The future of cohesion policy and the future of Europe

1. The future of cohesion policy and the future of Europe Oliver HEIDEN IVAP / EIPA: The present and the future of the European Union and EU funds: benefits or obstacles in development? 25-26 May 2017

2. … there are unprecedented challenges for the future of Cohesion Policy Direct management of EU programmes EMU: Fiscal Capacity Cohesion Policy ? UK withdrawal from the EU EFSI/Loan financing European Semester Conditionality Complexity of the Policy Future of Europe

3. The potential impact of BREXIT on Cohesion Policy

4. Options UK accepts legal commitments for RAL and other liablities until the end of 2020 (de facto 2023) New MFF from 2021 onwards Option 1: Deal can be found with the UK on Brexit UK doesaccept legal commitments for RAL and other liablities until May 2019 Rev. ofexisting MFF for 2020 Option 2: no deal can be found on Brexit ? UK does not accept any legal commitmentsbeyond May 2019

5. UK liabilitiesuntilthe end of the current MFF House of Lords report*: • Assuming that receipts from the EU to the public and private sector continued until the end of 2020, alongside UK payments into the EU budget, the net cost would be around £12.4 billion, for the 21 months between 1 April 2019 and 31 December 2020. • If it were argued that the UK were liable for a share of RAL, using the Commission’s forecast for 2020 and the maximum assessment of the UK’s share as 15%, the total liability could amount to some €38.1 billion. • Based on the UK’saverage contribution to the EU budget (between 8% and 15%), the proportion of those currently serving in EU institutions who are UK nationals (4%), or the proportion of those in receipt of an EU pension who are UK nationals (8%). The total liability on this basis would be likely to come to between €2.5 billion and €9.6 billion. * https://www.publications.parliament.uk/pa/ld201617/ldselect/ldeucom/125/125.pdf

6. What happens if no deal is reached…. If no agreement on MFF review can befound, the2019 budget would be the basis for the2020 • Art. 315 TFEU stipulates that, “if, at the beginning of a financial year, the budget has not yet been definitively adopted, a sum equivalent to not more than one twelfth of the budget appropriations for the preceding financial year may be spent each month in respect of any chapter of the budget.” • unclear whether liabilities of the previous commitments have to be met House of Lords report*: • “On the basis of the legal opinions we have considered we conclude that, as a matter of EU law, Article 50 TEU allows the UK to leave the EU without being liable for outstanding financial obligations under the EU budget and related financial instruments, unless a withdrawal agreement is concluded which resolves this issue.” * https://www.publications.parliament.uk/pa/ld201617/ldselect/ldeucom/125/125.pdf

7. StructuralFundinggapofBrexitbeyond 2020* http://www.institutdelors.eu/media/brexiteubudget-haasrubio-jdi-jan17.pdf?pdf=ok

8. Options for Balancing the Books • Increase contributions • Budget cuts • Mix of increased contributions and budget cuts • Different scenarios depending on different objectives

9. Impact on Cohesion Policy

10. Key interests of the Member States

11. Possible consequences for Cohesion Policy • The debate and timetable on the future of cohesion will be strongly affected by the BREXIT negotiations • If no BREXIT deal can be found it is unclear what implication this will have on the ongoing programmes and RAL: • Change of all operational programmes and legal commitments? • Drastic reduction of available funding to cover RAL etc.? • If no extra resources or additional contributions to the EU budget beyond 2020 can be found key elements of cohesion policy could be at risk to cover the structural deficit, i.e.: • Funding for developed regions • Funding for transition regions • Reduced aid intensity • Lowering the co-financing rate

12. The White Paper on the future of Europe

13. The White Paper on the future of the EU Scenario 4: “the EU27 stops acting or does less in domains where it is perceived as having more limited added value, or as being unable to deliver on promises. This includes areas such as regional development, public health, or parts of employment and social policy not directly related to the functioning of the single market.”* * https://ec.europa.eu/commission/sites/beta-political/files/white_paper_on_the_future_of_europe_en.pdf

