Isla Terceira, 03/06/2011 (Agence Europe) -Director General for Regional Policy at the European Commission Dirk Ahner hinted in the Azores on Friday 3 June at the political bureau of the CPMR (Conference of Peripheral Maritime Regions of Europe) that macroeconomic conditions would not apply to cohesion policy, in other words, in draft legislation for the EU's new financial framework (2014-2020), which is expected to be unveiled on 29 June, the Commission will not be suggesting suspending or cancelling Structural Funds for EU countries that break the Stability and Growth Pact rules. The Commission is, however, considering introducing other conditions to ensure the success of projects funded by the cohesion policy. The CPMR members expressed concern at the danger of the cohesion policy being shrunk back in the future as criticism of the policy mounts (recent articles in the Financial Times and the sheer scale of errors detected by the European Court of Auditors).
In October 2010, the European Council agreed to introduce macroeconomic conditions for certain headings of the EU budget, potentially including cohesion policy. Invited to the CPMR political bureau meeting, Director General for Regional Policy at the European Commission, Dirk Ahner somewhat reassured people expecting spendthrift countries to be penalised by having their Structural Fund allocations shrunk or suspended.
Ahner said that although the debate was still ongoing, the situation on the types of conditions that are no longer under discussion was as follows. Firstly, macroeconomic conditions (“external” conditions) whereby the payment to a member state of cohesion policy cash would be conditional upon respect by that country of the Stability and Growth Pact rules. This type of condition is “no longer in the discussion”, said Ahner. What is still under debate, however, is what would happen when member states regularly break Stability Pact rules, he said, but what is no longer under discussion is whether cohesion policy should be used as a lever in such a situation.
Another condition being discussed is conditions relating to structural reforms. The payment of Structural Funds to a member state might be made conditional upon implementation of structural reforms agreed to under its national reform programme (the country-by-country details of reforms to be undertaken under the EU 2020 Strategy). When countries fail to respect their commitments, they might be sent warnings or sanctioned by suspending EU Structural Fund payments, for example. Ahner felt that for the moment, his department at the Commission thought that this type of condition should not be introduced because it was not right to make the regions responsible for the good or bad behaviour of the member states. He therefore called for a separation of the macroeconomic debate among EU countries and the debate about regional development, which should be carried out at regional level.
One type of condition under discussion will be subject to draft legislation in the future, namely “internal” conditions, which can be used to ensure projects are successful. The payment of Structural Funds at the beginning of the programming period would be conditional upon three prerequisites - transposing EU legislation into national law for areas relating to regional policy; the existence of national or regional strategic structures for each type of investment (innovation, infrastructures etc); and ensuring there are properly functioning institutional and administrative structures in place to properly manage EU funds (administrative capacity). Ahner said that in 85% of cases, the types of internal conditions being considered by the Commission are met. When negotiating the programme with the Commission, countries would have to pledge to take whatever measures are needed to meet the criteria and until this is done, the Commission could suspend the corresponding payments.
In an opinion adopted on 3 June, the CPMR secretariat general said that maritime regions opposed any type of macroeconomic conditions because they would remove the regional dimension and programmatic intrinsic to cohesion policy and would also be counterproductive because it would remove from countries and regions some of the resources they need to restore a satisfactory macroeconomic situation.
On the other hand, the regions believe that internal conditions would be useful in theory, because capable of boosting efficiency, increasing value-added and cohesion policy legitimacy. The Commission and member states would, however, say the regions, have to introduce the right conditions for this type of partnership and to this end, the CPMR suggests a “territorial pact” in each country should be made one of the preconditions for cohesion policy in the future.
Future budget. Commenting on the budget for the future, the CPMR president, Jean-Yves Le Drian, said there would be choppy seas ahead because of low economic growth in Europe since 2008 and the parlous state of public finances in member states (24 of the 27 countries are under an excess deficit procedure). He explained that this automatically closed the door on any prospect for an increase in the EU's budget.
Julie Gourden, the director of the CPMR secretariat general, said the financial situation made it absolutely clear that there would not be any increase in the EU budget for the 2014-2020 period. Moreover, some people want to take cash away from the cohesion policy to finance new activity. Gourden said the president of the European Commission, José Manuel Barroso, doubted the utility of the cohesion policy, feeling it did not contribute very much. She added that the general direction for cohesion policy funding was downward in order to set up an infrastructure fund that would only cover certain sectors (see related article below).
Structure. One thing seems to have been agreed, going by the responses of EU member states to the Fifth Cohesion Report, and that is that cohesion policy should cover each and every region post-2013. In the future, cohesion policy will cover all regions, and that is a step in the right direction, said Jean-Yves le Drian.
Debate is ongoing at the European Commission over the idea of setting up a new category of “intermediate” regions. It appears that the president of the Commission dislikes the idea. The CPMR, the European Parliament's Special Committee on Budget Challenges and most EU member states (including France and Germany) favour the idea (Italy disagrees). The European Commission's Fifth Cohesion Report suggests keeping the current two objectives (convergence and competitiveness), to which a new category of regions could be added under the competitiveness objective. The new intermediate category would replace the current phasing-in and phasing-out categories and include regions currently covered by the convergence objective but whose GDP per inhabitant is over 75% of the EU average (according to the most recent statistics). (L.C./transl.fl)