EU regional subsidy system still too cumbersome

Ministers and officials from the enlarged European Union agreed on May 16 that the EU's regional policy must be streamlined to cope with the presence of 10 new members from the East but were divided over its future funding.

The policy, which accounts for a third of the annual EU budget, makes funds available for economically disdvantaged regions of member states.

An estimated 213 billion euros have been set aside for such purposes between 2000 and 2006.

But EU officials say applying for such funds and procedures govering their subsequent distribution have become unwieldy.

"Everybody agreed that procedures must be simpler, stricter and more transparent," Greek Economy and Finance Minister Nikos Christodoulakis, said.

He stressed nonetheless that delegates had been unanimous in deeming the policy an overall success.

The gathering was the first ministerial get-together of the EU's 15 current and 10 future member states joining the bloc in 2004 to discuss post-2007 policy.

From 2007 on, when a new deal will have to enter into force, the policy will be at a crossroads.

As the entry of poorer states causes a fall in the EU's per capita gross domestic product, countries such as Greece, Spain and Ireland fear they will turn from being among the policy's net beneficiaries to its payers.

Member states represented at the meeting here were divided on a proposal by the EU's executive commission to peg the amount of future funding at around 0.45 percent of the EU's gross domestic product.

The representative from Poland, the largest newcomer, reportedly insisted that a "substantial part" of the funds be reserved for what is known in EU parlance as "objective one."

Around two-thirds of regional policy funds go to regions of EU member countries where GDP per capita is less than 75 percent of the European Union average, which the EU describes as objective one.

The rest is used for industrial restructuring and employment measures, known as objectives two and three, which essentially benefit wealthier EU members.

The 10 countries from Central and Southern Europe joining the bloc in 2004 want that mix to be maintained after 2007.

"Of course we accept that the priority of priorities is to help the less developed countries," Noelle Lenoir of France said.

"Nevertheless, we are absolutely determined to keep objectives two and three."

Kurt Diller of Germany added that "as we concentrate funds toward poor regions, I think that a rejigging of the objectives' mix will be necessary."