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Commission’s over-reliance on financial instruments hinder EU Cohesion Policy

18/05/2017

Commission’s over-reliance on financial instruments hinder EU Cohesion Policy

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The thorny subject of how to finance and to assess the funding of the European Structural and Investment Funds (ESI Funds) as part of the EU’s Cohesion Policy has been discussed by MEPs in a joint debate with the Committee on Regional Development (REGI) in Strasbourg this morning, with GUE/NGL MEPs voicing concerns over the Commission’s heavy reliance upon financial instruments to fund regional and local projects after years of austerity and massive cutbacks across the EU. 

In addition expressing unease over the Commission’s over-reliance on such instruments, GUE/NGL MEPs also demanded increasing information transparency, and a strengthening of the Parliament’s role on monitoring and follow-up and that such technical assistance actually reaches local and regional authorities.

The plenary debate centred on the delivery methods of the Cohesion Policy and the so-called Technical Assistance which, since 1988, has been used to support institutional strengthening and administrative capacity building for the effective management of the ESI Funds.

Such financial instruments include microfinance, loans, guarantees, equity and venture capital. Yet, no assessment of these instruments or their contribution and role has ever been made in the European Parliament.

As the author of an opinion by the Committee on Agriculture and Rural Development (AGRI), Portuguese MEP Miguel Viegas spoke first for GUE/NGL and he slammed the Novakov report on the right funding mix for Europe’s regions as a threat to the cohesion goals of social and territorial development:

“Financial instruments are simply another phase of the choices that have been made in favour of neoliberalism and against the policies that would favour redistribution.”

“As demonstrated in the several hearings held in the AGRI committee, financial instruments cannot replace either the Structural Funds or the existing subsidies under the second pillar of the Common Agriculture Policy. Insisting on financial instruments will deepen the economic divergence and increase inequalities within the EU,” he argued.

German MEP Martina Michels, REGI member and group shadow on the Novakov report, also warned:
“The EU Cohesion Policy is not a financial instrument but a long-term policy with a specific aim: the creation of equal living conditions in the union. If we are serious about a ‘social pillar for the EU’, we must strengthen this most visible expression of European solidarity between all member states and regions.”

“It must also be clearly recognised that grants need to remain the core tool. The Cohesion Policy must not become the little sister of the ESI Funds,” said Michels.

Meanwhile, Greek MEP and Vice President of the European Parliament Dimitrios Papadimoulis noted that cohesion has been slowly slipping down the list of priorities for the Commission and the Council over the years, and urged:

“The Commission can do more in terms of social cohesion and regional cohesion because there are imbalances - both economic and social - over recent times. That gap has not been narrowing and if anything, it’s been widening. This not only applies to southern and eastern Europe but also the poorer areas of Germany, Italy and France.”

“There is a need for more technical assistance, a reduction in the bureaucracy and also more money as an investment in the social cohesion.”

For Spanish MEP and REGI member Ángela Vallina, it was clear as to where the problem lied:
“The EU is totally split in half. On the one hand, we have regions which are highly capable in handling investments and in asking for funds.”

“On the other hand, we have ‘second division’ regions which have neither the knowledge nor the technical and financial ability even to manage or ask for funds.”
 
“In addition, we have also countries that have no access to these funds due to Brussels imposing austerity measures on them and thus limiting and damaging the competences of local authorities, which are the closest to the people.”

“This is urgent. If the EU wants its Cohesion Policy to fulfil its goals, we have to act now,” she urged.

Finally, Irish MEP Martina Anderson warned that 982 million euros of structural funding would be lost to the north of Ireland due to Brexit:

“Some vital projects in the north of Ireland are already being delayed because of the fears and uncertainty surrounding Brexit.”

“The EU needs to ensure that the benefits of decades of cohesion funding for our community that has been emerging from conflict is not lost, and by ensuring that, the north is guaranteed ongoing access to cohesion funding in the future after Brexit, as part of the north of Ireland being afforded designated special status within the EU,” she concluded.

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