some relatively poor areas in Britain lose out substantially. “The West Midlands, which has the lowest disposable income per capita in the UK, pays £3.55 to the structural funds for every £1 it gets back. Merseyside, which has a disposable income of 88% of the UK average, pays in £2.88 for every £1 it gets back”.

The report's conclusions were unequivocal. The British government, its said, should "seek to bring regional policy back to the UK." "The economic, social and democratic arguments clearly point in favour of this policy direction,” said Pawel Swidlicki, author of the report.

The toughest issue on the table

One of the greatest concerns for new member states is the so-called ‘macro-conditionality’, a system proposed during the eurozone debt crisis, which allows the European Commission to suspend regional funding payments when countries fail to meet their budget deficit targets.

“Macro-conditionality is one of the toughest issues on the table and will not be solved during the Danish presidency, because of the magnitude of different feelings in the Council,” Wammen said.

“This will be a discussion until the very end, and eventually a compromise must be found.”

Romanian MEP Victor Bo?tinaru (Socialists and Democrats) said that macro-conditionality was not necessary, since countries have already signed up to the EU’s Fiscal Stability Pact and would face sanctions if they did not comply to the agreed financial rules. His comments were echoed by another Romanian MEP, Ramona M?nescu, coordinator in the regional policy committee for the Liberals group in the European Parliament, who added: “We question whether it is really the best option to punish beneficiaries for member states' mistakes.”

Constanze Krehl, the Socialists and Democrats' parliamentary coordinator for regional policy said the group had “serious concerns” about the system of macro-conditionality, because “federal structures can contract debt” this way.

The EU's regional policy Commissioner Johannes Hahn, who was also taking part in the debates, said that talks on the future of regional funds should take place simultaneously with negotiations over the allocation of money.

The European Commission presented on 29 June 2011 its proposals for the 2014-2020 budget – the so-called Multi-Annual Financial Framework.

The Commission proposed raising the next budget to €1.025 billion, up from the current €976 billion. This represents a 4.8% increase, above the average 2% inflation recorded in the last decade.

The regional policy (or cohesion policy) of the European Union has the overall goal of promoting economic prosperity and social cohesion throughout the 27 members and their 271 regions.

Within the current financial framework (2007-2013), the budget for regional policy amounts to €347 billion, which is more than one-third of the overall EU budget during this period.

  • 27-28 Jan.: General Affairs Council to debate the EU's next long-term budget for 2014-2020.
  • 28 June: EU summit may hold first discussion on 2014-2020 budget.

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