Monti warns governments over regional aid

Date: 09/12/1999

By Peter Chapman

COMPETITION chief Mario Monti has vowed to get tough on member states which fail to win the European Commission's approval for their regional aid spending plans for the next seven years.

The warning comes as a raft of governments are struggling to win clearance for new 'maps' of deprived areas which would be eligible for grants from national state coffers from 2000 to 2006. Under EU rules, such aid can be provided for those areas hit hardest by economic decline, but only under strict conditions.

Only four member states have so far had their maps approved, and four have not submitted properly-formulated proposals at all. In assessing the plans, Monti's officials must decide whether governments are trying to cover too great a proportion of their country's population or to include areas too prosperous to qualify for aid.

Only Finland, Denmark, Ireland and Greece have so far had their plans approved, while formal investigations have been launched into the maps submitted by Belgium, the Netherlands and Germany.

A spokesman for Monti said this week that the Commissioner had received assurances from German officials that they would present a new map complying with EU regulations "before the end of the year". But he added that Berlin still wanted to give more aid than allowed under the rules and could launch a legal challenge against the Commission's regional aid guidelines.

The Commission also warned Portugal this week that its plans to include Lisbon and the surrounding area in its map might be rejected on the grounds that the region was now too wealthy to qualify for aid. Officials added that they had not yet received properly formulated maps from Italy, Spain, Sweden and Luxembourg.

The situation has prompted Monti to insist that member states freeze all spending plans until his officials have endorsed them and to warn that the Commission might demand repayment of any grants made before maps have been approved. "There still exists a number of member states that risk not being able to give any regional aid after 1 January," he said.

However, diplomats say those governments which have notified their proposals to the Commission are likely to make contingency plans to avoid problems over unapproved aid. They are expected to earmark aid for particular regions, making informal promises of payments, while they await formal clearance of their maps in early 2000.

Under the new regional aid regime which enters into force in January, the Commission plans to cut the intensity of aid which deprived areas and individual industries can receive. This follows complaints that most regional aid has in the past been 'consumed' by the EU's richest states, with the four former 'cohesion' countries getting less than 10% of payments.

Competition chief Mario Monti has vowed to get tough on Member States which fail to win the European Commission's approval for their regional aid spending plans for the next seven years.