Tuesday

22nd Aug 2017

'Kafkaesque' EU to freeze Portugal and Spain funds

  • Commission vice-president Jyrki Katainen reminded MEPs they had once broadly backed the rules. (Photo: European Parliament)

The European Parliament is protesting a proposal to cut structural funds for deficit-ridden Portugal and Spain, but the European Commission says that rules are rules and that the funds must be suspended.

Jyrki Katainen, in charge of job creation for the EU commission, said they would be unlocked as soon as Portugal and Spain brought their budgets in line with EU recommendations. He said that model would make the harm ”minimal”.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Portugal and Spain were found earlier this year to be breaking EU budget rules, with deficits above the 3-percent limit.

The EU executive has the option of punishing underperformers with fines of up to 0.2 percent of GDP and the suspension of commitments or payments from structural funds up to 0.5 percent.

In the end, the commission suggested scrapping fines in exchange for the countries’ commitment to new fiscal targets.

Portugal is due to reach the 3 percent limit by the end of this year, down from 4.4 percent of GDP in 2015.

Spain was given until 2018 to bring its budget deficit in line with the 3 percent limit. The shortfall amounted to 5.1 percent in 2015.

The parliament’s regional development (Regi) and economic affairs (Econ) committees discussed the matter with Katainen and his colleague Corina Cretu, in charge of regional policy, on Monday (3 October).

MEPs across the political spectrum called the idea of suspending funds ”absurd", ”bureaucratic", ”counterproductive", "disproportionate and punitive”, ”unjust, dangerous and stupid”, and ”kafkaesque” in Monday’s hearing.

Franz Kafka was a Czech writer who wrote about the absurdity of bureaucracy.

Katainen said it was a question of following the rules. He reminded MEPs they had once put the rules in place with more than 500 votes in favour.

The EU executive will decide on the structural funds after Lisbon and Madrid present their budgets for next year, outlining commitments to reduce their budget deficits. They are due to do so before 15 October.

MEPs have only a consultative role in the commission's decision to suspend funds.

No country has ever been fined for breaking the EU growth and stability pact.

Portugal held up as symbol of EU recovery

Portugal to sail out of troubled waters after eight years of financial crisis, EU commission predicted, amid broad but "fragile" recovery in European economy.

Spain's Socialists ease Rajoy's path to power

The Socialists agree to abstain in a confidence vote later this week, meaning conservative leader Mariano Rajoy should be able to form a minority government after 10 months of deadlock.

Airbnb too 'different' to pay EU tax

US home rental firm said its “model is unique” because most of the money stays in pockets of local people, as France and Germany prepare EU tax crackdown.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. US will ask Nato allies to send more troops into Afghanistan
  2. Greece to be absent at event on Communism and Nazism
  3. Czechs want observer status in Eurogroup meetings
  4. Putin sends EU-blacklisted ambassador to US
  5. Austria has begun checks at Italian border
  6. Slovenian PM: Brexit talks will take longer than expected
  7. Merkel backs diesel while report warns of economic harm
  8. UK to publish new Brexit papers this week

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference