19th Sep 2020

Cash-strapped states slow at tapping EU funds

  • Debt-ridden countries have trouble contributing their share to EU-funded regional projects (Photo: andres rueda)

Troubled economies such as Greece and Romania have so far managed to secure the least amount of EU money earmarked for infrastructure, energy and employment programmes in 2007-2013, a report by the European Commission shows.

The interim report shows that in the first three and a half years, Greece selected projects worth only 11.9 percent of a total sum of €20.4 billion available until 2013, while Romania has managed only a little more – 14.1 percent out of its allotted €19.6 billion.

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"I would have been happier if Greece had more projects," regional policy commissioner Johannes Hahn said during a press conference on Wednesday (31 March).

Eurozone-member Greece has for weeks been at the centre of an EU debate over how to deal with its soaring deficit which threatens the stability of the single currency. EU leaders agreed last week to set up a financial mechanism based on loans from eurozone-countries and by the International Monetary Fund.

Non-euro member Romania has already borrowed €20 billion from the IMF and the EU to cope with similar economic woes.

Other laggards include big eastern recipients such as Poland – who managed to secure only 19.5 percent of a total envelope of €67.2 billion, while Bulgaria and Slovakia are also trailing behind.

The champion among EU states in selecting projects so far is Belgium, with a rate of 61.1 percent, although its overall sum is considerably less at €2.2 billion for the seven-year period. The Netherlands, Estonia and Ireland have also managed to secure more than half of their funding.

The EU's structural funds are aimed at helping poorer regions improve their decayed infrastructure, access broadband internet and to stimulate employment. But one of the austerity measures requested by both the EU and the IMF is precisely to reduce public spending and the size of the administration.

This also translates into less administrative capacity to select projects and less money for the co-funding required by member states for most of the projects.

"Regional policy is no charity, we are trying to promote investments in regions and local structures," Mr Hahn stressed. "There is a need to reinforce institutional responsibility for co-financing," he added.

As for calls to simplify the burdensome and slow procedures, the Austrian commissioner said that one way to achieve that was also "not to change the rules and regulations every year." A high level group is however already working on improvements which could be put in place from 2013 onwards.

EU fund smaller than a bank bailout

One of the EU's regional policy funds is the European Social Fund, with around €10 billion a year. It is tailored to projects fostering employment in all 27 member states.

The size of the fund is smaller than the amount cleared by the EU commission's competition unit for the Irish government to bail out the Anglo-Irish Bank: €10.4 billion.

Employment commissioner Laszlo Andor said that such big bailouts were initially needed to stabilise the financial system but are now only "sporadic", with governments now focusing more on job creation.

"The economic crisis challenges the unity of the EU and the eurozone, and here the European Social Fund is helping," he said.

The Hungarian politician rejected the idea of the fund being used to pay unemployment benefits. "We have a very strong opinion about this, that is should be used to activate the labour market, for re-skilling programmes," he said.

Asked specifically about Italy, he admitted that "in reality", some of the ESF money was used by governments in their programmes for the unemployed.

"But this was always done with some active training elements and we have to keep it this way," Mr Andor added.


A deep dive into the EU regional funds

While the regional funds account for a full third of the EU budget, they are somewhat under-reported. EUobserver's latest edition of the Regions & Cities magazine looks at the EU's cohesion policy.


A tourist's guide to EU-funded Amsterdam

When it comes to projects paid for by EU regional funds, most people think of roads in Romania or bridges in Bulgaria. But richer regions also receive money. EUobserver takes you on a tour of selected projects in Amsterdam.


Tug of war between 'top-down' and 'bottom-up' cohesion money

The European Commission has promised greater flexibility for local authorities when it comes to delivering on-the-ground results - but it has also tied cohesion policy to the European Semester, a tool used to coordinate macroeconomic policies.


Commissioner Cretu: the EU budget is 'very emotional'

Despite Brexit and new priorities, it is important to keep EU funds for all regions - rich and poor - argues the regions commissioner. But more controls, including a link to rule of law issues, are part of the discussion.

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