27th Oct 2016

'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”.

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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.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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