Cohesion and the NGEU — plugging the gap to create a fair Europe

When interviewing the various contributors to this ECA Journal on cohesion and the NextGenerationEU (NGEU), one of my first questions was often about their perception and understanding of the concept of cohesion. This was instigated by the fact that the concept has puzzled me for several years. Personally, since I joined the ECA, I have dealt with more or less all the major policy areas, except cohesion policy. To me, achieving the EU’s goal of convergence was not necessarily congruent with the idea of an effective and efficient single market. I also thought that this could be achieved much more easily by a simple redistribution of financial resources between Member States, through a sort of budgetary support that they could spend according to their specific national preferences. I quickly learned that many EU insiders considered this ‘pay out and claw back’ approach a ‘no‑go’ that might even risk undermining higher EU objectives. Hence the more complicated framework under the heading ‘cohesion’.

Further valuable insights came to me not only through the interviews for this edition of the ECA Journal, but also through a television programme I saw, although it had nothing to do with the EU as such. It was called Sander and the gap (originally in Dutch) and was made by a journalist from a rather wealthy background, a member of the economic elite. By looking into the housing market, education and healthcare, he reviewed the extent to which we can compare the opportunities of wealthy people with those of ordinary mortals. The wealthy can afford to have their children tutored, offer them financial support allowing them to snap up starter homes, or skip healthcare waiting lists. The average person has no such support, no such financial infrastructure to back them. He concluded that this leads to an everlasting gap, followed by frustration and vanishing hopes of doing better in the future, undermining the idea that merit will prevail. The central issue here is equal opportunities as a starting point to offer a fair chance of participation on a truly level playing field. In theory, many of us will agree that such gaps need to be prevented. But in practice, many of us will nonetheless support our children to enable them to get ahead, no matter what.

If we transcend from this micro level to the EU macro level, the idea of offering everyone a fair chance is one of the key objectives, if not the key aim, of the EU’s cohesion policy. The idea is to provide financial support to create equal opportunities, which in turn should facilitate convergence. Not in contradiction of the single market idea, but to make the single market function fairly. The EU Commissioner for Cohesion and Reforms, Elisa Ferreira, actually argues (see page 21) that by enabling Member States and regions to ‘play the game’, cohesion policy is essential to the functioning of Europe. This is even truer of a democratic Europe, a characteristic that stands out now more than ever, against the backdrop of war in Europe. Younous Omarjee, MEP and Chair of the Parliament’s Committee on Regional Development (REGI), underlines that diversity as an EU asset should not be used to justify inequality and inequity when it comes to salaries, education or healthcare (see page 112).

The regions that qualify for cohesion funding to ‘catch up’ are, unsurprisingly, also the least resilient to sudden shocks. And we have had a fair share of such crises in recent years, ranging from the financial crisis to the COVID-19 pandemic, and most likely now also the multiple consequences of the war in Ukraine. Somehow, albeit at differing paces, the EU has shown itself to be more resilient to these crises than many of its critics had expected. The clearest example — certainly in financial terms — is the creation of the NGEU initiative, with the Recovery and Resilience Facility as its key component. The initiative will result in a doubling of the EU’s budget for investments and reforms in response to the economic and social consequences of the COVID-19 pandemic.

While various European Commission experts, for example Director-General Gert Jan Koopman (see page 27), underline the complementarity between cohesion policy and the NGEU initiative, other experts focus on their similarities and the risks this may represent (pages 61 and 104). MEP Andrey Novakov labels this aspect of the two EU instruments as ‘frenemies and coopetition’ (see page 117). The crisis called not only for flexibility, but also for speed, as Gašper Dovžan, State Secretary of Slovenia explains (see page 37), recounting how 22 national recovery and resilience plans were approved at record speed during the Slovenian EU Presidency last year. But, as he also indicates, the plans were not pushed through no matter the cost. The innovative concept of rule of law conditionality was introduced, posing not only judicial challenges, as further explained by Professor Laurent Pech (see page 141), but also audit challenges, not least for the ECA (see page 84).

How the NGEU will influence the future of cohesion policy after the current multiannual financial framework, so beyond 2027, still remains to be seen. Certainly, cohesion policy has evolved over time against the backdrop of various crises, as Professor John Bachtler explains (see page 7). It has become more flexible, notably during the COVID-19 pandemic and the war in Ukraine, and ties into transition goals such as the Green Deal (see page 133). Likewise, it is geared more towards specific needs, as Friedemann Zippel points out (see page 13). The general feeling among the contributors to this Journal is that cohesion policy is here to stay, as argued by Lilyana Pavlova, Vice-President of the EIB. She underlines the need to work together and join forces instead of merely competing, aided by cohesion programmes through EIB investments in cohesion regions (see page 32).

If cohesion policy is here to stay, it is all the more important to assess what works well and what less so, to improve cohesion as a policy instrument. Many of the contributors agree that cohesion policy has had a positive impact on the economic and social development of the EU (see for example pages 128 and 146). But how much, in clear numbers, is difficult to say, simply because of the many variables that come into play. These are then multiplied by the numerous aspects covered by cohesion programmes, ranging from infrastructure investments to combating child poverty.

Both internal and external auditors agree that compliance with EU rules has improved over the past few decades (see pages 61), although there is ample room for improvement, including when it comes to fraud prevention and detection (see pages 77 and 137). Another side of the cohesion coin relates to performance. According to Iliana Ivanova, ECA Member and Chair of the audit chamber dealing with cohesion policy, by highlighting what works well and what does not, the ECA contributes to a more effective and cross-cutting cohesion policy (see page 49). Nonetheless, several worries remain, such as the use of performance incentives (see page 70). According to ECA Director Martin Weber, the fact that in the coming years cohesion policy will be implemented in parallel to the RRF presents a unique learning opportunity (see page 90). External auditors at both Member State and EU level are eager to identify what lessons can be learned from implementing the various national recovery plans, posing new challenges for audit (see pages 98, 108 and 121).

The production of this edition of the ECA Journal suffered due to the departure earlier this year of our deputy editor, Derek Meijers, who moved to the European Commission’s Publication Office, leaving a gap in our team. We hope he will have the chance to use his various qualities, not least regarding innovation and inspiration. Another staunch supporter of the ECA Journal also left us, in sad circumstances: on 14 April 2022, ECA Member Alex Brenninkmeijer passed away, leaving a gap in the ECA. Not only did Alex Brenninkmeijer contribute articles to the ECA Journal, he also served as chair of this Journal’s Editorial Board. He considered the Journal as one of the feedback mechanisms regarding EU policies and EU public governance, providing an accessible platform, including stories with a human touch, the citizen’s dimension, which he highlighted throughout his life.

The human aspect should perhaps be expressed more clearly in cohesion policy and the NGEU, as highlighted by ECA Member Iliana Ivanova, who points out that ‘…it is the closest to EU citizens, even though they may not often realise how projects supported by its funds are actually improving their lives.’ As complex as cohesion policy may appear, it plugs gaps regarding aspects we tend to take for granted, offering the prospect of a worthy future, including in its most vulnerable regions. With a war raging in Europe, this vulnerability may surface even more. Ultimately, cohesion policy reflects our choice of what the EU should be about: solidarity to build a society that offers its citizens equal opportunities, wherever they may live.

This article was first published on the 1/2022 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.

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