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27th Jul 2016

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Poorest regions get least out of EU funding

  • The poorer and more mismanaged a region is, the less it's going to profit from EU funds (Photo: snorski)

Countries with a poor public administration are absorbing less EU cohesion funds, meaning some of the poorest regions are getting the least out of the available money, the EU commission has said.

"Results are sometimes patchy and member states need to speed up their efforts to use the EU resources," EU regional policy commissioner Johannes Hahn said on Thursday (18 April) when publishing a report on the performance of EU's 27 countries in using regional funds.

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The report singles out Romania - the EU's second-poorest country - as having the lowest absorption rate: only 14 percent of the €20bn allocated to the country until the end of this year were paid out by January 2013.

Bulgaria, the bloc's poorest member, absorbed some 28 percent of its funds by January.

At the other end was Ireland, which got 60 percent of its funds paid out already, followed by Sweden and Portugal. Ireland and Portugal were able to claim more money in the first years of the economic crisis as part of their bailouts.

The EU's €347 billion worth of structural funds - aimed at helping regions, cities and small businesses get better internet connections, clean water plants or better roads - work best in countries that are already well off and not marred by corruption, says a report published last year by Bruegel, a Brussels-based economic think tank.

Confronted with this conclusion, Hahn's spokeswoman Shirin Wheeler on Thursday admitted that having a "decent administrative capacity, that controls the efficient use of funds goes along with having good results."

She said the commission is trying to help by allocating some of the funding to the training of ministry or local administration officials in eastern European countries.

"Clearly, we would agree that there is a relationship between administrative capacity and good and effective use of funds."

Both Bulgaria and Romania over the past years have scored poorly in corruption perception rankings carried out by Transparency International.

Bianca Toma, an expert with the Bucharest-based Centre for European Policy, told this website that her country's poor performance in absorbing funds "is unfortunately linked to low administrative capacity and slow progress in good governance reforms."

She said Romania fell behind the other countries because last year almost all payments were frozen after an audit by the European Commission found conflicts of interest and threw up suspicion of fraud in many of the projects.

"Basically, for almost six months, Romania received no euro from Brussels, thousands of beneficiaries of EU projects were blocked and some of the companies involved in the projects are almost bankrupt," Toma said.

As of April, some of the payments had been resumed, but some, such as the transport funding programme, is still on freeze after €6 billion were embezzled by a local businessman, now in jail, whose company was supposed to build a highway, but instead used part of the money to buy a jet.

The EU commission's report was the first one also to evaluate to what extent the use of these funds created more jobs or helped reach the EU climate goals. But the data is based on self-evaluation, with governments themselves reporting how they achieved the goals.

More scrutiny on the use of these funds was a key dispute point in the EU 2014-2020 budget negotiations. Countries like Germany, Britain and the Nordic states called for better - and lower - spending while countries in the east and south wanted spending to be maintained. The deal still needs the approval of the European Parliament.

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