Poorer states say EU spending proposals unfair

Poorer states say EU spending proposals unfair

The European Union's eastern and southern countries on Tuesday rejected efforts to cap aid they receive from the EU budget and attach conditions, fearing "the poorer will get less and the richer will get more".

The EU, which is gearing up for a battle over its 2021-27 budget plan, provides aid known as cohesion funds to member states in the south and east to help them invest in development and catch up with richer peers to the north and west.

But various proposals by Germany, the executive European Commission and current EU president Finland would reduce the size of the cohesion funds and attach conditions which would predetermine areas where investments should go.

"The Commission proposal is really unacceptable for us," Czech Prime Minister Andrej Babis said at a summit in Prague of the Friends of Cohesion group.

"The current Commission made a proposal that is not fair," Hungarian Prime Minister Viktor Orban said. "The new proposal wants to reduce cohesion – in other words the poorer will get less and the richer will get more."

The group of 16 countries signed a declaration calling for cohesion funds to stay at the same level, in real terms, in the next budget period, and for allowing member states to direct them where they see necessary rather than channelling them to pre-determined areas.

Discussions over the long-term budget are likely to be tough because an economic recession may be looming in Europe and Britain's likely departure will also leave a hole because it has been a net contributor to EU coffers.

 

GERMAN CONCERNS

The current budget amounts to 1% of the EU's combined Gross National Income (GNI). The European Commission has proposed a seven-year budget of about 1.1 trillion euros ($1.22 trillion) that would be about 1.11% of the EU's combined GNI.

But Germany, the biggest EU economy and paymaster, wants to ensure its contributions to the budget do not shoot up when Britain leaves, and proposes a 1% cap.

Finland is due to set out budget proposals later this month for discussion at an EU summit on Dec. 12-13.

Babis said he saw potential savings in areas including defence and border protection, which can be funded nationally, and open more room for the cohesion policies.

He said that after Britain's departure, no member state should get a "rebate" on its contribution to the budget.

"The rebates must go. That is 14.5 billion euros for the next budget period, excluding Britain," Babis said. (Reuters)

Source: www.businessworld.ie