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What Price a Europe of the Regions? [June 1998; International Viewpoint 301]
The regional policy of the European Union (EU), was grandly designated in the Maastricht Treaty as a commitment to
'economic and social cohesion and solidarity among the member states'. The two main mechanisms proposed to facilitate this cohesion were the structural funds and the cohesion funds.
Structural funds were directed at poor regions across the whole of the EU, while the cohesion funds were specifically targeted at the four poorest member states – Ireland, Spain, Portugal and Greece.
And yet, despite many years of funding, the EU’s own figures, published earlier this year, show that enormous inequalities still exist.1 GDP per head ranges from nearly twice the EU average, for the port of Hamburg, to around half the average in regions of Greece, Spain, Italy and eastern Germany.2
The poorest regions in Britain are Merseyside and South Yorkshire, which stand at 70% of the EU average. Wealth remains concentrated in and around state capitals, with Greater London enjoying a GDP per head at 139% of the average.
Indeed, it is possible to talk of a 'golden banana' of wealthy regions, stretching from London, across to Brussels and Paris, down through the Rhinelands of western Germany and into northern Italy. Of the poorest states, which have been receiving the additional cohesion funds, only Ireland has made significant progress. The position of both the Spanish and Portuguese states has only slightly improved, while Greece has actually declined.
The Irish experience is held up as a model by many in Plaid Cymru and the Scottish National Party, with regard to benefits of statehood and a seat at the Council of Ministers. Suffice it to say that while Ireland has enjoyed a mini boom in the last few years, the need for matching funding for all EU grants has meant cuts in many other areas of government spending. And the benefits of the cohesion fund bonanza have been very unevenly distributed, contributing to a deepening of inequality within the country.
The central approach has been to use spending on infrastructure and significant corporate tax breaks to attract inward investment – hardly a model of equitable and sustainable development which other small nations could or should try to emulate.
Thus EU regional policy is condemned as a failure by its own figures. There has been no fundamental change in the pattern of regional inequalities since the early 1970s, when regional funds were first established. In fact, the situation has deteriorated. And the concentration of wealth and investment in the core regions of Europe is set to continue, facilitated by the free movement of capital and labour enshrined in the Single European Act and the shake-out of less profitable branches and enterprises under a single currency.3
More far-sighted observers warned of these trends when the Maastricht treaty was first signed.4 Indeed, even some supporters of Maastricht, such as Wayne David, leader of the British Labour group in the European Parliament, have openly acknowledged that such trends are inevitable.5
According to an analysis common to many social democrats, Maastricht contained two trends. The first was a move towards concentration of ownership and the centralisation of production in a few core regions, driven by economic and monetary union. The second a counter-tendency towards regional decentralisation, facilitated by regional funds, the creation of the Committee of the Regions and the principle of subsidiarity.
The funds have clearly failed, so what of the political manifestation of this approach, the Committee of the Regions? This body was established by the Maastricht Treaty and first met in 1994. It is composed of 222 delegates from regional and local authorities across the EU and must be consulted by the Council and Commission on certain areas where regional interests are deemed to be involved.
It can also deliver opinions on its own initiative, but has no powers beyond this. However, the real problem with the Committee is not only that it is powerless but the wide, and sometimes contradictory, interests which it represents.
It is only necessary to consider the diversity of small nation and regionalist politics across the EU to appreciate this point. At the risk of being schematic, the small-nation nationalism of poorer nations is most often to the left, such as in Wales, Scotland and the Basque Country. This is not least because it is often in direct competition with a more centralist social democracy for working class votes.
On the other hand, the ascendant nationalism of more prosperous small nations, such as Catalonia and Flanders, is predominantly to the right, though with an important left-wing component. The relatively new phenomenon of right-wing regionalism is most spectacularly illustrated by the Northern League in Italy, but also by significant votes for the Republican Party in Baden-Wurttemberg in the early 1990s.
It is inconceivable that right-wing politicians from Europe’s richest regions, which benefit from the current inequalities, will find common cause with those from the poorest, who are obliged to support a more redistributive approach.
Such are the dilemmas and contradictions of EU regional policy as we approach the creation of a single currency. Since the current meagre resources allocated to regional assistance have clearly failed and the existing centralist economic tendencies will be accelerated by monetary union, it might be expected that an increase in regional funds would be in order. In fact, the opposite is the case, as regional funds are to be reduced in order to release funds for EU enlargement to the East.
The proposals are contained in a document from the European Commission entitled Agenda 20006 and have serious implications for regional funds and the Common Agricultural Policy (CAP). The reform of the CAP is outside the scope of this article but while the present system cannot be defended, the alternative being proposed, of opening EU agriculture to the
'free' market, will be equally detrimental to small farmers, rural workers and the environment.7
The terms of enlargement are also likely to be detrimental to the workers and poor of the new member states to the East. Existing Association Agreements between the EU and the eastern states already work to boost EU exports to those countries, while restricting the import of textiles, coal and steel into the EU.8
The continued imposition of austerity measures is also a precondition for EU membership, which will cause further erosions in social provision and an increase in unemployment. Despite this, the new élites in Eastern Europe express an almost desperate desire to get on the right side of the borders of
'Fortress Europe' as laid down by the Schengen agreement.
In the words of Igor Bavcar, Slovenia’s minister for European affairs
The budgetary framework for Agenda 2000 has been set by the Council of Ministers, which has fixed the total EU budget at 1.27% of Union GDP for the period 1999 to 2006. This figure has been described as
'woefully inadequate' by many commentators.
