Sunday

17th Dec 2017

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  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.

  • 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.

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

History of the agencies (re)shuffle

The history of how EU agency seats were established shows that political deal-making, not logic or objective criteria, is the decisive factor.

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. EU adopts 'track-and-trace' tobacco system
  2. Luxembourg appeals Amazon tax decision
  3. EU leaders agree to open phase 2 of Brexit talks
  4. Juncker: May made 'big efforts' on Brexit
  5. Merkel took 'tough' line on Russia at EU summit
  6. EU leaders added line supporting 'two-state' solution
  7. EU leaders agree to 20 European Universities by 2024
  8. Belgian courts end legal proceedings against Puigdemont

Stakeholders' Highlights

  1. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  2. Plastics Recyclers Europe65% plastics recycling rate attainable by 2025 new study shows
  3. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  4. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  5. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  6. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  7. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  8. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  9. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  10. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  11. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  12. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties

Latest News

  1. Catalonia, Brexit, and Uber on EU agenda This WEEK
  2. Macron and Merkel take tough line on Poland
  3. Eurozone future needs structural reforms, EU leaders told
  4. Showdown EU vote on asylum looking likely for next June
  5. EU stresses unity as it launches next phase of Brexit talks
  6. Polish PM ready for EU sanctions scrap
  7. Dutchman to lead powerful euro working group
  8. EU mulls post-Brexit balance of euro and non-eurozone states

Stakeholders' Highlights

  1. EPSUEU Blacklist of Tax Havens Is a Sham
  2. EU2017EERole of Culture in Building Cohesive Societies in Europe
  3. ILGA EuropeCongratulations to Austria - Court Overturns Barriers to Equal Marriage
  4. Centre Maurits CoppietersCelebrating Diversity, Citizenship and the European Project With Fundació Josep Irla
  5. European Healthy Lifestyle AllianceUnderstanding the Social Consequences of Obesity
  6. Union for the MediterraneanMediterranean Countries Commit to Strengthening Women's Role in Region
  7. Bio-Based IndustriesRegistration for BBI JU Stakeholder Forum about to close. Last chance to register!
  8. European Heart NetworkThe Time Is Ripe for Simplified Front-Of-Pack Nutrition Labelling
  9. Counter BalanceNew EU External Investment Plan Risks Sidelining Development Objectives
  10. EU2017EEEAS Calls for Eastern Partnership Countries to Enter EU Market Through Estonia
  11. Dialogue PlatformThe Turkey I No Longer Know
  12. World Vision7 Million Children at Risk in the DRC: Donor Meeting to Focus on Saving More Lives