Governments agree simplified aid budget

Date: 21/01/1999

By Tim Jones

EUROPE'S governments have agreed to simplify the system for deciding which regions should benefit from special EU aid in future.

They are also close to a deal on controversial plans to hold back €9 billion which would only be handed out to projects once officials were satisfied that they were being well-managed.

The agreement on the future 'objectives' for regional spending, which will be rubber-stamped by foreign ministers at their meeting next Monday (25 January), is the first substantive deal between Union member states as they piece together their long-term spending plans for 2000-06.

German Foreign Minister Joschka Fischer will warn colleagues next week that the real bargaining on key areas - farm subsidies, the level of regional aid and demands for cuts in national contributions to the budget - must start now if an overall Agenda 2000 deal is to be reached on schedule by the end of March.

From now on, negotiations on reforming the way the Union's €210-billion structural funds are spent will assume that the existing six aid targets will be compressed into three. The remainder of the talks will concentrate on determining the scope, content and eligibility criteria for the three new objectives.

Even Regional Affairs Commissioner Monika Wulf-Mathies' plan to include a 'performance reserve' in the structural fund pot, which had been vociferously opposed by Germany and the UK, made headway in talks between diplomats this week.

Under her original proposals, the Commission would have held back 10% of the cash allocated for 2000-06 and handed over the money to schemes judged to be operating efficiently after a mid-term review. Opponents claimed this would have been bureaucratic and open to abuse.

In an effort to win over critics, Wulf-Mathies suggested last month that the reserve could be cut to 4.3% and that the mid-term review would be conducted in "close partnership" with member states.

During negotiations this week, most member states accepted the idea of a reduced performance reserve in principle. The presidency will ask foreign ministers to consider whether the aims of the reserve could be supplemented by beefing up the Sound and Effective Management programme (SEM2000), which already polices national administration of the structural funds. Sceptical governments want to ensure that aid cash earmarked for spending in their regions does not end up in other, 'more efficient' countries.

Ministers are also set to end their dispute with the Commission over how to ensure that regions benefiting from Objective 2 aid, which is earmarked for areas in industrial decline, are the same as those receiving government redevelopment subsidies.

They will accept a revised Commission text which states that "the areas undergoing economic and social change should correspond to a large extent to the areas assisted by the member states".