The European Parliament’s Committee on Regional Development had an exchange of views on cohesion policy with Alves Vasco Cordeiro, President of the Committee of the Regions (CoR) on 9 September. This was followed by an exchange of views on the future of cohesion policy with Commissioner Elisa Ferreira. The meeting was chaired by the President of the REGI Committee Adrian-Dragoş Benea, who highlighted two main challenges for the next legislature: Implementing the 2021/2027 package and elaborating a new legislative package on cohesion policy with the objectives of efficient implementation, adaptation of the cohesion policy for enlargement and vision for post-2027 cohesion policy, including simplification and an adequate budget.
Cordeiro highlighted the CoR opinion on the 9th Cohesion Report, which was approved while expressing expectations in the future. “We are not in a position that we can consider cohesion policy as it is right now to be untouchable. Cohesion policy has key aspects that need to be kept and other aspects that need to be reformed and changed”, he said. “In this political context, it is clear that the EU needs a cohesion policy. Enrico Letta’s report about the single market, the strategic agenda by the Council, the Commission’s political guidelines of 18 July and Mario Draghi’s report on competitiveness all clearly state the need for a reformed cohesion policy and its importance for the future of the EU”, he went on. “It is not a charity policy”, he stressed. “It’s a policy that strengthens the ability of the regions to face challenges. It is a policy for all regions, adapted to the particular situation of each group of regions”.
He also underlined that cohesion policy is a long-term policy, which can be adjusted to extraordinary circumstances with certain pre-designed rules. Finally, he highlighted the territorial and place-based dimension of the policy. As for future reforms, he underscored the need to simplify procedures (i.e., a framework for funding), clarify rules and responsibilities, better deliver the objectives, and assess the results of the policy, and increase visibility at all levels. He also argued that the cohesion policy should be linked to the European Semester and reforms. “However, regions shall not be penalised if reforms are not being made at the national level”, he added.
Finally, he warned against the trap of talking about net contributors and beneficiaries when it comes to cohesion policy as everybody benefits. He gave the example of a less developed region that wants to build roads where customers will buy cars in more developed regions. He also drew attention to issues, such as the impact of enlargement on cohesion policy and the danger of a cohesion policy transformed in Recovery and Resilience Facility (RRF) instruments but not based on the principles of cohesion. He concluded as follows: “It is not about a policy, a ruling or a legal instrument. This is about people. Cohesion policy is what makes Europe happen everywhere. And we would have a major problem without it”.
Replying to questions from MEPs, he stated that the subsidiarity principle was important when it comes to the implementation of the cohesion policy while pointing out to the need of having flexibility and predictability to deal with extraordinary events. He added that the design of the policy, the set-up of preconditions and the involvement of local and regional authorities are necessary for a more efficient use of funds. The question of MEP Sergio Gonçalvez (S&D/Portugal) regarding the outermost regions was similarly taken on board by Cordeiro, who emphasised that excessive centralisation is a danger.
Commissioner Ferreira elaborated on cohesion policy’s achievements and challenges ahead, stressing that “cohesion is more needed than ever as is our excellent collaboration to keep cohesion as a central pillar, policy and principle of the EU”. She added: “I couldn’t agree more with Mario Draghi when he said: ‘The EU must ensure that more cities and regions can participate in the sectors that will drive future growth’. Indeed, competitiveness lies on all regions’ comparative advantages vis à vis the rest of the world.”
“Europe cannot succeed without cohesion. Cohesion cannot succeed without regional and local partners”, she went on. She stressed that the Member States that joined the EU in 2004 saw that their average GDP per head increased from 52 percent of EU average to 80 percent today, a concept referred to as the convergence machine by the World Bank.
She further went on saying: “The 2014-2020 period delivered investments and we are now preparing for final payment and administrative closure. Financing has supported 4.4 billion businesses, helped to create 1.5 million jobs. 5 million households benefited from energy savings and 63 million people gained access to better health care services.”
“Cohesion policy was equivalent to 13 percent of total public investment of the EU, representing 50 percent in certain Member States. Moreover, the cohesion policy became the first response to Covid-19, providing emergency support to vulnerable groups and keeping businesses afloat. 23 billion Euros were mobilised as an immediate response to Covid-19. Thanks to the excellent collaboration between the European Parliament and the Commission, legislation was produced in only 2 weeks and money was available on the ground in 4 weeks to support households and companies.”
