Nordic areas fear funding reform cuts

Date: 02/04/1998

SWEDEN and Finland fear that funding for deprived urban areas in Europe's Nordic regions may be slashed in the current round of EU structural fund reforms.

Local authorities in both countries complain that the European Commission's proposed overhaul of the funding for urban areas in decline could have devastating effects on their sparsely populated towns and cities.

The authorities in Sweden and Finland have traditionally supplemented EU structural fund cash by taking full advantage of regional aid rules which allow national governments to subsidise industries in deprived urban areas.

This would be seriously restricted under the Commission's plans, which call for a ban on such funding in areas with a population of less than 100,000 people per square kilometre.

"Only two urban areas in Sweden meet this criterion. The regional funding reforms seem to have been designed primarily with major European population centres in mind," said Eric Pierre of the Stockholm regional office.

The Commission retorts that its proposals would compensate countries in this predicament by increasing the proportion of the population eligible for structural fund money by 2%. Governments would be able to allocate this additional funding to urban or rural areas as they saw fit.

But the Swedish and Finnish authorities claim they would have to channel all the extra money into cities just to maintain the status quo.

"We are effectively being forced to starve rural and suburban areas of much-needed funding in order to ensure that our urban centres can continue developing," said Pierre.

Keijo Sahrman of the Association of Finnish Local Authorities agrees. "Some of our urban areas may simply lose their eligibility for structural fund money, and the new population density limit will compound the problem. We expect our national government to lobby hard on our behalf in the forthcoming negotiations," he said.