After over a year of negotiations, the European Parliament’s Regional Development Committee approved the reforms to the European Union’s cohesion policy last Thursday.
According to EU regional policy chief, Johannes Hahn, the reforms introduced will make the policy more effective and straightforward, for efficiency is vital in the face of significant cuts to the 2014-2020 budget. The legislation will most likely be presented before Parliament as a whole during the November 18-21 plenary session.
Representing one-third of the EU’s budget, approximately €325 billion, the cohesion policy is the main vehicle through which the Union invests in growth, development and the implementation of its policies across member states.
These funds are crucial investment tools as Europe climbs out of the recession and, while the bulk of the aid will go to regions that are less developed, money will be devoted to research and development, support for SMEs, sustainable growth, poverty reduction and job creation across the entire EU.
However, in order to ensure the maximisation of the funds’ impact, member states must now clearly outline their goals and the measures they will take to meet these goals prior to the allocation of the funds.
Moreover, the recent vote signalled a huge win for the European Parliament on an important issue known as macroeconomic conditionalities. Not only does this reform establish conditions that must be met by member states prior to receiving any funds but it also enables the suspension of such funds in case of a large macroeconomic imbalance. For the first time, the European Parliament’s opinion will be taken into account during the Commission’s decision-making process regarding the suspension of funds by enabling it to exercise its right of scrutiny.
Many hope that these reforms will ease the fears that a tightened EU budget for the 2014-2020 financing period will dismantle Europe’s track towards growth for the policy will achieve a more effective management of the money that is available to the Union.
According to European Commission president José Manuel Barroso, the EU budget is the most tangible means of enhancing investments as “in some of our regions, the EU budget is the only way to get public investment because they don’t have the resources at the national level”.
The budget for the next seven years was tightened to just under €960 billion euros, which is insufficient considering €1.8 trillion are required to meet the targets outlined by Europe 2020.
Many programmes that are essential to Europe’s growth, such as the Youth Employment Initiative, will receive substantially less funding. Thus, as the Union enters into a period of decreased spending, the focal point must now be placed on how to spend the available resources most effectively.
Many programmes essential to Europe’s growth will receive substantially less funding
The need for greater efficiency and cohesiveness within the EU regarding spending was highlighted by the European Court of Auditor’s annual report published last week. According to the document, national and EU perceptions of the main objectives for spending do not correspond. Moreover, the complex framework of the budget lacks measures that would incentivize member states to spend their allocated portion of the funding appropriately.
Vitor Caldeira, the Court’s president, said: “If Europe’s citizens are to be convinced of the need for EU-level programmes, they need to see the added value they bring.” Therefore, a partnership between the EU and national authorities must be forged to promote better management of finances.
Although public debt places constraints on budgets and fiscal options, the introduction of innovative and effective financing methods will enable the EU to make a greater impact with decreased costs.
The recent reforms made to the EU’s cohesion policy will serve as a platform to encourage greater efficiency in spending across member states as Europe continues down the road to recovery.
David Casa is a Nationalist MEP.