I am often asked why cohesion funds matter, both from a funding and an auditing perspective.
Their importance and sensitivity arise from the fact that as financial tools to implement the cohesion or EU regional policy, their primary aim was and remains that of reducing regional disparities in terms of economic development. They were designed as a key instrument to achieve the Lisbon Strategy objectives to create both growth and jobs.
In this day and age of aiming to correct imbalances between countries and regions they also need to deliver on the Union’s political priorities, especially the green and digital transition.
During the pandemic I had been honoured to host informal discussions at the European Court of Auditors’ offices in Luxembourg with Elisa Ferreira, the European Commissioner for Cohesion and Reform, who recently visited Malta on what seemed to be a very rewarding and successful visit.
Having discussed with her a report on cross-border co-operation with external countries outside the EU, for which I was then a Court Reporting Member, I was able to comprehend even more how both traditional and new instruments are being used to target investment and inclusive growth in this sensitive area.
Although many people tend to think of ‘cohesion’ as just another technical EU term, it is most likely the most effective instrument directly linked to equal opportunities for people to aspire to have a decent life and a good, sustainable job. All this while being able to participate and contribute to the community.
She had explained then, as she did recently in a published interview too, that while free competition in the internal market is good, to work properly, the internal market needs to operate on a level playing field to which cohesion policy contributes by rebalancing opportunities between unequal partners.
In times of crisis, member states need to be constantly allowed to allocate significant additional funding to healthcare, employment and business support- Leo Brincat
Thanks to such a policy, less developed countries and regions can aspire to play the game and be an integral part of the common market.
An effective cohesion policy relies much on encouraging convergence data. It should also ideally help address cracks and possible fractures that need to be repaired.
What I liked about this commissioner is that, rather than indulging in Brussels bubble talk, she has no hesitation in making it clear that despite their growth potential, both the green and the digital transitions need to be managed carefully. This explains the understandable reliance on the importance of the effectiveness of the implementation process linked to cohesion funds.
It is useless pontificating and delivering ‘sermons from the mount’ unless we accept the fact that different people and different regions and countries have different starting points.
All those who think the one-size-fits-all formula is best are in my view completely off target. This in itself increases the importance of a permanent and constant call for further dialogue and auditing methods linked to this pivotal sector.
Both the 2008 financial crisis and the pandemic opened new fractures, while the economic fallout of the Russian war on Ukraine made matters even more complex and complicated.
Having recently reviewed one of the latest ECA special reports on the subject I think it was very opportune on their part to analyse how cohesion policy rules adapted to respond to COVID-19. The report made it clear that while funds are and had to be used more flexibly, reflection was still needed on cohesion policy as a crisis response tool.
This in itself necessitated amendments to the 2014-2020 cohesion policy rules through what is known as CRIII/CRII+ and REACT-EU.
One cannot but admire the quick three-stage EU response to change the legal framework of cohesion policy in less than one year. It was only this rapidity that made it possible to help member states address the consequences of the COVID-19 pandemic.
In times of crisis, member states need to be constantly allowed to allocate significant additional funding to healthcare, employment and business support.
Any policy cannot be gauged solely in a standalone manner. Apart from being used to respond to crises, the Commission needs to analyse the impact of such policy on its long-term objectives too.
This also applies to cohesion funds used within the context of the Next Generation EU (NGEU). I say so because unlike the regular EU budget, which is primarily financed directly from member state contributions, these new instruments are exceptionally financed by funds borrowed on the capital markets by the Commission, on behalf of the member states themselves.
We can never afford to forget keeping in mind that management of cohesion policy is not a Brussels-driven instrument, but a policy shared by the member states and the Commission itself. Managing authorities at national and regional level are responsible for implementing cohesion policy funding through operational programmes.
Once we clearly understand these roles and responsibilities, I am quite sure that we – even as ordinary citizens and taxpayers – will become increasingly aware why cohesion funds do matter.
Leo Brincat is a former member of the European Court of Auditors.