Wednesday

24th Aug 2016

Interview

Regional funds may be linked to pension reforms

  • Johannes Hahn says structural funds should be used to make countries stick to economic reforms (Photo: European Commission)

Linking EU regional funds to economic reforms is "fair" because it applies to both euro and non-euro states, regional policy commissioner Johannes Hahn told EUobserver in an interview Friday (19 July).

"Macro-economic conditionality is one of the pending issues that is subject of ongoing negotiations in July, but we should definitely reach an agreement beginning of autumn," Hahn said.

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Earlier this month, the European Parliament made it clear that they would not accept this new conditionality for the €376 billion worth of regional funds in EU's next seven-year budget.

This is the main sticking point among MEPs, member states and the EU commission in transposing an agreement on the €960 billion budget into legal acts and rules.

"Everyone has an interest to have a rather quick decision if we want the funding to start next year. The multi-annual framework is also a sort of orientation for the private sector of how much money is available, that could trigger additional private investments," the Austrian politician said.

He admitted that "positions are far quite far apart", as MEPs are rejecting any link to economic reforms.

MEPs argue that the idea came up before the EU commission got new powers of oversight for countries lagging behind on economic reforms.

Hahn said this is true only for eurozone states, which are subject to increased scrutiny and sanctions from the EU commission.

"But there is nothing adequate for non-eurozone countries. Therefore the idea came up to use structural funds. This is nothing else than a justified attempt to have a fair treatment for everyone," he said.

Hahn said the details on how the macro economic strings would work in practice are not yet clear, but suggested it could also include reforms of pension systems.

"We still have discussions if structural funds could be used for more general macro-economic conditionalities. As an example, pension systems.

"We have many countries where the country-specific recommendations are referring to the existing pension systems that they need to be adapted in order to afford pensions in the future," he said.

He gave the example of Hungary, where the EU commission for the first time last year threatened to suspend the payment of regional funds because the country was not sticking to the EU deficit rules.

Hahn's services worked up a methodology on how to calculate the share of money that would be suspended, but in the end it was never used because Hungary got its deficit under control.

"The mechanism exists only for cohesion, but the idea now is to include all the other structural funds - regional development and social fund. This is still under discussion," Hahn said.

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