Ferreira further explained that thanks to Next Generation and React-EU, 50 billion EUR extra support was provided bridging the gap between the crisis and long-term growth. Care and Care Plus packages mobilised 13,6 billion Euros to support those who were fleeing warzones in Ukraine. In addition, with the amendment to SAFE, 4,2 billion Euros were released to support households during the energy crisis.
She enumerated the following key future issues: the need for a quick, strong, and efficient implementation of the 2021-27 programmes that were delayed during numerous crises in spite of an early start and the need to prioritise crisis management in a way to cover for administrative capacity of Member States.
According to the Commissioner, in June 23 percent of the financing was confirmed and allocated, reaching over 40 percent in some Member States. 380 programmes were disbursed, and some 278 billion Euros were spent so far to support 850.000 companies, 6.5 million jobs and 725.000 homes. With national co-financing this amounted to half a trillion.
The 9th Cohesion Report and the Cohesion Forum in Brussels took stock of the situation. The first lesson is that cohesion policy is needed more than ever given the structural transitions, such as demography, digital and green. There is the phenomenon of development traps, less developed regions getting stuck because of lack of innovation, weak public services, lack of growth and skills as well as brain drain. According to the Commissioner, cohesion will remain high on the political agenda during the new legislature.
The second takeaway was that funding is not sufficient. Also, adequate strategies, administrative capacity, performing legislation, dynamic workforce, sound economic system have to be put in place to achieve reforms and capacity building. On the regional level, obstacles have to be removed and a more performance-based delivery model can be explored while targets could be better set in compliance with the objectives. Decoupling of expenditures, better measuring the results and accelerating implementation while keeping a link to regions and local partners are other steps to be taken.
The third lesson is that the partnership principle and multilevel governance are essential. The principle of subsidiarity between national, regional, and local authorities shall be respected in order to reduce regional asymmetries.
Responding to questions from MEPs, Ferreira said that cohesion policy, which is a long-term development policy, helped regions recover from the Covid-19 crisis. Whereas it had taken 10 years to recover from the 2008 crisis, only in one year regions could reach the same GDP level as before the Covid-19 crisis. She also noted that cohesion as a horizontal policy could have asymmetric impacts, hence having a joint development agenda would be the only way to keep Europe moving forward. She also mentioned the importance of capacity building as some money allocated to certain regions had to be reprogrammed because it could not be used due to lack of capacity. As for the Recovery Plan, she emphasised that it was an anticyclical instrument as opposed to a space-based, bottom-up approach that is recommended for each region.
When asked about housing, she said that cohesion policy is investing in energy conversation, solar panels and public utilities to save fossil fuels and to stop congestion. “Hence, it is a public policy that is needed to rebalance where market forces don’t work”, she proclaimed.
In addition, she stressed that it is not a transfer but a development policy, corresponding to a symbolic amount – only 1 percent of the European GDP. Some countries benefit more from single market. “Hence, cohesion policy serves as the glue keeping the EU together and rebalancing asymmetries in places like Poland, Romania, and Hungary by opening the market, allowing for free movement, and mobilising FDI. In the long term, it promotes peace, progress, stability, and democracy. Hence, a cost analysis cannot apply”, she continued.
According to the Commissioner, cohesion policy increases the relevance of Europe in the world as a solid block, including the role of its stagnant regions, in order to face China, the US, India, Brazil etc, which would be impossible if the EU was split into small economies.
Regarding youth employment, Ferreira commented that European assistance and aid was needed to support infrastructure, good employment opportunities, transport, etc. She also said that companies could relocate to small and medium-sized cities where young people want to live and stay. Reminding that emergency funds are on limited scale, she said that reconstruction funds could be used for rebuilding hospitals after seismic activities, for instance, stressing the need for EU solidarity and the necessity to make the EU support more visible.
Responding to a question on the Just Transition Fund, Ferreira replied that this new funding of 19,7 billion was built out of necessity from bits and pieces, which adds to the cohesion funding. “A lot of money that was transferred is frontloading and there is visible progress in Member States that start better organising themselves”, she said.
As to cross-border regions, she underlined the importance of cross-border cooperation, reminding that the revision of a cross-border mechanism is going on the right track.
The session was part of Commissioner Ferreira’s farewell meetings. European House Budapest will follow the hearings of the new Commissioner-designate Fitto.
