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6th Apr 2020

EU budget overhaul draft causes anger in regions

A draft commission proposal on shifting the EU's main budgetary allocations from regional aid and common agricultural policy to jobs, climate change and foreign policy has caused a stir among the top beneficiaries of the current budget.

The draft, dated 8 October and seen by EUobserver, is prefaced by the head of the European Commission, Jose Manuel Barroso, and is meant to serve as basis for discussions on the next multi-annual budget from 2014 on.

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  • Who gets what: the fight for the EU's budget from 2014 on has begun even before its official start (Photo: Flickr)

The document makes the case for three new "axes" establishing a "direct link" between Mr Barroso's outlined policy priorities – jobs, climate change and foreign policy – and EU expenditure. A more "competitive" approach to community funding is promoted, focusing only on projects which really have an impact on research and technology, on greening the economy or on creating jobs.

Currently, regional and agricultural policy account for the two biggest slices of the community budget, amounting to some 78 percent of total expenditure.

Without floating any figures or percentages, the draft makes the case for a further reduction of the agricultural budget and for scrapping the regional aid for wealthy regions.

Under the current provisions, regions with above 75 percent of the EU's per capita gross domestic product qualify for the so-called competitiveness objective, meaning they still get regional funding, but for making their economies more attractive rather than investing in infrastructure and administrative capacity.

In the current budget, some 80 percent of the regional envelope goes to poorer regions, 13 percent to the well-off ones and the rest to cross-border cooperation.

"The considerable administrative costs of a set-up which channels funding from well-off member states to well-off regions, without generating appropriate levels of added value compared with national funding are generally ignored," the draft points out.

One suggestion is to have a so-called sunset clause in place to reduce support for member states which have failed to progress and to "limit the expectation of continuing support for those member states which have achieved a reasonable degree of prosperity."

Another would be to link the regional aid to the length of EU membership, a move that would disqualify current top beneficiaries such as Greece or Spain. None of these ideas, however, are likely to fly once put forward to member states.

The 'convergence' threshold is so sacred to some regions in the older member states, that they purposely keep their economies below or just around 75 percent of the GDP average in order to qualify for the EU funds, one Spanish official admitted in a conversation with this website.

With regard to the reform of the agricultural policy, the commission says it should "stimulate a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new EU priorities."

One of these new priorities is a so-called European framework programme for climate and energy, which would beef up the allocation for environment and "streamline" other policies in regards to climate change adaptation. Regional and agricultural expenditures, for instance, should both be "climate proofed" and aligned to national emission targets.

The draft also foresees "substantial budgetary implications" for the EU if the climate summit in Copenhagen reaches an "ambitious" agreement, for instance in allocating resources for developing countries in reaching their targets. Investments energy infrastructure are also high on the agenda of the commission, both inside the EU – connecting national grids and pipelines – but also in neighbouring countries.

Another major change in the EU budget is likely to happen once the bloc's own diplomatic corps is set, after the Lisbon Treaty comes into force. Currently, external policy expenditure accounts for six percent of the total EU budget.

Regions 'losing confidence' in commission

The draft proposal caused "grave concern" in the Assembly of European Regions (AER), a network of 270 regions from and outside the EU.

"We are at a loss to fathom why those that would be most affected by the draft communication's proposals – Europe's regions – appear to be the last stakeholders to have found out about them," Michele Sabban, president of AER wrote in an open letter to Mr Barroso.

A re-think of the commission's regional policy is "ironic", Ms Sabban says, as it comes only one year after starting to implement the 2007-2013 funding period – the first time when regional, not agricultural policy, is the largest EU expenditure.

"How can Europe's regions have confidence in a Commission that considers overhauling a policy in the first stages of implementation?" she asks.

The proposals also raised the eyebrow of the European parliament's budgetary committee chair, French Conservative MEP Alain Lamassoure, who asked the responsible commissioner for clarifications on this matter.

A commission spokeswoman declined to comment on what she described "work in progress" and told this website the final proposals would be tabled by the end of the year to the European Parliament and EU ministers. The current budgetary framework ends in December 2013.

Last time around, EU leaders repeatedly failed to reach an agreement over the next budget perspective. It was only at the very last moment, under British EU presidency and after intensive mediation work done by Angela Merkel, that the leaders finally agreed on a deal in December 2005.

It was then in May 2006, just before summer recess, that an inter-institutional agreement between EU member states, commission and parliament was reached, so that the new framework could be adopted in time for coming into force on 1 January 2007.

Court blames three EU states for wasted billions

Spain, Italy and Portugal are responsible for the bulk of financial errors detected by European auditors in the field of regional policy, where some €2.7 billion should not have been paid out in 2008.

Europe not ready for EU tax, says incoming budget chief

The idea of an EU-wide tax is still politically too controversial to fly, but could not be ruled out in future, budget commissioner designate Janusz Lewandowski said Monday during his parliamentary hearings.

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