Member states to challenge neighbourhood investment fund

EU member states are challenging the legality of a €1 billion investment plan for eastern European and Mediterranean countries following a row over the distribution of the funds.

Spain, Italy and France have questioned whether a neighbourhood investment fund and governance facility, proposed by the European Commission as part of the Union’s European neighbourhood policy, should be managed through a procedure giving the Commission a significant say over which countries receive money.

Together, the fund and the governance facility would provide about €1 billion over the next seven years to improve governance in countries on the EU’s borders.

Spain has said that it will not accept plans for managing the fund in a working group chaired by the Commission and has questioned the legality of such a move.

The Commission has defended its proposals, telling member states that the "legal basis is completely clear".

But critics describe Spain, Italy and France’s objections as a smokescreen for their opposition to deeper changes in EU policy.

According to one EU diplomat, they are concerned that a change in the way the EU funds reform efforts could see money drain from the Mediterranean region towards eastern European countries.

In October last year, the Commission announced proposals to merge previously separate funds for countries on the EU’s southern and eastern borders.

Since then member states from central and eastern Europe, including the Czech Republic, Poland, Slovakia and Romania, which advocate more support for the EU’s eastern neighbours, have clashed with their Mediterranean counterparts over which region receives what share of the money.

"We want to preserve the balance between the east and south," said one French diplomat, "we want to be sure if it is funded by a new tool or using existing tools."

After a series of discussions, member states are expected to split the €50 million provided by the governance facility this year equally between Morocco and Ukraine in recognition of their efforts to reform.

But diplomats from central Europe insist that they want to see aid reflect reform efforts, arguing that substantial funding without conditions to southern Mediterranean states in previous decades has not resulted in substantial improvements. One diplomat said that Spain, France and Italy were concerned that if there was "more conditionality, then the Mediterranean countries would get less money, [because] for many reasons they are not reforming as quickly [as they should]".

The German presidency will attempt to resolve the issue in a report on the European neighbourhood policy that will be presented to member state ambassadors on 14 June.

EU member states are challenging the legality of a €1 billion investment plan for eastern European and Mediterranean countries following a row over the distribution of the funds.