14. Five Scenarios

15. Scenario 1 Carrying on The EU27 focuses on delivering its positive reform agenda. The positive agenda of action continues to deliver concrete results The unity of the EU at 27 is preserved The unity of the 27 may still be tested in the event of major disputes The gap between promise and delivery will only progressively be closed if there is collective resolve to deliver jointly

16. Scenario 1: Carrying on By 2025 this could mean: Europeans can drive automated and connected cars (with Internet access) but encounter problems when crossing borders as some legal and technical obstacles persist. Europeans mostly travel across borders without having to stop for checks. Reinforced security controls mean having to arrive at airports and train stations well in advance.

17. Scenario 2 Nothing but the Single Market The EU27 cannot agree to do more in many policy areas beyond key aspects of the single market Decision-making may be simpler to understand It becomes harder to address issues of concern to more than one Member State and therefore the gap between expectations and delivery widens on common challenges Citizens' rights guaranteed under EU law may become restricted over time

18. Scenario 2: Nothing but the Single Market By 2025 this could mean: Crossing borders becomes difficult due to regular checks. Finding a job abroad is harder and the transfer of pension rights to another country not guaranteed. Those falling ill abroad face expensive medical bills. Europeans are reluctant to use connected cars due to the absence of EU-wide rules and technical standards.

19. Scenario 3 Those Who Want More Do More The EU27 proceeds as today but allows willing Member States to do more together in specific areas The unity of the EU at 27 is preserved while progress is made possible for those who want more The gap between expectation and delivery closes in countries who want and choose to do more Questions arise about the transparency and accountability of the different layers of decision-making Citizens' rights guaranteed under EU law vary depending on where people live

20. Scenario 3: Those Who Want More Do More By 2025 this could mean: 15 Member States set up a police and magistrates corps to tackle cross-border criminal activities. Security information is immediately exchanged as national databases are fully interconnected. Connected cars are used widely in 12 Member States which have agreed to harmonise their liability rules and technical standards.

21. Scenario 4 Doing Less More Efficiently The EU27 focuses on delivering more and faster in selected policy areas not acting in where it is perceived not to have an added value European citizens feel that the EU is only acting where it has real added value A clearer focus of resources and attention on a number of selected domains helps the EU27 to act faster The EU at first has difficulty in agreeing which areas it should prioritise

22. Scenario 4: Doing Less More Efficiently By 2025 this could mean: A European Telecoms Authority will have the power to free up frequencies for cross-border communication services used e.g. by connected cars. It also protects the rights of mobile and Internet users across the EU. A new European Counter-Terrorism Agency helps deter and prevent serious attacks through a systematic tracking and flagging of suspects.

23. Scenario 5 Doing Much More Together Member States decide to do much more together across all policy areas There is far greater and quicker decision-making at EU level Citizens have more rights under EU law Parts of society which feel that the EU lacks legitimacy or has taken too much power away from national authorities risk being alienated

24. Scenario 5: Doing Much More Together By 2025 ts could mean: Citizens travelling abroad receive consular protection and assistance from EU embassies, which in some parts of the world have replaced national ones. Non-EU citizens wishing to travel to Europe can process visa applications through the same network. Connected cars drive seamlessly across Europe as clear EU-wide rules exist. Drivers rely on an EU agency to enforce the rules.

