Saunas for horses or growth? Structural policy is a test case for Europe
In his article, Minister of State Michael Georg Link advocates seizing the great opportunity for promoting sustainable growth in Europe. He considers the forthcoming vote on the EU structural policy to be a test case for both Europe and its ability to overcome the crisis.
Article by Michael Georg Link, Minister of State in the Federal Foreign Office, published in the Frankfurter Allgemeine Zeitung on 7 September 2013
Recently we have begun to see the long yearned‑for green shoots of recovery from the worst of the crisis in Europe. This is a visible result of our efforts to boost growth.
No sooner does light appear at the end of the tunnel however, than it seems that decision makers’ focus on our common goal is drifting again. The most recent discussions in the European Parliament lead us to fear that inhibitive sectional interests could regain the upper hand, however we must not recklessly squander this great opportunity to promote sustainable growth.
We have the financial means that we need: the European Union wants to spend 325 billion euros on regional development over the next seven years. 20% of these funds come from the German federal budget – nearly 10 billion euros a year.
325 billion euros, that is an enormous sum – and by far the lion’s share goes to eastern and southern European member states where investments can provide the greatest stimulus for growth. Incubators for business start-ups in Poland or technology parks for highly specialised biotechnology companies and young IT service providers in the Czech Republic are good examples of how our funds are invested in robust and intelligent growth-boosting measures.
That would lead us to believe that quite naturally, the funds we have available at the moment are being spent on promoting growth, employment and competitiveness. It should be a given that as a priority funds are being channelled to projects which make a real contribution to overcoming the crisis and to those for which the most pressing funding needs have been identified.
The Federal Chancellor and the Federal Government vigorously advocated such a connection between EU funding programmes, growth stimulation and observation of budgetary rules at the EU budget negotiations. At the EU Summit in February all Heads of State and Government unanimously endorsed this stance. One would think that this is good news.
However it could be that this remains a partial victory. We are about to enter the final negotiations with the European Parliament on the critical legal texts regarding the implementation of the new rules. There are signs that large parts of the European Parliament would prefer to continue as before. But that would mean giving in to the sectional interests of regions and spending further millions inefficiently, for instance on golf tournaments, music festivals on the beach, bird watching or five‑figure sums for a “Day of the Strawberry”. If a majority in the European Parliament voted in favour then, no joke, nothing would stand in the way of funding saunas for horses. In parts of Europe the structural weaknesses run so deep and funding is so scant that we can indulge any passing fancy or local vanity project under the guise of promoting tourism or preserving tradition.
We should not hope for much from speeches delivered atop soapboxes about an abstract concept of “economic governance”. In structural policy we already can and want to set ourselves concrete and exacting rules to ensure economic prudence. The European Institutions need to implement these rules using instruments which can also hurt.
If member states flout conditions relating to deficit procedures or disregard economic policy surveillance then Brussels must be able to divert or withhold funding at an early stage. The devastating consequences of wrongly spending millions of EU project funding can only be avoided with timely macroeconomic data monitoring. The ignominious role of EU regional development funding in the Spanish property bubble is an example of this. We can no longer allow ourselves such bad investments, once they are approved the horse has already bolted – I doubt that threats of penalties would be effective.
However this is in no way about punishing those who are already suffering. Quite the opposite, those in Greece who are striving to reform should be given additional support, as the EU budget is – when properly allocated – the best instrument of solidarity that we have.
It would be a great disappointment if of all institutions, the European Parliament were to let itself be exploited by short-sighted, parochial interests. The politically desired focus on growth for the future structural policy is not a ball and chain but a prerequisite for structural policy to be able to make its contribution to overcoming the crisis. The vote on the future structural policy scheduled to take place in September in the European Parliament is a test case for both Europe and its ability to overcome this crisis.
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