Regions bitter at being pushed to the sidelines

Date: 17/10/1996

As the Union gears up for the publication of the long-awaited 'cohesion report', a growing number of people are asking whether the European citizen is not somehow getting lost in the race for economic and monetary union.

The report, assessing the impact of EU policies on economic and social convergence over the past three years will, on the whole, sing their praises.

But Regional Commissioner Monika Wulf-Mathies admits that, measured by certain criteria such as unemployment, the gap between the Union's poorest and richest regions is wider than ever.

It is a message from a Union which committed itself to greater cohesion in the Maastricht Treaty that will cause deep concern.

Watching very much from the wings, local and regional politicians are growing increasingly angry at the side-lining of their interests by national statesmen.

At recent three-day conference, entitled For a Europe based on Democracy and Solidarity, MEPs, the Committee of the Regions (CoR) and local and regional authorities gave their broad support to the single currency.

But they warned that an ill-considered transition period could have grave consequences.

In particular, they highlighted “the need to foresee the impact on disparities of staggered adoption of the single currency”, and called on leaders to introduce “a solidarity mechanism designed to stabilise the financial markets, and further development of the cohesion fund”.

These demands reflect a profound sense of indignation at what many in the regions regard as the tendency of too many EU decision-makers to see regional policy as 'just another issue'.

If the Union is going to work, one speaker after another told the conference, it has to take more account of the citizens it is striving to help.

“Regional considerations are not another element in the equation,” said one representative, “they are the whole point.”

Erwin Teufel, president of Baden-Württemburg in south west Germany and its representative on CoR, insists: “We need a European regional policy more than ever now to balance out the economic and social differences between the regions.

“It was an important step by the Maastricht Treaty that it paid greater attention to regional relations. We must further develop these principles.”

Anger in the regions was stoked in July when the Council of Ministers cut 1 billion ecu off the structural fund provisions for 1997.

Commission sources insist that whatever happens in a single year, the total six-year structural fund budget for 1994-1999 (170 million ecu) will remain unaltered.

But British Labour MEP Arlene McCarthy argues that the 1997 cut will “lead to further delays in programme implementation during 1998 and 1999” and that “member states are ignoring the multi-annual nature of the structural fund programmes, and therefore the need for a long-term and sustained effort to meet targets”.

These worries do not appear to have caused too much concern in the Parliament's budget committee, which accepted the reductions to the 1997 structural funds last week.

But many MEPs believe the cuts reflect a growing temptation for member states to pay for the cost of the EMU convergence criteria through regional sacrifices.

French Finance Minister Jean Arthuis recently proposed establishing a link between payments from structural funds and member states' macroeconomic policies in the run-up to EMU - in other words, that the Union should suspend payments to states with an excessive budget deficit, the so-called 'conditionality' principle.

That would mark a huge change in the essential character of the structural funds.

The cohesion funds were, from their creation, conditional on progress by beneficiary countries towards budget deficits of less than 3&percent;.

The implications of this have been highlighted following recent revisions to Spanish economic indicators which sparked a minor panic, amid fears that the country might forfeit some of its cohesion funds.

MEPs and the CoR are adamant that the principle should not be extended any further, given that the last thing a struggling economy needs is a cut in funds.

“We must at all costs avoid playing regional aid and the Maastricht criteria off against each other. We need both,” insists Teufel.

A recent Commission communication sought to allay such fears, stressing: “It would be impossible to modify the structural funds' regulations before the end of 1999, or change the operation of the Community budget before the third stage of EMU (locking of exchange rates).”

Ultimately, say Commission sources, the task would prove too difficult on both technical and political grounds.

Perhaps more alarming, though, is a tendency amongst member states not to use structural funds to the full even when they are available.

A forthcoming annual report on the structural funds will touch on the problem, although not in great detail.

But recent figures revealed that while Portugal, Austria and Ireland have taken up much of the funding available to them (spending more than 80&percent; of their 1994-96 allocations), the UK, the Netherlands, Italy, France and Belgium have spent less than 40&percent;. Consequently, as much as 25 billion ecu which has built up since 1989 is sitting unspent in EU coffers.

This situation has been used by some politicians to support their argument that the structural fund payments are too high.

But McCarthy insists: “The justification of a cut in payments as a result of underspends is effectively an indication of certain member states' weak commitment to spending in declining regions.”

These arguments, say critics, are another example of how the debate on regional policy is being twisted to suit the political bandwagon of the day.

EMU's difficulties should not be blamed on Europe's regions, they say. Regional difficulties should be understood and alleviated in the context of progress towards the single currency.

“Almost no one questions the beneficial effects that the creation of a single currency will have on the Union as a whole. However, the path towards this objective will provide a severe test for the weaker economies,” warned Spanish MEP Daniel Varela Suanzes-Carpegna in a recent report.

The CoR therefore recently called on EU leaders to create, before stage three of monetary union, “the economic and monetary policy instruments to guarantee sustained convergence between the member states”. It also rejected “any consolidation of public-sector budgets which would place a disproportionate burden on the regions and localities”.

But until regional politicians are given a bigger say in EU policy, they will have little sway over the decisions made in Brussels.

“No one will accept Europe if we cannot bring it closer to the people,” warns CoR President Pasqual Maragall. “Subsidiarity means dignity for all decision-makers and authorities at local and regional level. Only then will you have real cohesion.”

Teufel agrees. “The regions need to be granted the right to go to the European Court. We need more regional scope for decisions on financing,” he insists.

All these issues will be broached again in June 1997, when regional politicians plan to hold an alternative Amsterdam summit at the same time as EU leaders hold theirs.

In the meantime, Intergovernmental Conference negotiators are showing little inclination to give the regions a greater say.

Proposals for the CoR to become a kind of second chamber of the European Parliament have sunk without a trace, as well as almost any suggestions that its competence should be extended.

The best it can probably hope for is to be given an increased level of budgetary autonomy.

National governments wary of incipient local power are loathe to open a back door through which would-be regional policy-makers could enter the political arena.

But many question how long they can continue to ignore a burgeoning sense of local identity throughout the Union.