Brussels has decided to reform the way of spending one of the largest „slices” of the Community budget – cohesion policies (about one-third of the budget).
The Commission published on Tuesday the long-term plans for this chapter aimed at reducing regional disparities registered across the continent. The official announcements (HERE-LINK) do not immediately show the impact that the new vision will produce.
Some member states have already stated that the proposal is unacceptable, a sign that negotiations of member states and the Parliament with the Commission’s representatives will be tough and most likely last, in the most fortunate case, until the next European Parliament elections. President Juncker said he wants the new multiannual budget voted before these elections.
In the following, some information aggregated by Politico about the effects of those announced on Tuesday by Commissioner Jyrki Katainen, Vice-President of the Commission in charge of jobs, development, investment and competitiveness:
Bittersweet moment of South
At first glance, Greece, Italy and Spain have reasons for joy – if global cohesion policy allocations decrease, allocations for Greece will grow by 8% in the future multiannual budget, for Italy by 6.4% and for Spain by 5%.
But there are also certain conditions: the Commission proposes to link the allocation of these funds to the implementation of economic and structural reforms.
It is not very clear how Brussels can impose this link or whether states can be „sanctioned” under the pretext of poor economic management.
And not the entire South will enjoy the perspective of supplementing the funds – there are states that have been heavily affected by the crisis and managed to recover economically, and that is exactly why they are not eligible for funds. It is Portugal’s case.
Part of the East pays the price of success
The Center and the East of Europe are going through a good economic period, and that means they will receive fewer cohesion funds.
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Poland, Slovakia, Hungary and the Czech Republic have allocations reduced by a quarter. Estonia and Lithuania have smaller allocations by 24%.
Poor countries – Romania and Bulgaria – have relatively modest additional allocations: plus 8%. But the increase in allocations will probably not change, at least in Romania’s case(, the absorption capacity of these funds.
The drastic cuts in the allocations of cohesion fund will certainly affect the six eastern or central European states. Even if their saving process is going well, public investment is likely to no longer reach levels registered in previous years. A conclusive example: 60% of public investment in Poland was based on cohesion funds.
It is expected that such a measure will also lead to a radicalization of the speech in the forthcoming European Parliament election campaign in countries such as Hungary or Poland, which already have repeated confrontations with Brussels.
Cohesion policies or just politics?
Critics of the proposals formulated Tuesday in Brussels complain that rich states are not too much affected by the new plan. France and the East of Germany are among beneficiaries and therefore the following question arises: when money is so limited, why do you also help countries that can finance by themselves their development projects from national budgets?
The Commission says, however, that one can not ask our net contributors to give up their share of the Community budget.
The signal that it is not the only reason is given by the change in the way to determine the regions’ eligibility for cohesion funds. It is about the so-called „transition regions”, which are eligible for financing development projects, and which are now defined as areas where GDP per capita is between 75 and 90% of the EU average, a range that changes to 75 -100% of the EU average.
As a result, many regions in France will no longer be considered „developed”, but „in transition”, therefore eligible for funding. France will lose only 5.4% of the actual allocation in the next multiannual budget.
Regions need to „get green”
Two of the major directions of the cohesion funds – the European Regional Development Fund and the Cohesion Fund – will have strict criteria on what type of programs they will support, and ecology will play a very important role.
The Commission’s proposal is that 30% of the funds allocated to underdeveloped or transition regions will have to be spent on „promoting a greener, less carbon-emissions Europe”, and another 25% of the funds will be focused on environmental projects.
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