Research: EU governments in funding tug-of-war

Behind-the-scenes manoeuvring is underway in Brussels as EU governments battle for large chunks of the Community research budget – even though the new funding programme will not kick in until 2014.

A €50 billion pot of cash is currently available for research projects across Europe but there have been constant murmurings that other sources will also be tapped in a bid to boost innovation. 

Incoming EU commissioner for research, innovation and science, Máire Geoghegan-Quinn, has already said she wants to ensure that the €86 billion earmarked for innovation in the European Structural Funds is used for research and technology transfer. 

Others are suggesting that big-ticket programmes like the agriculture and social budgets could be reoriented to match the EU’s focus on innovation. The European Investment Fund (EIF) is also seen as having the potential to leverage extra capital for the research effort. 

Big nations fighting to protect their patch 

Intense lobbying is expected as the EU considers how to spend the next multi-billion euro framework programme for research and technological development (FP8), which will be the largest such fund in the world. 

The Germans are setting the tone of early discussions, not least because figures show that they have much to defend. German businesses, research centres and universities are the most frequent partners in research projects, followed by those in the UK, France and Italy. 

France has also been out of the blocks early and is making a virtue of the need for closer cross-border ties between scientists. Paris has embraced the notion of “science diplomacy” and has dispatched scientists to several member states in the name of building valuable relationships. 

This is seen as part of established countries’ efforts to keep ahead of the rising competition from newer member states, many of which feel they are yet to reap major benefits from FP6 and FP7. 

Opening the research ‘iron curtain’ 

Examine data on which member states participated most in FP6 projects and a clear East-West divide opens up, leading newer member states to argue for a bigger slice of the pie. This trend has not gone unnoticed at political level (EURACTIV 28/01/09).

However, the message from Berlin is that the framework programme is designed to fund excellence and that this has a leverage effect by raising standards through pan-European cooperation. 

German officials have stressed the need to reward Europe’s best researchers, rather than viewing the programme as a pool of cash to be evenly sprayed across the continent. 

It has also been noted that, compared to their contribution to the EU budget, most countries benefit from the framework programme, and newer member states have done better than some expected. 

It appears smaller and medium-sized countries have tended to select an area of expertise and focus their attentions there in order to achieve excellence in niche areas. 

Figures from FP7 show that Sweden has a particularly high proportion of funding for health research, Greece specialises in ICT, and Lithuania attracted a proportionately large chunk of money for SMEs. 

A more ‘holistic’ funding system 

Falling GDP across the EU will put the Community budget under strain in the coming decade as governments battle burgeoning deficits. The drive to protect the research budget is well underway but has also prompted policymakers to examine how to nudge other funding streams towards supporting research. 

When previous framework programmes were crafted, innovation did not have the pull it has today. FP8 will be negotiated in the context of a new ‘EU 2020’ strategy, the publication of an innovation action plan, and at a time when Europe’s first innovation commissioner is chairing a sub-group of the EU executive to maintain the focus on the knowledge economy. 

All available funds will be tapped to deliver the growth and jobs Europe so desperately craves. In light of this, building a backbone for European infrastructure might be a justifiable use of structural funds if it meant more ‘bang for buck’ in terms of research spending. 

€86 billion of the €347 billion structural funds are earmarked for research and innovation but there is currently a broad definition of how this can be disbursed, allowing some of this cash to be directed towards tourism and regional development. 

Now there is a growing chorus arguing that roads and roundabouts should take a back seat to research and innovation. To use more diplomatic language, innovation enthusiasts are speaking of a “more holistic system” of using various strands of EU funding to fulfil the grand goals Europe has set for itself. 

At the more extreme end of this line of thinking are those who suggest the European Social Fund could be recast as the European Innovation Fund. Opponents of this idea are quick to point out that the economic crisis has morphed into a volatile social crisis now that jobs are being lost across the Union. 

Venture capital needed to capitalise on research funding 

If a European Innovation Fund were to emerge, it would most likely spring from an overhauled European Investment Fund (EIF) – the EU’s main provider of “risk financing” to small businesses. 

The European Investment Bank (EIB) and the EIF have seen their role grow dramatically since the outbreak of the crisis, leading to calls for these institutions to be given a more permanent role as a source of venture capital for innovative start-ups. 

Advocates of expanding the EIF’s role say it could be used to plug holes in Europe’s innovation landscape, such as funding sources of research clusters, technology transfer and demonstration projects which turn lab work into new products and services. 

While there appears to be momentum behind many of these trends, there will inevitably be resistance to radical change. 

Public universities and research institutes have become reliant on framework programme funding as a regular stream of income for large-scale projects, and would be under pressure if their tranche were reduced. Similarly, any changes to the agriculture, social or structural funds will raise the hackles of interest groups. 

The shape of FP8 will become clearer after the upcoming mid-term review of FP7. Geoghegan-Quinn has indicated that the currently programme will be changed to take account of ongoing difficulties with bureaucracy. 

More fundamental reforms are also likely to be identified and incorporated into the next framework programme. 

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