After several hours of discussion, the European Parliament and the German EU Council Presidency reached an agreement in the middle of the night from Tuesday 1 December to Wednesday 2 December on the so-called “umbrella” regulation on common provisions between the structural and investment funds; they converged to keep the macroeconomic conditions, albeit in a very reduced version.
As a reminder, macroeconomic conditions are a mechanism which makes the financing of cohesion policy actions conditional on compliance with the rules of economic governance of the European Union.
Although the EU Council thus succeeded in maintaining the provisions which the European Parliament had rejected in its negotiating mandate (see EUROPE 12193/2), the Chairman of the Committee on Regional Development (REGI), Younous Omarjee, insisted on underlining the progress made by the co-legislator in moving closer to the European Parliament.
“In fact, the Council has come closer to the position of the European Parliament, since the Council was initially absolutely against any suspension of this mechanism, even under special conditions”, he recalled, adding that the interinstitutional agreement includes a total exclusion of the European Social Fund plus (ESF+) and Interreg from this mechanism.
The co-legislators agreed to suspend the mechanism as long as the Stability and Growth Pact, to which it is linked, is suspended. Thus, as co-rapporteur Andrey Novakov (EPP, Bulgaria) explains, there will be no possible sanction against Member States whose deficit and debt are too high as long as the general escape clause is exercised. Therefore, the mechanism will not apply until 2023 and after 2026. Finally, he adds, in the event of a major change in the EU’s socio-economic situation, macro-conditionality may be reviewed.
One source explains to us that the Commission is no longer obliged to act in four cases referred to in Article 15 of the umbrella regulation, except in the case where the EU Council takes the decision to act against a Member State which has not taken the necessary corrective measures to combat an excessive deficit.
The agreement raises the co-financing rates to 85% for the least developed regions, 60% for regions in transition and 40% for the most developed regions.
Another point, stressed by the co-rapporteur, Constanze Krehl (S&D, Germany) at a press conference, is the drastic simplification of the regulation. Thus, she said, partnership agreements will be simplified to a maximum of 35 pages. “Small mountains” compared to the dozens of pages needed in the Multiannual Financial Framework, the MEP quipped.
Another source of satisfaction for Parliament is that the co-legislators have agreed to introduce a whole series of cross-cutting conditions, such as respect for the Charter of Fundamental Rights of the Union, equal treatment between the sexes and, in general, the fight against all forms of discrimination, as well as compliance with the objectives laid down in the UN Paris Agreement.
As such, the co-legislators agreed that 30% of the investment from the EU budget should support climate objectives. In addition, the ‘do no harm principle’ was introduced. Broadly speaking, any project financed under cohesion policy must not harm the environment.
On the question of potential transfers from the Cohesion Funds to the European Interconnection Mechanism (EIM), the ceiling would have been set at €10 billion. A safety net would have been introduced for the four least developed Member States (lower GDP minus 60%), we are told.
Generally speaking, the simplification of thematic concentrations sought by the European Commission has been preserved and is structured around 5 axes: – a more competitive and intelligent Europe; – a green, low-carbon transition; – a more connected Europe; – a more social Europe; – a Europe closer to its citizens. In addition, half of the remaining funds can be freely allocated from 2025 onwards.
“This means that Member States now have clarity on programming, implementation and closure of their programmes. Finally, we can plan the budget of over €330 billion”, Mr Novakov prompted.
The agreement still has to be validated by the national delegations in the Permanent Representatives Committee II (Coreper II) and the European Parliament, after the text has been cleaned up by the lawyer-linguists and the recitals have been aligned.
There is still an unknown in the negotiations on the European Regional Development Fund (ERDF), which includes cross provisions with the umbrella regulation, as well as the agenda for the next plenary session to adopt the agreement. (Original version in French by Pascal Hansens)