Final debates over the funding

BRUSSELS - The Baltic States can still expect to avoid the  widely discussed cuts in the EU co-funding for their public investment in 2014-2020. The issue is still under discussion in Brussels.
On Oct. 8-11, on the eve of the EU’s crucial decisions over its funding for the European cohesion policy for 2014-2020, 5,807 politicians, experts, officials and researchers representing all the 27 EU member states discussed the EU’s cohesion policy in Brussels while 274 journalists from all over Europe were reporting about this annual discussion forum titled “Open Days”. It is the biggest annual event in the world for discussing  regional and urban policy, according to the event’s organizers, the European Commission and the Committee of Regions (CoR), which is the EU’s assembly of regional and local representatives.

A year ago, in October of 2011, the prime ministers of Lithuania, Latvia, Estonia and Hungary sent their joint letter to the EU heads, to express their disagreement with the European Commission’s proposed plan to lower the EU member states’ GDP-related cap on receiving cohesion policy funding from the EU’s structural funds in 2014-2020. In 2007-2013, the EU funding could not exceed 3.8 percent of an EU member state’s GDP, while in 2014-2020, according to the European Commission’s proposal, this cap will be lowered to 2.5 percent of a EU member state’s GDP. It is a serious blow to such countries as Lithuania, Latvia, Estonia and Hungary, where economies shrank significantly during the recent crisis. In the case of Latvia, some 4.3 billion euros were available in 2007-2013, while this sum will be 1 billion euros less in 2014-2020, if the European Commission’s cap-related plans are not changed.

“The European Commission was forced to come to that cap,” Johannes Hahn, EU commissioner for regional policy, said during the Open Days 2012 when he was answering the question from The Baltic Times about the officially negative position of Lithuanian Prime Minister Andrius Kubilius towards the European Commission’s proposal. This proposal means that more EU cohesion money would be left for the poor regions of Western Europe, such as Wales, part of the UK.

This fall, during the ongoing Lithuanian parliamentary election campaign (its second round will be held on Oct. 28), Lithuanian Prime Minister Andrius Kubilius reiterated his negative stance towards the lower cap and promised to fight against it. His cabinet member, Finance Minister Ingrida Simonyte, recently stated that, during her stay in office, the EU co-funded projects were the main public investments in Lithuania.

Hahn sounded somewhat softer speaking about the cap at the Open Days 2012 than he did a year ago. He pointed out that the European Commission’s proposal is still under discussion. “Next weeks or next months will be crucial for the final decision,” Hahn said urging officials, who represented various EU regions at the Open Days 2012, “to put pressure on their national government’s finance ministers.” It could suggest that the European Commission’s cap-related proposal was influenced by the wish of the richest EU states, which are the donors of the EU cohesion policy, not to share too much of their money with poorer member states of the EU club. Hahn urged the donor states not to save on the cohesion policy because the EU’s co-funding, which covers the ‘new’ EU states as well as poorer regions of Western Europe, has become the main instrument of public investment for growth throughout the EU in these times of austerity and structural reforms in the EU member states.

“There are six EU member states where EU co-funding makes up two-thirds of all their public investment,” Hahn said.
Representatives of Commissioner Hahn’s office, talking to The Baltic Times, said that the final decision regarding the EU budget and cohesion policy funding will be made in the negotiations between the Council of the EU, which represents the EU member states’ national governments, and the European Parliament. “The EU’s final decisions on important issues usually are made on the last day at three o’clock in the night,” said Shirin Wheeler, who used to be the host of the EU-related weekly talk show Record Europe on BBC World TV and who, four weeks ago, became the spokesperson for  Commissioner Hahn’s  office.

During the Open Days 2012, the CoR called for the EU’s budget 2014-2020 worth 1.14 percent of pan-EU GNI (some donor EU countries would like it to be lower than 1 percent).
“The recent developments in the negotiation have led to a worrying scenario, not only for regional and local authorities, but also for a number of member states whose investment strongly relies on EU funding. Regions and cities reiterate their full support for the position expressed by the European Parliament and call for a budget 2014-2020 worth 1.14 percent of EU member states’ GNI,” said Mercedes Bresso, the first vice-president of the CoR, referring to the figures provided in July by the European Commission which could lead to cuts of more that 5.5 billion euros of resources for cohesion policy. CoR President Ramon Luis Valcarcel urged the European Parliament to be tough in defending the cohesion policy and expressed his concern over the ‘capping’ plans.

Martin Schulz, President of the European Parliament, was very supportive towards Valcarcel’s position. “Freezing the money can be popular [in the EU’s richest states] but these kind of cuts are irresponsible,” Schulz said speaking at the Open Days 2012. He emphasized the EU’s values of solidarity (actually, on Oct. 12, the EU was awarded with the Nobel Peace Prize for these values).

“We have come a long way to change the image and the importance of cohesion policy for growth and jobs. I remember when I took office cohesion policy had not been attributed the role it really deserved by policy makers on a European level. Today, almost three years afterwards, cohesion policy has a central role in all economic key documents at EU level. […] The cohesion policy in many member states accounts for more than 50 percent  of public investments, and this is guaranteed over a period of seven years. I don’t know any regional or national budget that is outlined for such a long period. And more importantly, this investment guarantee attracts further private investments,” Hahn said at the Open Days 2012.

During the Open Days 2012, the presentation of the finalists to win RegioStars 2013 was held in the headquarters of CoR. RegioStars are the annual awards for innovative business projects implemented with EU funding. There is one entry from the Baltic States among the finalists: the three-year project titled Towards Work which was launched in Lithuania in 2009. It was implemented by Lithuania’s Republican Rehabilitation Center of the Deaf. A series of short video clips have been produced for broadcast on Lithuanian national TV channels to encourage recruiting people with hearing disabilities. The videos targeted employers to encourage them to discover the employment potential of deaf people. During the project, specially trained recruitment agents working in  job centers helped hearing-impaired people to find work opportunities. Of the more than 600 people with hearing disabilities actively involved in the project activities more than 400 were successfully employed. The project’s cost of  891,000 euros, was covered 100 percent  from the European Social Fund.