Progressive Economy newsletter - N°4 - 2017

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Newsletter - 03 - 2017 - Progressive Economy
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Newsletter N°3 - 2017
László Andor

5 good points about cohesion and conditionality in the EU

Every year comes a season for budgeting and auditing, and every time when a new long-term budget is about to be made, the costs and benefits of EU funding instruments are thoroughly discussed among member states, regions and other stakeholders. In the following five points László Andor, former EU Commissioner and Associate Professor at Corvinus University, Senior Research Fellow at IMK discuss some of the key issues of this debate.

1. Positive results with "Ex ante conditionality"

1. Positive results with Ex ante conditionality

Ex ante conditionality means that before a structural funds ‘programme can be launched, specific measures such as a clear operational strategy have to be taken in order to ensure that spending money in a particular area leads to the expected result. The experience with such ex ante conditionality’s is largely positive and helps ESIF funds demonstrate not only a net GDP growth effect but also a transformative impact towards "smart, sustainable and inclusive growth".

2. Be careful with macroeconomic and political conditionality

2. Be careful with macroeconomic and political conditionality

Macroeconomic conditionality means that the normal flow of EU funds can be interrupted and funds can be withdrawn if the country violates the Stability and Growth Pact. It has many problems, starting with the fact that it would punish regions for the failures of the central government of a country. It kills one of the most important feature of the structural funds, namely that they provide certainty and security of investment resources in low-income regions. Regarding political conditionality, again a question is whether poorer regions should suffer because of nasty governments. Sanctions without a proper focus and without guarantees against double standards may politically backfire and strengthen the hand of nationalist forces at all levels.

3. Put focus on better control and management

3. Put focus on better control and management

Progress has been made towards establishing an EU prosecutor with a power to punish the abuse of EU funds. Such an EU prosecutor with powers beyond OLAF is a good idea, but this is only an action that is possible ex post, i.e. after mishandling already happens. In recent years, however, new practices have also been developed to prevent abuse, and one could think about building on those. For example The Commission already can interrupt payments and suspends programs if there is a strong suspicion of abuse, and less than 100 per cent confidence in the integrity of management or audit at the national level.

4. EU needs a strong social dimension

4. EU needs a strong social dimension

arkets do not equalise but polarise. In order to prevent divergence in the Single Market, it needs to have a strong social dimension, in the form of social legislation, support for investment in the less developed countries and regions, and a representation of social partners in EU level decision making on all issues that affect them. These elements are absolutely fundamental components of the legitimacy and overall public support for the European project.

5. Cohesion belongs to the core mission of the EU

5. Cohesion belongs to the core mission of the EU

Cohesion is not a peripheral policy area; it belongs to the core mission of the European Union, and therefore its funding has to continue at a level comparable to the recent past. However, cohesion instruments can improve, but they cannot become overly tricky and must combine delivering economic and social convergence. The EU needs to maintain a wider range of instruments, and generate innovative solutions for the fiscal capacity of the Eurozone and the management of Cohesion Policy instruments.

Concrete achievement towards a greener Capital Market Union

S&D group succeeded to include a reporting obligation on how environmental and climate-related risk is taken into account in the investment approach of European Social Entrepreneurship Funds. The text (Review of EuVECA and EuSEF legislation) a has been adopted on the 12th of September in Strasbourg. This is a another step towards a more sustainable finance and will give investors more awareness of the sustainability of profits.

Conference, 25.09.2017: "How can sustainable finance contribute to the Paris climate goals?"

Group of the Progressive Alliance of Socialists & Democrats in the European Parliament
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