25. The way ahead 2017 25 March End April 29 April Mid-May End May Commission reflection paper on the social dimension of Europe Commission reflection paper on harnessing globalisation Commission reflection paper on the deepening of the Economic and Monetary Union EU27 Summit - Rome Declaration - 60th anniversary of the Treaties of Rome Extraordinary European Council Early June Commission reflection paper on the future of European defence Mid-September President Juncker's State of the Union Speech 2017 19 – 20 October European Council End June Commission reflection paper on the future of EU finances 14 – 15 December European Council Throughout 2017-2018 June 2019 Future of Europe Debates European Parliament elections

26. Every scenario of the EC White Paper has different territorial implications* In scenario 1(carrying on) current territorial imbalances will remain for a foreseeable future and may even deepen as especially larger metropolitan areas thrive. In scenario 2 (nothing but the single market), territorial diversity in Europe will flourish in terms of increasing disparities between Member States . In scenario 3 (those who want more do more), it seems that we will have a multi-speed Europe of different functional geographies. Most possibly with a core (with more integration in several EU policies) and fringes (accessing selected EU policies of their interest). In scenario 4 (doingless more efficiently) we may see decreasing socio-economic divergence between EU Member States. Depending on national policies put in place, in some countries regional disparities may increase while they decrease in others. Scenario 5 (doing much more together) may offer the prospect of increasing cohesion between Member States, accompanied by the risk of increasing disparities between regions. Considering the scenarios’ implications for economic, social and territorial cohesion is a must. The territorial balance within Europe and the development challenges and opportunities of regions and cities differ between the scenarios. Every scenario needs a corresponding territorial scenario to discussdesirable futures.   *http://www.spatialforesight.eu/tl_files/files/editors/dokumente/Brief-2017-7_170425.pdf

27. Reflection paper on the Social dimension of the EU (quotes) • The pace and complexity of many transformations currently underway fuel a perception - and a real risk - of disruptions and insecurity for the lives of many, as well as broader inequity and inequality. • Social realities within Europe differ greatly, depending on where we live and work. • Europe has always meant convergence towards higher living standards. In the past, this convergence took place almost automatically, through the internal market and support from EU funds, so much so that the World Bank dubbed the EU as “the convergence machine”. Yet, in recent years, convergence has slowed down considerably, if not come to a halt, as the best performers progress faster. • Economic indicators of living standards show a varied picture across Europe. And yet, even national averages do not tell the full story, as they mask even greater disparities within the territories of the Member States, with pockets of relative wealth in less well-off countries and vice versa. • Thanks to the support of agricultural funds, rural areas – three-quarters of Europe's territory - have also seen a significant improvement in their development. • Nevertheless, progress is not evenly felt across all regions or in all parts of society. For instance, while the partial or full delocalisation of companies has not had negative overall effects for some countries and is part of the possibilities offered to enterprises through the Single Market, this has brought about serious hardship and losses for many individual regions. • Ensuring that all third country nationals are effectively integrated, fully participate and contribute is important for the future prosperity and cohesion of European societies as a whole. • There is no "one-size-fits-all" approach across Europe, but there are common challenges and there is a shared need to act. At a time of rapid and constant change, the focus should be on empowering individuals and building more resilient societal structures, able to adapt successfully over time. Published 26.04.2017

28. Reflection paper Harnessing Globalisation (quotes) • Many European regions are well positioned to take advantage of the opportunities offered by globalisation. However, others face a higher risk of heavy job losses as a result of international competition and technological change. Vulnerable regions can be found across Europe, though most are located in southern, central and eastern Europe. • The divide between more technologically advanced regions and those that are less advanced risks widening, unless governments invest in education, equip their citizens with the right skills, encourage innovation, ensure fair competition and regulate smartly where needed. • Changes associated with globalisation can lead to calls for countries to isolate and insulate themselves from what is happening around them. This is particularly acute in regions that have been left behind. • Appropriate fiscal and structural policies by Member States also play a key role. European Structural and Investment Funds can also help promote essential investments to improve infrastructure and innovation or to support the development of human capital and employment. • We therefore need to target regional and local investment needs, skills gaps and regulatory obstacles to ensure that all regions can benefit from the internal market and better prepare themselves for the challenges of globalization. • Special attention should also be paid to strengthening the resilience of rural communities that are at risk of being left behind by globalisation or demographic change. • Approaches developed in one country, region or town may not necessarily work elsewhere. • Consideration should be given to make the [European Globalisation Adjustment Fund] more operational, in order to ensure a fast deployment in case of factory closure, and more flexible, in order to enable it to support a broader range of economic development actions than the current focus on the affected workers. Published 10.05.2017

