Cohesion policy is the most important instrument currently available to the European Union to directly tackle social and economic disparities among its territories. Its operations, since the 1988 reform, are carried out through a multilevel governance system based on a partnership between European institutions, Member States and regional and local authorities. Given its complexity, the policy regulation needs to be periodically fine-tuned to adjust to the ever-changing economic and social realities of Europe. Cohesion policy reform cycles usually coincide with the Member States’ budget negotiations, which are essential in determining the future ambitions of the policy. Since 1997, the European Cohesion Forum has been one of the most relevant venues for high level European policy-makers to discuss the theoretical and ideational underpinnings of the policy. The 7th edition of the Cohesion Forum took place on June 26-27 in Brussels to discuss the reform that will determine cohesion policy’s objectives and rules after the end of the current multiannual financial framework, in 2020.
The budget, especially within the Eurozone, must be reinforced in order to create a macroeconomic stabilization function; the emphasis, however, should be on investment and the reduction of unemployment rather than creating a permanent transfer mechanism between Member States.
The post-2020 cohesion policy reform has been widely anticipated in recent times. The reasons are manyfold. In part these are pragmatic: with Brexit the EU will lose one of the net contributors to its budget. This means that, to keep up with current expenditures, someone else will need to bear a heavier financial burden. In this respect, the post-2020 budget proposal is foreseen to be presented by the Commission in mid-2018, which makes the discussion urgent. Political reasons are also at play: the outcome of the Brexit referendum has put the issue of the losers of the globalization once again to the fore of the European public discourse, a trend which was confirmed by the 2017 French presidential campaign. Cohesion policy is, indeed, one of the instruments that can be deployed to tackle this issue. Finally, the Commission presented its official proposal for a European Pillar of Social Rights (EPSR) in April 2017—its joint Proclamation by the European Parliament, the Council and the Commission being foreseen by the end of 2017, after the Social Summit for Fair Jobs and Growth. Cohesion policy has been presented as a key instrument in delivering many key aspects of the Pillar. The 7th Cohesion Forum gathered a large number of key policy-makers, organizing them in three panel debates. In the rest of this article we will look at the two of them which can add knowledge about the policies contributing to the resolution of the existing political conflicts in the EU.
Cohesion policy and macroeconomic governance
In the first panel the ties between cohesion policy, the EU budget and the national reforms promoted by the European Semester were discussed. Financial negotiations within the EU are notoriously one of its most divisive arenas. While the divide between net contributors and net recipients has existed for a long time, it has become particularly conflictual after the euro crisis, when the different levels of development between core and peripheries fostered an existential crisis for the Union. The aftermath of this crisis is still affecting the European debate. Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, discussed how social and economic divergence has created political and economic instability within the Union, and how cohesion policy could be used to solve this issue. The solution involves a complex policy mix. On the one hand the budget, especially within the Eurozone, must be reinforced in order to create a macroeconomic stabilization function; the emphasis, however, should be on investment and the reduction of unemployment rather than creating a permanent transfer mechanism between Member States. The new budget would be managed by a finance economic minister of the Eurozone and by an economic minister, both under democratic scrutiny. On the other hand the existing links between cohesion policy and deficit control should be strengthened so to encourage “real” economic and social convergence. In other words, the existing political conditionality should be extended so as to create incentives, at state level, to pursue the reforms elaborated within the European Semester framework.
Globalization presents itself, unavoidably, with opportunities as well as challenges. Cohesion policy can be employed to tackle the localized perverse effects of globalization.
In his keynote speech Günther Oettinger, the European Commissioner for Budget and Human Resources, discussed how Brexit is going to affect the EU coffers, by quantifying the net loss in at least €10 billion. On top of this, both the migrant crisis and the emerging European defense policy will create functional pressures on the Union. To face these new challenges, the budget will need to step up expenditures from the current 1.3% to 2% of the EU’s annual gross domestic product. In order to justify such an increase EU institutions need to demonstrate that supranational policies are able to create added value. Cohesion policy, in particular, should create convergence among territories, something that nation states are not able to do on their own.
