BERLIN: Plans supported by several Western European states including Germany to cut European Union (EU) funding to poorer regions in the east of the bloc could backfire, a report published on Friday by the magazine SPIEGEL warns.
According to SPIEGEL, a reduction or more selective distribution of so-called EU structure or cohesion funds could harm German exports to poorer neighbouring countries such as Poland and the Czech Republic.Resulting savings in the transfer of cohesion funds could help make up for a forecasted annual budgetary shortfall of circa 12 billion euros (14.7 billion U.S dollars) from 2021 onwards which will be caused by Britain’s decision to leave the bloc.
Additionally, several Western members hope to pressure members of the “Visegrad” group, including Poland, Hungary, the Czech Republic and Slovakia, to refrain from right-wing populist policies, uphold the national rule of law, and comply with EU directives by curtailing their access to EU budgets.
The EU currently spends around 50 billion euros each year, a third of its total budget, to promote the economic development of poorer member states and regions. Visegrad countries receive the lion’s share of the money and have attracted growing criticism from major net contributors to the cohesion funds in Western Europe who accuse the likes of Warsaw, Prague and Budapest for refusing to accept their legally-binding share of refugees under the European asylum system.
Furthermore, halting the flow of EU cohesion funds to Eastern Europe could have a boomerang effect on growth in Western Europe. The EU Commission estimates that a quarter of gross domestic product (GDP) expansion in net contributor countries between 2007 and 2013 was attributable to indirect positive effects of the controversial subsidies.
