Macroeconomic conditionality in cohesion programmes: Yes or no?

Yesterday, the EP's REGI Committee discussed on macroeconomic conditionality in cohesion programmes. 

By Hendrik Meerkamp

24 Sep 2014

Please note that this does not constitute a formal record of the proceedings of the meeting. It is dependent on interpretation and acts as an unofficial summary of the debate.

On September 23, the European Parliament’s Committee on Regional Development met for a presentation by and an exchange of views with the European Commission in matters of the ‘European Commission Communication: Guidelines on the application of the measures linking effectiveness of the European Structural and Investment Funds (ESIFs) to sound economic governance according to Article 23 of Regulation 1303/2013’.

Note that the decision to link the effectiveness of the ESIF expenditures in the EU Member States to their respect of the EU’s annual macroeconomic Country-specific recommendations (CSRs) as laid out in the European Semester process (the so-called macroeconomic conditionality) was one of the most controversial aspects discussed during the adoption phase of the horizontal EU Cohesion 2014-2020 Common Provisions Regulation in the end of 2013.


Rudolf Niessler, Director in the European Commission’s DG for Regional and Urban Policy (REGIO), started by explaining that the aim of the article 23 addressed by the Commission Communication is to ensure that the effectiveness of ESIF-supported cohesion programmes in the Member States in the programming period 2014-2020 is not undermined by counterproductive national fiscal and economic policies but that cohesion programmes may be adjusted by certain instruments to specific emerging challenges.

He then said that such available adjustment tools are far more sophisticated in the 2014-2020 programming period than in the previous 2007-2013 term. He explained that until 2013, available measures were restricted to Cohesion Fund projects and only in relation to the EU’s Excessive deficit procedure (EDP) but that as of 2014 the availability of more tools ensures a full consistency between all cohesion programmes and the European Semester’s annual Country-specific recommendations (CSRs), spanning across all ESIFs – the Cohesion Fund, European Regional Development Fund (ERDF), European Social Fund (ESF), European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF) – and across all instruments of the EU governance, i.e. the Excessive deficit procedure, the Macroeconomic imbalance procedure (MIP), and any economic adjustment programmes. He added that the procedures to apply the instruments are also more automatic and mechanical than in the past.

Before speaking on the substance of Commission Communication, Mr Niessler clarified that the document does not refer:

  • to all those frequent cases in which the European Commission and Member States routinely discuss potential readjustments of the so-called Operational Programmes (OPs, documents specifying the implementation of cohesion programmes on the ground) even in the absence of emergencies or other unforeseen situations,
  • to those cases, covering in particular paragraphs 9 to 11 of Article 23 of the horizontal EU Cohesion 2014-2020 Common Provisions Regulation, whereby the European Commission is obliged to mechanically propose a suspension trigger of ESIF funding ‘when certain stages in the various economic governance procedures are reached’ (the so-called second strand suspensions),

but that it only aims to clarify the technical procedures, provisions and modalities applicable certain exceptional cases, covering in particular paragraphs 1 to 8 of Article 23 of the horizontal EU Cohesion 2014-2020 Common Provisions Regulation, whereby the European Commission may request a Member State to re-programme part of its funding ‘when this is justified by the economic and employment challenges identified under various economic governance procedures’ and where in this context a Member State does not cooperate adequately with the European Commission by taking so-called effective actions (the so-called first strand suspensions).

In this context, Mr Niessler said, the Commission Communication aims to clarify what types of amendments to the OPs the European Commission may request in which circumstances, what the European Commission would consider to be an effective or non-effective Member States action, what circumstances may give rise to a suspension of payments, and which criteria will be used to determine the level of suspensions.

Mr Niessler then brought forward a number for underlying principles relevant to the modalities of strand one suspensions:

  • No initial OPs will be adopted which are in contradiction with relevant CSRs in the first place. Therefore, there will be a “stable starting point” and first strand reprogramming can only come into play as of 2015,
  • The European Commission will, especially for reasons of administrative complexity, pursue a very careful approach with strand one suspension procedures and will prefer “stability over frequent reprogramming”,
  • Reprogramming requests can be made within all ESIFs individually or across the ERDF and ESF but the following cornerstones must be respected: any spending ceilings set by the EU’s Multiannual Financial Framework (MFF), the minimum share of ESF spending in relation to all ESIF expenditures as set out in article 92(4) of the horizontal Cohesion 2014-2020 Common provisions regulation, the thematic concentration requirements as set out in Chapter III of the same regulation, and the financial cohesion allocations per category or regions.

Explaining the strand one reprogramming procedure in detail, Mr Niessler said that it will take place within eleven months and that it starts four months after Council has adopted the CSRs with a request by the European Commission to re-programme. He added that, when doing so, the European Commission must well explain in particular the need for intervention, how reallocated ESIF funding can contribute to tackling identified challenges, and which priorities, programmes, or parts of an OP should be reinforced but that the affected Member State can decide which ones should be reduced. He noted that, however, the European Commission has the right to say which priorities cannot be downsized.

He said that the European Commission would ask the affected Member State to submit, most importantly, revised financial tables, a new strategy of the programme(s) in question, an explanation of how the identified challenges will be achieved, and examples of actions to be taken. He stressed that a full ex-ante evaluation is not necessary.

Mr Niessler then explained that if a Member State does not react to these requests for submission, does not respond adequately to its concerns, or is not consistent in its statements, the European Commission considers that as so-called non-effective actions and may propose a suspension of a part or all payments relevant cohesion programmes in that Member States. He stressed that, however, even in these cases, the European Commission would carefully look at certain factors that may give rise to a decision to not initiate suspension procedures in the end, including unemployment rates, the proportion of people at risk of poverty or social exclusion, and potential contractions of national GDP. In cases where the European Commission nevertheless finds suspensions to be unavoidable, Mr Niessler said that a suspension ceiling of 50% of the payments to the affected programmes or priorities will apply and that the factors referred to above, if found applicable on a case-by-case basis, may decrease the ceiling to well below 50% so as to keep sanctions proportionate (unless the Member States continues to fail to cooperate adequately, in which case the suspension rate may eventually rise to 100%). He stressed that all suspensions will be lifted immediately after a Member States has produced an effective action.

Jan Marian Olbrycht (EPP, PL) asked if situations might arise in which a Member State might get around suspensions or partial suspensions just because it is weak in terms of criteria measured (GPD or unemployment figures), but not necessarily because it has not taken so-called effective actions.

He also asked how long a reprogramming process will take.

Mercedes Bresso (S&D, IT) asked how in detail the process of suspension, reprogramming, and reallocation of resources would work in practice.

Monika Vana (Greens/EFA, AT) wanted to know what the role of partnerships will be in the process of reprogramming.

Joachim Zeller (EPP, DE) stressed that many CSRs are being followed-up by the central government but that ESIF resources are often being implemented in the regions, and in this context he asked if there will be safeguards put in place for the regions so that they do not lose out if the central government fails to take so-called effective actions.


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