Globalization and technological change
The second panel debate focused both on the increasing trade integration with countries outside Europe and the concurrent technological change that affect industrial processes in general. Both phenomena affect the whole EU economy. Particularly relevant are the effects on the work organization that can result in a rise in unemployment localized in the EU’s peripheral areas. Marku Markkula, the President of the Committee of the Regions, argued that globalization presents itself, unavoidably, with opportunities as well as challenges. Cohesion policy can be employed to tackle the localized perverse effects of globalization. The main aim here should be that of creating territorial resilience: since many individuals are not able to adapt to globalization, the policy should fill the gaps in specialization by providing adequate training. The policy should also support private firms in competing in the global market, by “boosting innovation”. While these solutions are not qualitatively different from what has been done starting from the Lisbon strategy, Markkula suggested that the resources needed to foster such strategy should involve more efforts on the part of private investors.
Over the years cohesion policy has become a “space-blind” device, which does not rely on local knowledge in selecting its aims, and which is aimed at a “compassionate compensation” of disadvantaged areas without really trying to change the conditions that create underdevelopment in the first place.
Marianne Thyssen, the European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, addressed some of these themes in her keynote speech. She stressed how the European Pillar of Social Rights is a response to the challenges of both globalization and digitalization. Cohesion policy should be employed to support the Pillar by investing in human capital. In particular, the European Social Fund “encourages people to be mobile and available for whenever, wherever and whatever new jobs emerge, as a result of globalization”.
An authoritative dissenting voice
In his keynote speech Fabrizio Barca, the author of the 2009 eponymous report on territorial cohesion, presented some dissenting ideas on the future of cohesion policy. Barca started by emphasizing the normative dimension inherent to the political conflict: “a sense of threat to the values of the national and local communities, a perception of uncontrolled diversity, a loss of trust in authorities”. This perception is ignited by problems that affect Europe unevenly: the already mentioned core-periphery divide and an emerging cleavage between rural and urban areas. The latter involve high skilled workers, moving towards cities, indirectly contributing to the demise of rural areas. The epistemic pro-urban bias by policy-makers could only make thing worse. In this respect, globalization and digitalization are not as culpable as the failure of cohesion policy in producing harmonious development within the EU. Over the years cohesion policy has become a “space-blind” device, which does not rely on local knowledge in selecting its aims, and which is aimed at a “compassionate compensation” of disadvantaged areas without really trying to change the conditions that create underdevelopment in the first place. The policy should uncontrovertibly aimed at providing Europeans with “the opportunity to be included”, and not at pursuing a “metaphysical convergence point”. Accordingly, cohesion policy should empower local authorities, by entrusting them with actual decision-making powers, while keeping tabs on them, so to avoid the “parochialism” which descends from their almost inherent risk-aversion. In this way, the policy could produce the “permanent institutional change” which would be sufficient to produce endogenous development. Barca’s proposal, then, is to keep the legal framework of cohesion policy unchanged, while changing its politics: EU institutions “must do a forceful political commitment to the conceptual framework”, ensuring then the necessary political will to make the whole operation succeed.
Judging from the latest Cohesion Forum, the reform debate seems to be torn between two contradictory ambitions. On the one hand, there is a general awareness that cohesion policy has moved beyond its original ethos, based on the concept of endogenous development. Over the last fifteen years attempts to make cohesion policy an instrument available to the European economic policy have increased; many of the ideas analyzed show that this general trend could possibly be confirmed by the post-2020 Cohesion Policy reform. On the other hand, authoritative voices of dissent are present; attention was given to them in the past reform. How the new cohesion policy reform will try to reconcile these two ambitions is an open question for the future.
Photo Credits CC: Delegation of the European Union to the United States
Also published on Medium.