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EU budget revamp set to shift funds to southern states
| The reforms will be one of the most contentious parts of the European Commission’s draft 2021-2027 EU budget, which will be unveiled next month, and mark a dramatic redesign of the €350bn “cohesion policy” that aims to support less developed parts of the union.
Brussels wants to end the practice of distributing cohesion money almost exclusively on the basis of gross domestic product per head, replacing it with much broader criteria covering everything from youth unemployment,
| education and the environment to migration and innovation.
On top of revising the allocation of funds, the commission is reinforcing conditions on eligibility, including rule of law compliance, and applying more restrictions on how the EU money can be used. A draft policy paper seen by the FT puts the programme under a new “cohesion and values” heading — a clear signal about the expectations that come with EU funding.
| The overhaul will be particularly worrying for Warsaw and Budapest, two big beneficiaries of cohesion funds who have clashed with Brussels over the rule of law and democratic standards. Poland has warned that tough conditions for EU funding linked to judicial independence would cause “enormous problems” and encroach on sovereign rights.
They are trying to fix it against us. It is another way we lose money.
| Ambassador from EU member state
Precise details of the reforms are still being thrashed out behind the scenes. But diplomats and officials expect the outcome to be a redirection of funds from Poland, the Czech Republic and Baltic states towards southern states such as Italy, Spain, Greece and even some regions of France.
| “They are trying to fix it against us,” said one ambassador in Brussels from an EU member state set to lose out from the reforms. “It is another way we lose money.”
The changes to allocation terms would not just redraw the geography of EU funding, but would establish a new rationale for the bloc’s wealth redistribution policy.
| Following the wave of EU enlargement after 2004, the EU’s so-called structural funds were heavily geared towards closing the economic gap between old and new member states. Poland secured about €77bn from the cohesion policy in the 2014-2020 budget period, Hungary €22bn and Slovakia €14bn, from a total of €350bn.
| The budget battle over reforms will be made harder by planned cuts to overall cohesion spending, partly to help fill the Brexit-related funding gap. Günther Oettinger, the EU’s budget commissioner, has said reductions of “5 to 10 per cent” are “necessary”.
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| John Bachtler, an expert in cohesion policy at Strathclyde university, said the budget negotiation could be “the most difficult in 30 years”. He said: “All countries are likely to lose cohesion policy funding; the main question is how big the losses are for individual countries and regions.”
When the last long-term budget was agreed in 2013, southern states such as Greece and Spain fared badly in relative terms, seeing cuts of about 30 per cent in allocations.
| Angela Merkel of Germany and Emmanuel Macron of France have backed the idea of using the EU budget to provide financial support to regions hosting large numbers of asylum seekers, such as Germany and Sweden.
During the coming months, diplomats expect one of the key elements of the cohesion negotiation to be a “safety net” and a ceiling on gains made by any one member state.
| These would limit the potential changes in overall funding levels for both the winners and losers from the reforms.
EU officials are also revising the rules around the requirements for member states to match EU funding, which would require some member states to use more national money in projects. The commission has described the step as helping to “increase the sense of ownership in the policy”.
| https://www.ft.com/content/74d3a5aa-45b5-11e8-8ee8-cae73aab7ccb
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| Warsaw and Budapest fear loss of support as future allocation to be linked to ‘values’
Brussels plans to shift tens of billions of euros in EU funding away from central and eastern Europe, diverting money from countries such as Poland, Hungary and the Czech Republic to those hit hard by the financial crisis such as Spain and Greece.