Since no significant increase in cash will be available after the year 2000, the money for enlargement has to come from the existing programmes.
The table shows a breakdown of the regional budget for the period 2000 to 2006.
Under the new proposals, the present five categories of regional assistance will be reduced to three:
Funding at pre Agenda 2000 levels will only be automatic for Objective 1 areas. Areas which lose Objective 1 status will have their funding phased out over six years; those that lose Objective 2 status over four years. The document is committed to promoting labour flexibility, in line with the decisions of the Luxembourg Summit last November, stating that 'a key task of structural policy will be to underpin the reform of labour market policies and practices'. The convergence criteria are also invoked, in that control over the allocation of cohesion funds will be 'strengthened to prevent excessive public deficits in the context of the stability and growth (sic) Pact.' With the current summit being held in Cardiff, it is appropriate to take Wales as an example of the effects of Agenda 2000. Under the current system, most of the country is covered by either Objective 2 or Objective 5b status. This has resulted in annual funding of around 100 million Ecu (£150 million) a year for the period 1994-99. This is indeed a small amount of money, compared to the British state’s allocation of over £7 billion to the Welsh Office budget! But most of this is set to disappear by the year 2003, since Wales does not currently qualify for Objective 1 status and only small parts of the country will qualify for Objective 2. The proposals have predictably raised a storm of protest from governments and politicians across the Union, worried about the effect that such drastic cutbacks will have on their electorates.11 The response in Wales, which mirrors that in Britain as a whole, has been threefold:
Each of these approaches, in their own way, miss the point. The key issue is that regional funds were inadequate to begin with. The cash pot has suddenly got much smaller, and any attempts to redefine criteria or redraw maps will only result in some regions securing funds at the expense of others. Far too much money and effort is already spent by poor regions in competing for scant EU funds: to intensify this scramble still further is a desperate lunacy. All of the approaches accept the logic of taking part in an enormous competition amongst the poor for a shrinking pot of EU assistance. A competition both within the existing member states and between the poorest regions, East and West, within an enlarged EU. The starting point for the left must be to reject this whole approach and in so doing, to reject Agenda 2000 as a basis for enlargement. The Marxist left has generally given insufficient attention to the regional dimension of EU politics.14 This reflects, perhaps, its concentration in the metropolitan centres, where regional aid is less of an issue. And yet at present, 51% of the EU population lives in areas covered by regional programmes. The funds involved are indeed small, in financial terms, but their real importance lies in the ideological gloss and justification which they provide for social democratic and left politicians to support the Maastricht process. Hence, the visible outrage (and thinly disguised panic) in response to the current proposals. It is clear that the European left needs a wide ranging discussion on how to respond to Agenda 2000. It is perhaps useful to propose at the outset some general points on which the discussion should be based:
Of course, none of these demands will be won, or even forced onto the agenda, without a concerted effort. It is time that the leaders of our trade unions and the left parties gave some real content to their talk of a social Europe, by mounting active campaigns on demands such as those above. It is also vital that we continue to develop the existing Europe-wide campaigns on these issues, such as those which have successfully mobilised for the Summits in Amsterdam, Luxembourg and Cardiff. The Single European Act, the Treaties of Maastricht and Amsterdam and the Dublin Stability Pact were each, in their own way, blows against the workers and poor of Europe. Agenda 2000 threatens to further reinforce a 'Europe of the core regions' at the expense of an impoverished periphery to its south, west and east. It must be opposed.
Notes
1 'GDP in the Regions', Eurostat Report, April 1998.
2 Gross domestic product (GDP) is a measure of the total goods and services produced in a given region.
3 For a more detailed discussion of uneven development in Europe, see Brendan Young,
'Wales in Europe: the poor relation?', Conference Papers, Socialists and a Welsh Assembly, Cardiff, July 1997.
4 Ash Amin and John Tomaney, 'EC policy muddle will fail the poorer regions',
The Guardian, 13 July 1992.
5 Wayne David, 'Building on Maastricht: a left agenda for Europe', Tribune Group of Euro MP’s, March 1993.
6 'Agenda 2000: the legislative proposals', The European Commission, Document IP/98/258, March 1998.
7 'The common agricultural policy',
International Viewpoint, Special Issue on the EU, No 290, 1997.
8 Catherine Samary, 'Can the EU absorb the east?',
International Viewpoint, No 278, June 1996. Also,
'The EU’s eastward expansion', International Viewpoint, No 290, 1997.
9 Marc Champion and Tim King, 'Long road ahead to the EU for eastern
supplicants', The European, 1-12 April 1998.
10 One Ecu = 0.65 British pounds, 0.79 Irish punts or 1.1 US dollars.
11 Martin Walker and David Gow, 'Poorer UK regions face ‘colossal’ Europe aid
cut', The Guardian, 19 March 1998. Also, 'Agenda 2000 - protests at regional reform
plans', European Parliament News, April 1998.
12 See, for example, Victoria Winkler, 'Strategic partnerships and a communitaire
spirit', Agenda, Institute of Welsh Affairs, Summer 1996.
13 The National Assembly provides a limited measure of autonomy for Wales, though its powers fall far short of those granted to the Scottish Parliament or regional governments in Catalonia and the Basque Country.
14 A notable, and interesting, exception is the article by Claude Gabriel, 'The crisis of citizenship and the future of
Europe', International Viewpoint, No 228, May 1992.
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