Regional Funds: it’s not the quantity, it’s the quality

10 October 2012, EurActiv

Western and Eastern European governments fighting over some billions less or more to the EU’s next multi-annual budget (2014-2020) would better focus on how to spend this precious resource.

Last Friday, leaders of the Friends of Cohesion countries (Bulgaria, the Czech Republic, Croatia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain) who oppose a potential reduction of the next long-term one trillion euros EU budget, met in Bratislava to cement their joint position and argue that only an uncut EU budget can create much needed growth and jobs across Europe.

‘The Cohesion Policy remains a key investment tool for our countries,’ wrote the Friends of Cohesion in the final statement after the Bratislava meeting. ‘Furthermore, it benefits the entire union by strengthening the internal market and increasing economic convergence as well as channeling investments to areas of potential growth and supporting structural reforms in Member States.’

‘There is no room for further reduction following the Commission proposal,’ the governments declared.

The Bratislava meeting came after weeks of counters between the so-called Friends of Cohesion and the Friends of better spending (the UK and other net payers).

Yet in this protracted debate both sides have failed to pay enough attention to the quality of spending, thus ignoring that they have more in common than it appears.

Indeed, like the net payers say, in times of multiple crises, we cannot afford to waste any euros. And, just like the net beneficiaries argue, it is money from the EU budget, such as cohesion funds, that can help make the economies of poorer member states at the same time better off and more sustainable.

A focus on how to spend EU budget funds can bring the two sides together. Not any euro from the EU budget can create jobs. But a well spent euro can both create durable jobs and contribute to the much needed transition towards a low-carbon European economy making us more resilient in the future.

How do these well spent euros look like? Last year, the Commission proposed that 20 percent of the EU budget be set aside for measures tackling climate change and serving the Europe 2020 objectives; at the same time, research has shown that such investments come with significant economic benefits.

Governments looking for ways out of the economic crisis need to realize that the “green investments” often touted in official speeches – but less so in actual practice — are indeed the biggest opportunity for the EU.

As a case in point, increasing energy efficiency in the Slovakian housing sector would create thousands of stable jobs. In addition, every one million euros invested into the renovation of buildings can create net benefits for the Slovak state budget of half a million euros which in times of scarcity can make all the difference for municipalities. Last but not least, residents all over EU can save massively on domestic energy bills if energy efficiency measures are implemented, with the Commission estimating up to 1000 euro annual savings for households.

Despite the apparent chasm between the Friends of Cohesion and the Friends of better spending, all EU member states are facing similar individual challenges when it comes to the environment, dealing with fuel poverty and trying to stave off rising unemployment. A collective, strong commitment to green spending could be the way to overcome the impasse we are now in.