Cohesion funds: Italy and Poland up, Spain down

Essays - January 28, 2024

One third of the Union’s budget is allocated to funds which support economic development across regions in Europe, the creation of employment, and so called sustainability, particularly with regards to the current “green and digital transitions”.  Such funds are known as Cohesion Policy Funds (CHP).

Over the six-year period 2014-2020, the total amount of Cohesion Policy Funds amounted to EUR 400 billion.  In three months from now, the European Parliament will publish a study regarding CHP absortion rates among different Member States; however, the House policy department for Structural and Cohesion Policies has already made available some preliminary results.

By the end of 2020, Spain and Italy were second worst in the whole of the 27, with a poor 42% absorption rate.  This is explained because the leftwing governments of Pedro Sanchez and Giuseppe Conte’s were “prioritising expenditure rather than the selection of quality projects and their effectiveness”.

Indeed both Italy and Spain rank first and second, respectively, in number of operational programmes covered in the analysis of payments, with more than 40 each; whereas Member States with higher absorption rates, like Luxembourg, Greece, Ireland or Cyprus all account for less than 20 each.

Worse than that, by August 2023 Spain still ranks on the third worst percentage of the Union, while Giorgia Meloni’s Italy climbs a 6% closer to the EU average.

Poland, fourth in number of operational programmes and first in total resources programmed (EUR 79 billion) managed to absorb 59% up to 2020 and 97% by August 2023, fourth best in the whole of the Union.  This is despite the PiS conservative government’s difficult relationships with Mrs. von der Leyen’s European Commission, who would typically block Union monies to blackmail Warsaw under the guise of a Rule of Law argument.

The Polish case study does underline some obstacles and solutions to improve absorption, such as more EU harmonisation in procurement legislation and regulatory changes in the environment and energy sectors; but the bottom-line is that a 97% rate by the middle of last year allows for a very slight margin in order to achieve the potential maximum of 100%.

As further reasons for Madrid’s failure, the European Parliament analysis outlines the late approval of operational programmes and of intermediate bodies’ appointment.  In addition, there have been delays in the intervention planning, the publication of calls, and the operation selection.  Overall, an incompliance of timing in five areas seems a catastrophic management on behalf of Spanish authorities.

Moreover, the study claims that there were difficulties in communication and coordination between the stakeholders involved in the Cohesion Policy Funds in Spain.  Additionally, uncertainties appeared because of changes in the regulatory framework for public procurement.  Finally, the Parliament experts warn about inconsistent criteria on the eligibility of expenditure.

As an urgent solution, the involvement of more technical staff managing the funds, rather than ideologues, would be welcome in the future.  This could be achieved in part through the appointment of interim civil servants, as the rate of temporary jobs in Spain’s public administration has been widely regarded as excessive.

In particular, two regions in Spain are focused as opportunities for improvement:  Andalucia and Castilla y Leon.  In the former, Socialists were governing up to January 2019, which means that for the period up to 2023, the centre-right government by the Spanish Popular party could eventually show better results than the deficient picture shown in the analysis.

More interestingly, Castilla y Leon saw a new coalition government coming to power in April 2022 where, for the first time in history, the ECR partner party VOX is providing the Vice-President as well as the Counsellor for Industry, Commerce and Employment.  This marks a clear change of trend in Spanish politics, where efficiency in the use of public funds can be acknowledged.

Source of image:  Virgilio Notizie