The EU’s cohesion policy accounts for the biggest chunk of its budget, yet it is distributed through back-door negotiations, far away from public attention. For transparency’s sake, this needs to change – especially as new, less-developed countries will still join the bloc.
Manfred Weber, leader of the European People’s Party (EPP) and one of the most senior politicians of the Brussels bubble, once famously warned against seeing the EU as a mere “cash dispenser”.
Yet last week, a group met in Brussels for an exercise close to this way of thinking.
The Committee of the Regions and the European Commission held its annual “EU Regions Week”. On the agenda was an urgently needed reform of the EU’s “cohesion” policy, its main redistribution instrument from richer to poorer member states.
The case for redistributing money from rich countries like Germany, Denmark, and the Netherlands to the less wealthy such as Romania and Slovakia, is strong.
Rich countries have significantly benefitted from past EU enlargement as their companies could use Eastern Europe as both new export markets and an “extended workbench” with substantially lower labour costs.
Moreover, Eastern European migrant workers have taken many of the lower-wage jobs: Without them, the medical and care sector in countries like Germany would have collapsed long ago.
As new, even poorer countries could join the bloc, we may observe a similar pattern. Thus, it is only fair for them to expect money from the cohesion fund once their membership is a done deal.
However, this will also necessitate reforming how the EU machinery dispenses its money.
As with the bloc’s agricultural subsidies, where the prospect of agricultural giant Ukraine joining has already sparked a debate about moving away from absurd cash-per-hectare payments, this should be more than welcome.
The EU’s cohesion policy needs reform – for several reasons.
First, because the EU is failing its poorest citizens.
A study published earlier this year showed that while cohesion policy is indeed successful in helping poorer regions catch up with the richer ones, this does not go for the poorest households within those regions. In fact, the poorest are left behind while those already better off are lifted up, increasing the inequality within supported regions even further.
Second, the funds are extremely complicated to access.
In practice, this means the most EU money goes to regions that invest the most effort into applying for funding and ticking all the procedural boxes – and not necessarily to those that need funding the most.
Dispersing the money via local authorities secures their buy-in, and the involvement of Commission officials stops funding from going into nonsense projects – unlike the EU’s vaunted recovery funds, parts of which were wasted to fund Italy’s ridiculous 110% renovation rebate scheme.
And finally, as new member states join the bloc, the fund would either have to increase drastically or see funding cut from richer regions, who have already started complaining.
All this should make the EU question the two holy cows of cohesion policy: Its “place-based approach” and its principle that everyone gets a share of the payments.
Every opening of markets creates winners and losers, and further opening up the EU internal market will do so. And there is more: The transition towards climate neutrality, primarily regarded as a policy “coming from Brussels”, will have a similar effect.
As nice as involving local authorities may sound, focusing on regions instead of citizens means that funds are not explicitly targeted at those who stand to lose from market integration or the green transition. As a consequence, their enthusiasm for both could falter.
Therefore, the EU should look more seriously into “people-based” approaches. These could take the form of sending people cash via direct payments – yes, you read that right.
And this, of course, should only go to those who need it.
This means scrapping the idea of funding projects with EU cohesion money, even in affluent regions, just to put stickers with the EU logo on stuff in the hope that it will buy citizen’s support for the EU.
This is questionable anyway, as many people in countries like Germany know very well that it’s ultimately their own money that is sent to Brussels and back.
With a people-based, net-beneficiary model, the EU can make its cohesion policy fit for the future – for enlargement and the green transition alike.
Unlike Weber’s reasoning, the EU should take pride in the fact that it’s a big cash dispenser.
It is so for good reasons – but it needs to tell citizens more honestly what those reasons are (see above: winners on the internal market compensating those who are not benefitting from it in the same way) and make sure the money is withdrawn by those who need it most.
The Roundup
Belgian police on Tuesday shot and wounded a 45-year-old Tunisian who killed two Swedish citizens in Brussels on Monday. RTBF later announced that he died from his wounds.
EU countries on Monday adopted a common stance for the United Nations COP28 international climate conference but language on the EU’s emissions reduction target and fossil fuel exit goal was softened to reach a unanimous decision.
Czechia is trying to secure innovative medicines for its patients by betting on cooperation with other countries through joint negotiations with manufacturers as the EU’s pharmaceutical package aiming to address the issue is still a long way off.
The EU is holding its first-ever live military exercises (MILEX) from the Rota naval base in Southern Spain this week, in what is also a test case for the bloc’s recently established crisis response force.
The likelihood of a new pro-European government in Warsaw has brightened the prospects for the twin project of EU enlargement and reform, one of the experts behind the recent Franco-German enlargement report said, but warned change may still be a long way off.
The most sought-after and missing drugs in the Bulgarian pharmacy network are those related to diabetes, which forced the authorities in Sofia to tighten control by introducing a mandatory electronic prescription from a doctor.
Russian President Vladimir Putin and his closest ally among European Union leaders, Hungarian Prime Minister Viktor Orbán, on Tuesday reaffirmed their commitment to bilateral ties amid international tensions over the war in Ukraine.
China’s President Xi Jinping on Tuesday met Serbian President Aleksandar Vučić in Beijing, calling the country an “ironclad friend” and urging stronger strategic coordination between them.
The European Parliament voted in plenary in favour of a negotiating mandate for a new Strategic Technologies in Europe Platform (STEP) on Tuesday but lawmakers warned this must only be a first step towards a full-fledged sovereignty fund.
Europe wants to boost the amount of carbon held in its nature, but farmers and foresters also need to make money from processes that help land capture more carbon.
Don’t miss this week’s Transport Brief: Love e-fuels, not the internal combustion engine.
Look out for…
- European Parliament plenary session Monday-Thursday.
- Extraordinary EU virtual summit on the Middle East, Tuesday evening.
- Transport, Telecommunications and Energy Council (Energy) Tuesday-Wednesday.
- Economic and Financial Affairs Council Tuesday-Wednesday.
Views are the author’s
[Edited by Zoran Radosavljevic/Nathalie Weatherald]