Sunday

24th Jun 2018

Magazine

Regional funding at stake as EU states battle over budget

  • Talking cash in economically tough times (Photo: Images_of_Money)

EU budget negotiations are famous for bringing out the worst of what's-in-it-for-me politics.

Every seven years, the EU's coffers need to be refilled. All governments contribute. The cash is then redistributed among member states who fight tooth and nail to get their due.

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

  • Danuta Huebner - Poland is a "different country" thanks to EU funding (Photo: epp group)

So far, so very EU long-term budget. But the current economic crisis means talks on the next budget (2014-2020) are tougher than usual.

There is less money to go around and richer states are feeling the pinch.

"This is going to be an extremely important budget because Europe desperately needs growth and jobs," says Danuta Huebner, head of the parliament's regional affairs committee.

"In the current reality, when the national budgets will continue to suffer cuts, it is the EU budget that can really be the catalyzer for investment and growth," she adds.

But it is just in the policy that is meant to boost growth – Cohesion Policy – where the hardest battle is being fought.

The European Commission last year suggested a total seven-year EU budget of €1.025 trillion, €336bn was to be for Cohesion Policy.

The policy, which includes the European Development Fund, the European Social Fund and the Cohesion Fund, took a hit of €18 billion compared to the current 2007-2013 budget. A further €5.5 billion was chopped this year. And bickering among member states means a third cut is likely.

This is short-sighted, believes Huebner.

"This is really the investment policy and the growth policy," she notes.

"One of the values of regional policy is that it takes into the specificities of European territory. We have places in Europe where to become competitive and to grow you still need the basic investment in infrastructure.

"No investor would go to a city or a region that has no connection with the rest of Europe. There is still a huge part of Europe that require investment infrastructure."

At the budget negotiation level, member states are divided into two broad camps.

The first camp – including Germany, Finland and the Netherlands – say their own citizens are feeling the effects of budget cuts and a large EU budget is not justifiable.

The second – broadly poorer eastern European states – say that argument does not take into account the leverage effect of EU aid money and that the cuts already made are enough. The two sides are about €100 billion apart.

"It is the first group for sure that have the better argument," said Marco Lopriore, a regional policy expert at the European Institute of Public Administration

"We are in a time of economic recession. We need to bring results to the European parliament and European citizens."

The backdrop to the rich states' argument is not only the austerity cuts sweeping Europe but also poor past records of spending EU money. Millions of euros flowed to Greece, Italy and Spain over past decades with little of use to show for them.

Meanwhile, academics note that the entire debate is based on fuzzy grounds.

"The problem regarding cohesion policy is that there are very few instruments to measure the impact of the investment," said Claire Dheret of the European Policy Centre, a Brussels-based thinktank.

The European Commission has conducted "a lot of studies on the achievements of cohesion policy but there are many economists who don't agree with the model used to assess its impact."

But, says Huebner, it is all too easy just to criticise.

Referring to her native Poland, an EU member since 2004, she said: "It is a different country now. That's all thanks to European contributions, the transfer of funds."

"I often hear criticism - well there was a pizzeria financed in one of the regions - but this pizzeria is a small enterprise which gives jobs, creating the first ever restaurant in the village. This gives a lot of value."

And the parliament may turn out to be the regions' ally in the budget negotiations.

Last year MEPs suggested a five percent increase for 2014-2020 budget.

"There is a risk that if the budget is below the expectations of the European Parliament, then we will veto it," says the Polish deputy.

This story was originally published in EUobserver's 2012 Regions & Cities Magazine.

Click here to read previous editions of our Regions & Cities Magazine.

EU budget hurdles mount

The EU is hoping for agreement on the next long-term budget by the end of the year but two opposing camps in the money negotiations remain about €100bn apart.

Visual Data

Mediterranean towns ready for EU-sponsored free wifi

The European Union's fund for free wireless internet connection hotspots is most popular in Belgium, Bulgaria, Croatia, Italy, Malta, Slovenia and Romania. Check if your municipality pre-registered.

Magazine

Decision day for EU agencies relocation race

EU ministers will decide on the future location of two London-based EU agencies on Monday. In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies.

Magazine

The EU Agencies Race

In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies, exploring how their location matters and the benefits for cities and regions to host them.

Magazine

The EU Agencies Race

In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies, exploring how their location matters and the benefits for cities and regions to host them.

News in Brief

  1. Venice Commission: Hungary should repeal NGO law
  2. Trump threatens to slap 20 percent tariff on EU cars
  3. EU closes deficit procedure against France
  4. Romania's ruling party leader gets jail sentence
  5. EU states defer individual decisions on asylum reforms
  6. Commission opens case on Qatar gas flow
  7. EU adopts posted workers directive
  8. EU leaders to call for 'coordinated plan' on AI

Stakeholders' Highlights

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

Latest News

  1. EU leaders still in search of migration plan
  2. Migration row at centre of EU summit This Week
  3. Merkel's woes cast shadow on EU's future
  4. Europe's tech race - trying to keep pace with US and China
  5. Merkel and Juncker's mini-summit risks fiasco
  6. Greece and creditors proclaim 'end of crisis'
  7. How a US firm pushed for EU €2.1trn pension fund
  8. Commission defends Africa migrant plan ahead of summit

Stakeholders' Highlights

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

Join EUobserver

Support quality EU news

Join us