EU regional policy 'at a turning point'

Nicola Zingaretti outlines what steps the EU's cohesion policy can take to adapt to the 'very special needs' of Europe's modern socioeconomic system.

By Nicola Zingaretti

07 Oct 2014

Cohesion policy, especially under the new regulations, is more than a mere financial instrument. It is also increasingly about taking on the great challenge of political innovation. Those who receive funding must spend it on areas set at a European level; they must have a strategy that determines the areas on which to focus; they must have an administrative organisation adequate to the expenditure; and they must set objectives with concrete, tangible outcomes, monitor that they are pursued and engage people and social partners. This area of political action deeply touches pivotal points of the European social and economic system, starting with an attempt to have an administrative model based on a broadly shared culture.

The crisis, with austerity policies reducing the reach of member state action, has only highlighted its role. Now more than ever its support is essential for tackling the financial and administrative shortcomings facing many regional governments. And now more than ever this support helps our regions when we feel the responsibility of having to look from a European – or indeed global – perspective if we want to be competitive. Recent experience shows us that cohesion policy can still take even more steps to adapt to the very special needs of these times. I am convinced that along with a fully domestic effort to 'Europeanise' our administrations, there are decisions to take on a European level to fully acknowledge this policy's role, and demonstrate that we truly believe in social and economic cohesion.

"This area of political action deeply touches pivotal points of the European social and economic system, starting with an attempt to have an administrative model based on a broadly shared culture"

The first step is to intelligently ease budget constraints and free up new resources; this could be achieved by simply removing the national co-financing component of EU funds from the stability pact's accounts. This would free up critical resources every year to galvanise the economy and speed up the expenditure processes. So for once, in weighing the two EU objectives – cohesion and monetary stability – let's shift the balance in favour of cohesion; there's no doubt it will help.

The second step is to streamline all European financial instruments in order to increase investment volumes and target them to specific goals. For example, working with specialised European institutions, we could develop loans for regional development with maturities of up to 60 years. We could strengthen the European investment bank and broaden its mandate, putting it in charge of ensuring the quality of European investments.

Step three is to reconsider the priorities set by recent prevalent economic theories, bearing in mind that the crisis is about more than competitiveness; it is also about the struggle against exclusion and poverty. The crisis has produced a growing number of poor and marginalised people. This is affecting our cities and rural areas alike, undermining the foundations of their social structure, rendering them more vulnerable. In my opinion, cohesion policy should be bolder and more open. Its directives should be more flexible and more focused on spurring the real inclusion of people at the margins of society.

Step four is to mitigate the effects of the absurd restraint, bureaucratically termed 'macroeconomic conditionality' – the rule that links the actual allocation of cohesion policy funds to the regions on the member states' compliance with budget balancing and the fiscal compact. The Committee of the Regions has already come out against a decision that could once again penalise communities already hard hit by the crisis and slow growth by limiting investments in the very areas suffering the most.

"Cohesion policy has its head in Brussels but its feet are firmly planted in our regions"

The fifth and final step is to create a genuine European government that can give fresh life to our shared values and support the innovative choices we must make. Cohesion policy should increase its political standing. If we want to demonstrate the deep political nature of this action and how central it is on a European level, we should launch a council of ministers for cohesion – a place for the member states' ministers to meet and discuss the improvements, objectives and problems of a European action so involved in our national systems.

The time is right. I strongly believe that we are at a turning point in EU regional policy. The crisis has highlighted its paramount importance to many economies. Beyond that there's a cultural change underway. After years in which one could not speak positively about the role of the state in the economy, we are now starting to do so again. It's no longer taboo to talk about an 'innovator state' or public action moving towards innovation. Cohesion policy – with its attention to administrative quality and its connection to major European strategic challenges – can receive this change and become the policy that shapes a new model of European development. This is a great challenge for modernisation that affects us all directly – very directly. Cohesion policy has its head in Brussels but its feet are firmly planted in our regions. Ultimately, the change it brings is enormous for us all.

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