Venice to duck regional funding issue

Date: 02/05/1996

By Michael Mann

THE highly-sensitive issue of the future of regional spending will be firmly off the agenda at this weekend's informal meeting of EU regional affairs ministers in Venice.

The resounding official silence on one of the key questions facing those laying the groundwork for the next round of EU enlargement reflects the European Commission's awareness of the danger of bringing the debate on the future of the Structural and Cohesion Funds into the open before the Intergovernmental Conference negotiations have reached a very advanced stage.

At all costs, it wants to prevent member states from holding the IGC talks to ransom in return for assurances on future regional funding.

“Future policies could well come up in the margins, but any formal discussion would simply end up with each member state repeating its national preoccupations and talking from 15 different scripts,” said one official.

The funds, which already amount to over a third of the EU's budget, are certain to be one of the major areas of controversy as the Union prepares to open its doors to the applicant countries of Central and Eastern Europe (CEECs).

The Commission has been at pains to play down embarrassing rumours about the potential cost of extending the EU's generous system of regional payments to countries which are even poorer than the four current beneficiaries of the 15-billion-ecu Cohesion Fund.

DGXVI, the Directorate-General responsible for regional policy, is quietly investigating possible future scenarios, but is understandably reluctant to show its hand.

Unlike in agriculture, where the Commission was under firm instructions to suggest policy alternatives by the end of 1995, it is doubtful that anything so specific will be required from DGXVI before December's Dublin summit at the earliest.

More pressing priorities at the Florence summit this June will be the fight against unemployment and the work of the IGC.

The plot will be thickened before Dublin by the long-anticipated publication of the “Cohesion Report” - the Commission's opinion on the operation of the funds to date.

The report, now delayed until after the summer break, is not supposed to be a vehicle for making proposals, but there is no doubt the Commission will take the opportunity to look ahead.

It will examine the effects of the decision taken at the time of the last review of EU funding, in 1992, to double the amount of money available for regional restructuring. There are some who believe that increased funding has actually slowed the pace of development in some regions and undermined the dynamism of local economies.

The Commission is also mindful that some member states are starting to look with concern at the growth of the Union's expenditure.

Regional Policy Commissioner Monika Wulf-Mathies has already set down guidelines for the next stage of the debate, calling for greater “concentration” of regional funds and acknowledging that future measures have to be affordable.

She has also sought to assure the four recipients of cohesion money - Spain, Portugal, Greece and Ireland - that the accession of a number of poor countries will not undermine the assistance they currently receive.

The enlargement element of the debate also means that officials in Directorate-General Ia (responsible for relations with the CEECs) are heavily involved in the debate.

But the Commission insists that although it is an important element, enlargement should not be the main factor in driving policy decisions.

The next financing package for regional funding has to be decided by the end of 1999.

The Commission will face a considerable political headache in preparing the 'Santer I' financing package at the same time as the mandates are being prepared for membership negotiations with the CEECs.

It is little wonder that no one is too anxious to begin ministerial-level talks on such a controversial question in the current climate of confusion.

Ministers will, however, discuss ways of making more efficient use of the Structural Funds at this weekend's meeting.

The Commission will stress the importance of ensuring value for money by finding a balance between transparency, simplification and flexibility, and the need for rigorous financial management.

According to the Commission, the way regional policies have developed has meant that current policy-makers have inherited a complex system and a less than clear division of responsibilities between the Commission and member states on financial management and control.

It also argues that there may actually be too many different Community initiatives, causing further confusion.

The Commission will tell ministers of its determination to apply tougher sanctions where improper use of funding is discovered and will suggest that one way of avoiding confusion would be to cut down the number of committees involved in the process and tighten control systems.