German government says it knows best what is good for growth

German economy minister Michael Glos challenges the Commission’s powers to define which kinds of investments are relevant to the EU’s Jobs and Growth strategy.

In letters to Regional Policy Commissioner Danuta Hübner, to Commission Vice President Günter Verheugen and to Austrian Economy Minister Martin Bartenstein, German Minister of the Economy Michael Glos opposed the Commission’s definition of what is relevant for the Growth and Jobs strategy. “I consider it of utmost importance that the discretionary authority of member states and regions in this respect is not unduly limited,” Glos wrote in the letter, which EURACTIV has seen. 

Glos says he shares “the position that European structural policy should contribute to achieving the Lisbon targets”. But, he adds, “in the last end, it will be the countries and the regions themselves who best know with which measures to boost the competitiveness of their regions.” He says that “promoting business investment is a core element of German structural policy”. 

Glos stressed Germany’s horizontal structure, where those regions which were formerly part of Eastern Germany are still economically underdeveloped. He wrote that “only with the incentive of capital investment subsidies enterprises can be convinced to relocate to disadvantaged regions”. 

Glos is a Conservative from the southern region of Bavaria, which borders to the Czech Republic. He pointed to the fact that neighbouring regions in the EU-10 countries do not have to earmark structural fund payments. “Too strong limits to investment subsidies in German regions would aggravate the already severe competition between locations in an intolerable manner.” 

In a different letter to Verheugen and Employment Commissioner Vladimir Spidla, German Labour and Social Affairs Minister Franz Müntefering has complained about the Commission’s classifying certain measures under the European Social Funds (ESF) as not being Lisbon-relevant. In the letter, which EURACTIV has seen,  Müntefering – a Social Democrat from Central Germany, who shares part of his political history with Verheugen – cites activities such as the integration of migrants into the labour market and the promotion of social inclusion and of better compatibility of professional and family life. 

Müntefering wrote: “As concerns the ESF, the Commission’s recent proposals will result in an unbalanced fencing-in of the reformed Lisbon strategy to concentrate all disposable resources on the targets of competitiveness, employment and social cohesion. Earmarking has built up an alarming amount of uncontrolled momentum. […]From a German point of view, this is leading us to a situation where the right balance between the different Lisbon targets is not warranted any more.” 

He concluded: “My opinion is that the whole range of the ESF is ‘Lisbon-relevant’ and I would ask you to execrcise your influence in favour of a re-drafting of the Annex to take this notion into account.”

In a speech to the Committee of Regions on 1 March 2006, Commissioner Hübner said: "Earmarking is not a legally binding requirement. In the case of the Member States which joined the Union in May 2004, it is strictly voluntary. That was the decision of the European Council in December. Personally, I wonder whether it would not have been better to maintain a consistent approach for the whole EU of 25. But I intend to ask all the new Member States to adopt the same approach on a voluntary basis. And I am hopeful, perhaps even confident, that they will accept. There are no sanctions for missing targets, but what we will ask Member States to do is to report on how they have used cohesion policy in support of growth, jobs and competitiveness. They will do this each year, in the run-up to the Spring European Council, as an integral part of their overall Lisbon progress reports. My feeling is that regions and Member States are fully behind the Commission on this, and that we will have no trouble in going the extra mile."

The Commission's latest proposal on the financial perspective is unlikely to undergo any more important changes before it will be adopted by the Council and the Parliament. 

Its Annex IV proposes to earmark 60 to 75 percent of the money member states receive from structural funds for investments with relevance to the Lisbon strategy. The Commission defined a catalogue of investment categories which it considers relevant for this strategy. It comprises research, venture capital and consulting for companies. Investments into companies themselves are not considered Lisbon-relevant. 

The so-called 'earmarking' criteria apply only to the EU-15 countries, not to the ten new member states who joined the EU in 2004. 

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