by
Nikos Kostopoulos*
We are gradually making the transition from a period of subsidies to a period where guarantees tend to prevail. Public money no longer constitutes direct funding but guarantee, either in the form of low-interest or interest-free loans or in the form of guarantees for high risk projects. This is a fundamental shift which is building its roots deeper and deeper both in the public and private sector.
Thus, it is no surprise that strengthening the role of the financial tools is at the heart of the European Commission’s plans for the next funding period.For Greece and for the less privileged regions of Europe in general, this means that funds that until today were “reserved” for each country separately, will become “contestable” in the near future for Member States that are better prepared to attract them, having properly laid ahead the ground for investors.
Thus, it is no surprise that strengthening the role of the financial tools is at the heart of the European Commission’s plans for the next funding period.For Greece and for the less privileged regions of Europe in general, this means that funds that until today were “reserved” for each country separately, will become “contestable” in the near future for Member States that are better prepared to attract them, having properly laid ahead the ground for investors.
Tax stability, exemptions for large investments and elimination of bureaucracy are the major issues of concern for potential investors and key points on which all European governments and authorities are focusing.
However, full implementation of this model which would replace the EU’s Cohesion Policy would threaten to destroy what was built with great efforts and even greater funds over the past decades: an effort for regional convergence, through the transfer of funds and resources, support of the least privileged regions and aid for the socially disadvantaged with actions aiming at social welfare. So, will this model, which made Europe the most attractive migration destination worldwide, be overturned?
My guess is that it won’t. Both the European Investment Bank- which bears most of the implementation burden of this new policy- and the European Commission have realized that funding tools are not a panacea. They cannot efficiently tackle every challenge along the way. The issue now is for everyone to understand that a policy framework is necessary to guide investments and secure regional balance.
The failed example of the Agenda 2020, which was never implemented, dragging to failure a series of ECB programs should not be repeated. Similarly, we should avoid mistakes of the past that made Cohesion Policy cumbersome and unpopular: bureaucracy, formalism and excessive costs gave the (wrong) impression that funds in European Regions are wasted to no avail. The first EFSI assessments, however, also indicate the same conclusions: labyrinth procedures, complex bank mechanisms and difficulties in participation from the administrative mechanisms of the Member States. This leaves one to wonder whether Europe has stopped being effective for good.
The failed example of the Agenda 2020, which was never implemented, dragging to failure a series of ECB programs should not be repeated. Similarly, we should avoid mistakes of the past that made Cohesion Policy cumbersome and unpopular: bureaucracy, formalism and excessive costs gave the (wrong) impression that funds in European Regions are wasted to no avail. The first EFSI assessments, however, also indicate the same conclusions: labyrinth procedures, complex bank mechanisms and difficulties in participation from the administrative mechanisms of the Member States. This leaves one to wonder whether Europe has stopped being effective for good.
*Nikos Kostopoulos is advisor to the Governor of the North Aegean Region (Greece) and Secretary for Scientific Organisations at Nea Dimokratia political party
By: N. Peter Kramer
