By Duncan Lumsden - 18th February 2004
EU regional aid chief Michel Barnier has pledged to soften the blow for Europe’s poor western regions, expecting to lose Brussels funding to their new poorer neighbours in the east.
Around 17 of the current EU’s more impoverished regions could see their EU handouts diverted east as even needier areas in Eastern and Central European countries join the bloc in May.
But Michel Barnier, regional policy commissioner, reassured EU capitals that “while most of the poorest regions are in the new member states, we still need to help the regions in the 15 where the process of catching-up is still incomplete.”
The details are set out in Wednesday’s European Commission announcement flagging up major changes to the EU’s ‘regional policy’ to take into account Europe’s enlargement from 15 to 25 on May 1.
In the current EU, regions whose GDP is below 75 per cent of the pan-European average receive extra ‘cohesion’ funding under the regional policy.
But as ten much poorer new countries join later this year the EU average is expected to take a 12 per cent tumble, leaving many regions that until now enjoyed generous Brussels payouts suddenly above the eligibility threshold.
Areas which have the misfortune to fall to this “statistical effect” will not be left entirely exposed, as Brussels intends a phasing out period to last at least seven years from 2006 to get them used to their newfound status as officially no longer poor enough.
The ideas come in the form of the commission’s third annual ‘cohesion’ report on the EU’s regional aid schemes. Regional policy commissioner Michel Barnier, whose term ends this autumn, has used this year’s analysis to announce fairly major changes which will see money diverted eastwards to the new Europeans, while giving the aid programmes a tighter focus on invigorating regional economies.
Until now the policy has had no explicit aims to foster economic growth, although some 50 per cent of the projects had some kind of beneficial outcome to regional performance.
Under the new system, people in Europe’s poor regions applying for Brussels aid will have to prove the money will end up promoting jobs and growth in the area.
The aim, says the European Commission, is in line with the commitment made by EU leaders at the Lisbon summit in 2000 to make the bloc “the most competitive economy in the world by 2010.”
“Our economic performance has faltered over recent years. Europe must respond to this situation. We need to involve all of the regions and people in generating wealth,” said Barnier.
“And that is precisely what this proposal is all about: narrowing the gaps to achieve faster growth. Growth and cohesion are opposite sides of the same coin.”
Regions that fall under the 75 per cent of GDP – until now defined as ‘objective one’ areas – will be able to pick and choose their programmes as long as the end result fits in with what has become known as the Lisbon Agenda.
Money will still be available to areas above the threshold – known as ‘objective two’ areas but soon to be redubbed ‘competitiveness and employment’ regions – but there will be a narrower choice of schemes.
For this category only projects that contribute to ‘innovation’, the ‘environment’ or ‘accessibility’ will be accepted. Commission officials say this could mean some current schemes, such as urban regeneration, could lose their funding.
Concrete proposals will follow in July.
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