Brussels, 14/11/2013 (Agence Europe) - With two years of negotiation on reform of cohesion policy at stake during the plenary vote next week, EUROPE updates with Johannes Hahn, European Commissioner for Regional Policy, on his legislative package that revises no fewer than five structural funds and introduces a new common regulation. Speaking in a reassuring tone, Hahn tackles the compromise reached on macro-economic conditionality - that he considers minor with respect to any reform - and states he is confident that MEPs will shoulder their responsibilities for confirming the mutation of cohesion policy towards an investment policy for Europe, ready to be deployed without delay on 1 January 2014. (MD/transl.jl)
(AE) Last week the regional development committee endorsed a compromise on the outstanding politically sensitive issues relating to the cohesion package (see EUROPE 10959), closing the negotiation on reform. The entire package can now be put to the vote of the Parliament next week. Are you generally pleased with the agreement on your decisive proposals made two years ago?
(JH) I am satisfied with the deal because the main elements of this very huge reform have been retained, so the quality of the spending investment of structural funds money will improve. That's why I'm really satisfied.
This policy should now be understood as an investment policy. It doesn't exclude that we have respected the aspect of solidarity. Indeed, in terms of allocation, the principle remains as 70% of the money is allocated to 25% of the regions, the less developed regions. But the way the money should be spent follows the idea of being an investment in the people, in the regions, meaning that the results should be finally more than what we have invested. This is not only in terms of money, but also in terms of satisfaction of the people, with an increased welfare level. For that purpose we have significantly changed the policy. We have introduced three main elements, ex ante conditionality, thematic concentration and quantifiable results which have to be achieved by the end of the period by each region. It is important to stress that we have shifted the focus on infrastructure to the promotion and stimulation of the economy, in particular the SMEs, as these are the backbones of an economy.
(AE) During the negotiation, great attention was given to the macro-economic conditionality that you proposed. Initially opposed to the mechanism, the EP included many safeguards in the compromise reached on this issue. With such a basis, is it realistic that this mechanism should be applied? Are you satisfied with the deal?
(JH): For the reform; it is by far not the most important issue. But for the debate in the Parliament it was very important, as there were fundamental concerns. But, finally, it was possible to get a fair deal. And yes, yes, it can be applied, otherwise we wouldn't have found an agreement. I have always insisted on the fact that this instrument must be understood as an absolute last resort. I am rather confident that we won't need to apply it because it is not automatic when there is an excessive deficit procedure - only if a country persistently refuses to take measures reducing this deficit. And still it would be the outcome of intense negotiations and discussions in the EP and Council on the basis of a Commission proposal.
(AE): But as half of the payments can be suspended if the macro-conditionality is applied, is this not counterproductive for an “investment policy”? Indeed, beneficiaries might be reluctant to start to invest knowing the money can be lost somehow?
(JH): That's why it must really be understood as a last resort tool if a member state (MS) repeatedly refuses to make any macro economic changes, or if it is needed to intervene in the macro economic performance of a MS with a too high deficit because, with such a deficit, this MS might therefore have problems to co-finance the money being provided by the European structural funds. So it is also about guaranteeing the capacity of a MS to finance the co-financing rate, and the European investments. But again I think we have been extremely focused on this issue in the parliamentarian work, but the relevance for the entire policy in practical terms is not so high. I'm happy that the main elements of the policy which are decisive for the success in the future have not really been questioned.
(AE): However, this issue still puts at risk the adoption of the whole package of the cohesion reform next week in plenary, meaning a second reading. Is it a worst case scenario that you envisage, and what might be the consequences?
(JH): We have to respect the decision of the EP. The parliamentarians have to be aware of the consequences of a non-decision, which would mean delays up to one year. And I know that a huge majority of them is aware of it. So I try to avoid working for a back pocket solution. If it is not accepted by the EP, we don't know what would be the final outcome, so I don't have a plan B, C, or D. And I have to work on what is now on the table which seems to be the final outcome. In the Council there is no readiness for any changes, because they rely on what has already been agreed. At a certain moment you have to start preparatory work, and they started that back in the spring.
(AE): With these long negotiations, however, will it be possible to start the new programming on time despite the preparatory work?
(JH): If there are delays, it is because the MS proposal (preparations and partnership agreements) is not mature enough. Provided that the look of the regulation and the figures in the MFF are those which we had in principle before summer, on the basis of these we started negotiating with MS. Half of them have already submitted rather mature partnership agreements, indicating how and where the money should be spent, the other half is expected for the end of the year. But the agreement depends more or less on the speed of MS.
(AE): Indeed, the multi annual financial framework (MFF) for the 2014-2020 period will be adopted during the same plenary meeting. It foresees roughly €325 billion for the cohesion policy. Are you satisfied with this amount?
(JH): Of course we are not happy with any budget cuts. There are cuts, no doubt, but in general we face the lower cuts, which is good.
(AE): However, dedicating more money for the regional policy would be in contradiction with the fact that, under this current programming period, some member states have not yet managed to absorb all the funds of their national envelope…
(JH): That is why we have told some countries, who are endangered, to dramatically improve their performance. Because indeed it is difficult to argue for more money if you cannot prove it is used. But in the meantime I think it is no longer a real issue in particular for the next financial perspective. Indeed difficulties for the use of money are caused by a weak administration, and this is also the result of being “new in the business”. So in particular some new MS faced problems in using the money. But if you look to the performance of Bulgaria or Romania for the past two years there is a lot of improvement which is promising for the future. Greece, heavily criticised, now ranks 4th for the absorption of the funds due to our presence and close monitoring, and their efforts. This is significantly above the EU average. (MD/transl.jl)