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Funds for cohesion and regional development are the EU's largest area of spending. On 6 October, MPs met MEPs in a joint session of the Regional Development Committee to discuss the proposed legal framework for cohesion policy post-2013. They welcomed the focus on growth but voiced concerns about rules that would allow the Commission to cut funds if it deemed national budgets unsustainable.

Cohesion policy, which accounts for 45% of the EU budget, aims to help the poorest regions, and boost competitiveness and employment in the targeted regions. Five funds make up the cohesion policy - the European Regional Development Fund, the European Social Fund, the Cohesion Fund,  the European Maritime Fisheries Fund and the European Agricultural Fund for Rural Development.

As Europe continues to deal with the financial crisis, politicians have focused on promoting growth within the regions. More than 70% of new funds would go to regions with below 75% of EU average income (120 million inhabitants). According to Commissioner Johannes Hahn, responsible for regional policy, spending in "cohesion" regions benefits Europe as a whole, thanks to the operation of the single market. "€1 spent in Poland brings 40 cents more to the rest of the EU", he told the committee.

New rules for the next phase of cohesion spending

"Cohesion policy has suffered from its own success…at present there are 84 converging regions, in the future there will only be 68," he said. "Some 34 million EU citizens are now better off than a few years ago..But the current economic crisis made it clear that we have to go further, we need more conditionality, more restrictions and more specificity."

The Commission's proposed new regional policy aims to simplify access to funding, by bringing all five funds under the umbrella of a single regulation and reducing the documentation burden on applicants. It further demands that national and regional authorities set clear, attainable and measurable goals in priority areas linked to the EU's "2020" growth and sustainability strategy. However, crucially, the policy also includes a caveat that allows the Commission to cut funding if it deems national budgetary policies unsustainable.

The last point in particular provoked reactions from MEPs. "We are focusing too much on stability and not enough on growth," said Regional Committee chair Danuta Hübner, who criticised conditionality as "an indirect punishment" of countries and regions that are suffering from the economic crisis. Similar views were expressed by Elisabeth Morin-Chartier, speaking for Parliament's Employment Committee,. "We cannot impose a double penalty on countries already in difficulty."

However, speaking for the presidency of the Council, Polish Minister of Regional Development Elzbieta Bienkowska  saw conditionality as a positive move: "not a form of punishment, but an incentive which encourages greater efficiency in the cohesion policy sphere."

Next steps

Current regional funding programmes will run until 2013. A new regulatory framework must be in place for the next phase of cohesion programmes beginning in 2014. It is up to the European Parliament and the Council to examine the Commission's proposals and find agreement by then. Six MEPs have been appointed to guide different aspects of the legislation through parliament.

Funds for Cohesion Policy  
  • European Regional Development Fund: correct imbalances between regions through aid to companies; infrastructure investments; support for regional development; cooperation between regions 
  • European Social Fund: improves employment, access to employment for job seekers; social integration of disadvantaged people; reforming education systems 
  • Cohesion Fund: funds trans-European transport networks, energy efficiency, renewable energy, public transport. Member states with GNI per capita of less than 90% of EU average eligible (2007-2013: Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia) 
  • European Agricultural Fund for Rural Development: improves competitiveness of agriculture, forestry; environment and countryside; quality of life 
  • European Maritime Fisheries Fund (EMFF): helps fishing industry and coastal communities become economically resilient and ecologically sustainable