Tuesday

19th Jun 2018

Hungary and Poland to lose quarter of EU funds

  • Commissioner Cretu arriving to the weekly meeting of commissioners (Photo: European Commission)

The European Commission has proposed steep cuts in cohesion support in the next longt-term EU budget to eastern European member states, according to theEU executive's detailed plans on Tuesday (29 May).

Two countries that have caused headaches for the commission over the last years over migration and rule of law, Hungary and Poland, will be hard hit.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

Hungary's cohesion allocation will be cut by 24 percent, while Poland will get 23 percent less money in the 2021-2027 period in 2018 prices. The overall cut in cohesion policy will be around 10 percent.

The deep cuts in funds to the countries that are the loudest critics of the EU's migration policy could inflame political tensions among the eastern and western member states.

The commission however argues that the reduction is not a punishment for criticism and that it is misleading to compare funds available per countries, when it calculated the allocation by focusing on regions.

"I hope you don't expect us [to] start making statements about individual member states, it does not make sense … we are talking about regions and their prosperities," Corina Cretu, commissioner for regional development, told reporters.

Funds directed to the Czech Republic would also be cut by 24 percent, along with Lithuania, Estonia, and Malta. Slovakia and Germany would also get more 20 percent less cohesion money.

Italy, on the other hand, would get 6.4 percent more. Romania, Greece and Bulgaria would get 8 percent extra and Spain and Finland 5 percent more.

"There is no political top-down decision," an EU official commented on whether the move away from eastern countries was a political decision.

Nevertheless, on 2018 prices, allocation to the three Baltic states and the Visegrad Four of the Czech Republic, Hungary, Poland, and Slovakia will be less by €37.5bn between 2021-2027 compared to the current budget.

Calculating

The commission, as expected, also tweaked the way it calculated allocation of cohesion funds.

Traditionally it used a region's GDP per capita figure to reflect its prosperity. Now that criterion is reduced from 86 percent to 81 percent and the commission added other criteria, such as youth unemployment, climate, low education levels, and the reception and integration of migrants.

"This will better reflect the reality on the ground," commission vice-president Jyrki Katainen said.

Some central and eastern European member states have criticised the introduction of new criteria and they fear it is another way for the EU executive to divert money from them to southern, crisis-ridden EU countries.

But the commission warns that since regions in Hungary and especially Poland have performed so well in terms of GDP growth, the two countries would have suffered even bigger cuts if 100 percent of the allocation would have been based on GDP per capita criteria.

"The exercise is not about transferring money from east to south," an EU official said.

"The fundamental reason for the change is driven by the change in GDP, and growth of GPD in the east," the official added.

Poland's GDP grew by 3 percent in 2016, 4.6 percent in 2017 and is projected to expand by 4.3 percent according to the commission's forecast. Hungary's economy grew by 3.3 percent in 2016, 3.4 in 2017 and is expected to grow by 4 percent this year.

Meanwhile, Italy's economy was lagging by 0.9 percent in 2016, 1.5 percent in 2017 and 1.5 percent in 2018, according to the commission's figures.

The commission argues that, for instance, specific regions in Portugal grew faster over the last period, which resulted in a 7 precent cut in cohesion support, even though the country itself has been struggling with the effects of the crisis and only grew by 1.6 percent in 2016, although it picked up in the two past years.

"Nobody should be dissatisfied if countries are doing better," Katainen said.

Commission launches seven-year budget 'bargaining'

While the European Commission's post-Brexit EU budget proposal for 2021-2027 calls for a less-than-expected increase in spending, prime ministers of net payer countries have already called the starting proposal "unacceptable".

Visual Data

EU budget: Biggest cuts and increases

The European Parliament accused the EU Commission of not providing clear figures for a comparison of the proposed and the current EU budgets. We take a look at the main differences.

Commission 'playing tricks' with EU budget figures

The EU parliament's budget rapporteur complained the Commission is using numbers with a "desire to confuse". According to parliament estimates, the cohesion fund could suffer as much as a 45 percent cut.

Poland, Hungary push back at EU budget 'conditionality'

EU affairs ministers held their first discussion on the Commission's long-term post-Brexit budget plans - with cohesion and agriculture cuts, phasing put rebates, and the overall size emerging as major divisions.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

News in Brief

  1. Merkel and Macron meet over migration and eurozone
  2. Salvini plans census of Roma communities
  3. Slovenia to take Croatia to court in border row
  4. Parliamentary setback over corruption in Romania
  5. Lords force new vote for UK parliament to influence Brexit
  6. Report: Audi CEO arrested over Dieselgate
  7. EU-Australia trade talks kick off in Brussels next month
  8. France and Germany moving closer to eurozone reform

Stakeholders' Highlights

  1. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  2. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  3. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  4. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  5. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  6. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Stakeholders' Highlights

  1. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  2. FIFAGreen Stadiums at the 2018 Fifa World Cup
  3. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  4. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  5. FIFARecycling at the FIFA World Cup in Russia
  6. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  7. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  8. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  9. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  10. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  11. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  12. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments

Join EUobserver

Support quality EU news

Join us