29. Reflection Paper on harnessing globalisation (CoR input) • 1. Preparing regions to face the challenges • using the territorial and place-based approach to promote innovative co-investments and cooperation between multiple levels of government • promoting research, development, innovation at regional and local level • the elaboration and delivery of SME internationalisationprogrammes • 2. Mitigating the negative impact • better linking existing European Globalisation Fund (EGF) with the place-based approach • encouraging public-private partnerships for local/regional mitigation strategies • 3. Empowering cities and regions by enhancing transparency of the EU's decision-making processes • suggesting an inclusive working method involving RLAs • usingterritorial impact assessment

30. The CoR strategy on the future of cohesion policy

31. … the future of Cohesion Policy beyond 2020 timelineis set… 2017 2018 COM September 7th Cohesionreport 26-27 June Cohesion Forum December Proposal on thenext MFF March 2018 (tbc) Presentationof legislative proposals Council 25 April GAC on CohesionPolicy 8-9 June Inf. ministerial meeting 15 November GAC on CohesionPolicy EP 18 May REGI adoption Building Blocks forthefutureofCohesion 13 June EP adoption Building Blocks forthefutureofCohesion 11-12 May Adoption ofopinion at Plenary 18 May „Alliance on the Future of CP“ 2-3 March COTER mtg. andconf. Adoption ofopinion CoR 9-12 October EWRC REGI-COTER

32. … the CoR is well equipped with political positions to respond to these challenges CoR Documents for the debate on the future of cohesion policy: • Opinion on the future of Cohesion Policy (Michael Schneider) • CoR Plenary adoption on May 11th 2017 • Discussions with VP Katainen and Commissioner Oettinger Other important documents: • Opinon on the simplification of Cohesion Policy (Petr Osvald) • Opinion on the review of the Financial Regulation (Michiel Rijsberman) • Opinon on the territorial vision (OldřichVlasák) • Opinion on smart specialisation (Mikel Irujo Amezaga) • Opinion on GDP and beyond (Catiuscia Marini) • …

33. … key elements of the CoR strategy (so far) Researchers/ ThinkTanks European Commission DG REGIO/DG BUDG CoR Communication Strategy regarding Cohesion Policy UK EuropeanParliament European Investment Bank Council/Presidencies Visegrad V4+4 Territorial Associations

34. … main elements of the CoR Strategy (I)

35. … main elements of the CoR Strategy (II)

36. Main challenges • Budget of territorial cooperation (Interreg Europe, Macro-regional strategies, Cross-border cooperation) • Regionalisation of funds (multi-regional funds) • Flexibility of different funds (ERDF, ESF, CF, EAFRD, EMFF) • Take up of financial instruments • Simplification, Proportionality (Auditing, Reporting requirements, State aid, Public procurement) • Smart Specialisation • Economic governance, macro-economic conditionalities (art. 23)

37. Alliance building with the Territorial Associations • European Committee of the Regions • Round Table discussion on the objective of economic, social and territorial cohesion in the wider debate on the future of Europe • Round Table discussion on the future ofCohesion policy

38. Concluding remarks • Cohesion policy is confronted with an unprecedented number of challenges • Economic, social and territorial cohesion was never more important than today – whereas the policy is criticised more than ever before • The changes of the policy have (not yet) been fully implemented • Promoting the place based approach in other EU policies (i.e. industrial policy, innovation, etc.) is key! • Avoiding double funding (i.e. innovation, SME, urban matters) • Raise awareness of the territorial impacts and imbalances • Promote the budget for results idea of all EU policies • Communicate about the results… communicate … communicate….

40. Thank you very much for your attention.