Cohesion funding proposals unfair

Sixteen Member States met in Prague to issue joint declaration on EU's 2021-2027 budget

The EU's eastern and southern countries on 5 November rejected efforts to cap aid they receive from the EU budget and to attach conditions to the next multiannual financial framework. Government delegations from 17 Member States, known as the Friends of Cohesion, met in Prague to build a united position on the EU's budget for 2021-2027, saying cohesion funding proposals were unfair.

All except Italy issued a joint declaration which calls for cohesion funds to be kept at their current level, but states to be given more flexibility in how they use them.

The current EU budget proposals for 2021-2027 plan on cutting cohesion policy funding. The European Commission's reason for this is mainly the impact of Brexit, which will see the second largest net contributor leave the EU. Germany and current EU president Finland attach to the reduced size of the cohesion funds conditions which would predetermine areas where investments should go. Naturally, the Member States that benefit from such funding are not pleased about this new budget plan, which would see them miss out on billions of euros.

When it comes to the EU's financial framework budget plans, the EU can divide into two groups - the wealthier “net contributors” and the poorer “recipients”. Especially when it comes to EU cohesion funds, which aim to reduce economic and social disparities by allocating extra money to states with Gross National Income (GNI), per inhabitant, of less than 90% of the EU average.

The Friends of Cohesion Group is formed by 17 EU Member States: Czech Republic, Slovakia, Hungary, Poland, Lithuania, Latvia, Estonia, Bulgaria, Romania, Greece, Slovenia, Croatia, Portugal, Spain, Cyprus, Malta and Italy. All of them take the view that cohesion policy plays a central role and importance in the EU budget, eliminates inequalities between different regions of the Community, adds value to the EU as a whole, and is of benefit to all its citizens.

“The Commission proposal is really unacceptable for us,” Czech PM Andrej Babis said before the meeting. He stressed that the countries whose representatives arrived in Prague are united in their view of cohesion politics as a key investment tool that enables citizens' wealth to increase and lowers the inequality within the EU. He said the proposals reduced “traditional policies” and introduced “some positions that we believe should not be there”.

“The current Commission made a proposal that is not fair,” Hungarian PM Viktor Orban stressed. “The new proposal wants to reduce cohesion - in other words the poorer will get less and the richer will get more.”

Aside from ensuring that sufficient money remains available, the group also agreed its states want greater flexibility in how they can use cohesion funds. Babis and Orban were joined by the leaders of Poland and Slovakia in saying the budget proposals were too rigid in their conditionality.

“We have to rid ourselves of the administrative burden that is connected with EU funding. Member States should have the ability to decide on their own about which areas they want to spend these resources on. That is the only way to effectively react to domestic needs and allocate funds where they can have the most significant benefit,” the Czech PM explained.

Discussions over the EU's long-term budget are likely to be tough because an economic recession may be looming in Europe and Britain's likely departure will leave a hole in EU coffers because it has been a net contributor to the budget. The current budget amounts to 1% of the EU's combined GNI. The European Commission has proposed a seven-year budget of about €1.1tn that would be about 1.11% of the EU's combined GNI. The European Parliament wants a bigger budget - equivalent to 1.3% of the EU's GNI. Germany wants to ensure that, as the biggest EU economy and paymaster, its contributions to the budget do not shoot up when Britain leaves. Some states want a larger EU budget because they want to increase spending on research, the digital economy, border control and defence.

Croatian Prime Minister Andrej Plenkovic said he wants a balance to be found in budget negotiations between countries that traditionally want EU budget funding to be reduced and those that want larger allocations for poorer members so that they can catch up faster with the more developed countries.

“We want a more consensus-based approach, we don't want winners and losers in this game,” Plenkovic said, adding that this was particularly important for Croatia as the next president of the Council of the EU. He said that there would be enough funds for cohesion policy in the EU budget.

Finland is due to set out budget proposals later this month for discussion at an EU summit on 12-13 December.

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