25th Mar 2019

Economic governance tool to be part of regional aid

  • More strategic thought is to go behind EU regional spending from 2014 (Photo:

MEPs in the regional affairs committee Thursday (7 November) gave the go-ahead to an overhaul of the EU regional aid policy, including its most controversial element - linking payouts to good economic governance.

EU regional affairs commissioner Johannes Hahn said the vote was a "major step forward" for the EU economy, with the €325 billion in the regional pot to be spent more strategically and without the bias toward traditional infrastructure, such as roads and airports, of past years.

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Hahn said the policy for 2014-2020 had a "fundamental new direction."

Over the coming years, projects will need to be either innovative, supporting small businesses, reducing poverty, boosting employment, or be green.

Funding will only get the green light if certain conditions are already in place such as good environment and public procurement laws.

There will also be spending-efficiency checks before any EU aid is disbursed and checks on on-going projects. Part of the payment will not be paid out until successful completion of the project.

Broad statements about investing in innovation will now have to be backed up with public information on exactly how the money will be spent and what the targets are.

With over 70 meetings between member states and MEPs, Hahn noted that macro-economic conditionality, whereby money can be withheld if EU budget rules are not adhered to, was "one of the most discussed issues."

The clause made it through despite strong opposition from leading MEPs who said that regions risked being punished for fiscal misbehaviour by central governments.

Impossible to use?

However parliament won the right to be involved in the process by being allowed to discuss any decision to use the macro-economic clause and to have its opinion taken into account.

Constanze Krehl, a German social democrat and one of the lead negotiators on the dossier, said the compromise means it will be "impossible" for the economic conditionality mechanism to ever actually be used.

Hahn, for his part, said the tool remains useable but it will be the "absolute last resort."

"I hope it will never have to be applied," he added.

The conditionality tool was pushed for by a group of member states including Germany and Finland who argued that there should be less cohesion money - the overall pot was slashed by €22 billion compared to the current budget cycle - and that it should be spent more efficiently.

According to Hahn, the new economic conditions are not what will give member states the most headaches.

It is the more rigourous thinking that authorities will have to apply to their project planning that is set to be a bigger problem.

"What will be a really big challenge for some member states will be to come forward with strategies in the different areas," said Hahn.

Taking transport policy as an example the commission said that member states have to have a comprehensive transport policy - not just "bits and bites" - and "future projects must be embedded in the overall strategy."

"This is clearly a precondition."

The committee's vote has still to be endorsed by the plenary as a whole later this month amid general time pressure to get funding agreements between member states and the commission wrapped up before the EU elections in May 2014.


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