& Events

EU support for regions with geographic and demographic handicaps. What is at stake?

Jan 11, 2023 | News

Read the article in PDF.

AEIDL contributes to the Committee of the Regions Opinion that makes forward-looking proposals to support Europe’s more disadvantaged areas. 

On 1st December, the European Committee of the Regions (CoR) adopted the opinion of Nanette Maupertuis , President of the Corsica Regional Assembly on “Enhancing Cohesion Policy support for regions with geographic and demographic handicaps (Article 174 the Treaty on the Functioning of the EU)”.  It is a key piece of the political discussion that is already shaping up on the future of EU support for Territorial Cohesion.

The European Union does not respect its founding treaty if it doesn’t sufficiently take into account the constraints of territories like islands, mountains and rural areas. Their geographical condition implies additional costs for services like transport, energy, digital connectivity that need to be considered in order to not increase interregional disparities. Therefore, the Committee calls for the needs of these regions to be included in the development of the various EU policies with a territorial dimension, beyond Cohesion Policy.” Rapporteur Nanette Maupertuis

What is at stake?

Regions with permanent natural or demographic handicaps, such as those with very low population density, islands, cross-border and mountain regions, rural areas and regions experiencing an industrial transition, cover the vast majority of the European landmass. They are meant to be protected by Article 174 of the Treaty on the Functioning of the European Union.  The 8th cohesion report found that in 2040 half of EU regions will be demographically declining. Mountain areas represent 29% of the EU’s surface area, while islands are home to over 20.5 million inhabitants (4.6% of the EU’s population).

The concerns about the new “geography of EU discontent” is very much behind the creation of a Commission Vice Presidency of Democracy and Demography and subsequently the Long Term Vision for Rural Areas and the new Rural Pact, where indeed AEIDL will play a very active role.

Furthermore, the 2021-2027 Partnership Agreements and CAP Strategic Plans, together with the post COVID-19 Next Generation EU 2020-2026 Recovery and Resilience Plans, are about to launch, or are already progressing full steam ahead.

To take stock of all these developments, and to start the policy discussions post 2027 all the EU institutions, and notably the European Commission (EC) and the European Parliament, are in preparations for the future shape of EU policies.  As last time round, the ECis launching a High Level Group on the Future of Cohesion Policy in January 2023. The European Committee of the Regions (CoR), which is the EU assembly that brings together regional and local elected representatives, is no exception, and has traditionally led the way in key aspects of territorial policy thinking, from simplification of EU funds to territorial impact assessments.   

A key part of this effort is this Opinion on Art. 174. Dr Serafin Pazos-Vidal, AEIDL Senior Expert on Rural and Territorial Development was appointed as the technical expert for this Opinion.  

AEIDL is a non-partisan organisation and is happy to work with a variety of stakeholders of different policy and political persuasions. Indeed, as a result of a number of compromises the Opinion was unanimous: it received the backing of all European political groups represented at CoR. Previously it had benefited from the input of a variety of pan-European networks (Euromontana, Association of European Border Regions, for instance) and individual regions that contributed to it. Likewise it was also the result of detailed discussions with DG REGIO officials and key MEPs such as the Chair of the REGI Committee Younus Omarjee MEP (who also attended the final vote at the CoR Plenary) and key representatives from the RUMRA intergroup. Likewise, Ms Maupertuis discussed the key elements of her opinions with the REGI Committee on the eve of the vote.

To sum up, all in all it was a very rounded political exercise that, despite the heterogeneity of the regions covered by art. 174 (to rural areas, areas affected by industrial transition, regions which suffer from severe and permanent natural or demographic handicaps, island, cross-border and mountain regions), managed to put together a series of forward looking proposals. The rest of this piece will critically examine how this was done, and what it tells us about the present state of territorial cohesion in the EU.

Uniting all the regions with serious handicaps

First, it is important to note that an agreement was relatively doable because there is little financial pressure: national and regional budgets are awash with fresh or still unspent money from the Cohesion and Next Generation funds, and soon those of CAP. Indeed, it is an oddity of the EU policy processes that the debate about the future of EU policies and funds commenced before the new 2021/2027 funds have even started to be spent, let alone after a proper evaluation of the previous 2014-2020 has been carried out. But that is the imperative of a multilevel polity such as the EU with very different timelines at EU, national and local levels. 

Secondly, art. 174 TFEU is a mishmash of a very large variety of territories which, added together, amount to the large part of the EU in territory and a very sizeable part of its population: in other words, while the EU shall foster economic integration it shall not forget, and should ideally support, the losers of the single market and of globalisation in general. 

For a few years now EU texts have strict length limits (to reduce translation costs) so any examination of each type of territory covered by Article 174 would have been inconclusive and unfit for its basic purpose: to move the boundaries of what is politically possible to support those territories.

Thus, the opposite approach was carried out to craft this opinion: to look at what unites these territories. And in so doing, the opinion developed  an expansive interpretation of the Treaties, instead of only looking at the letter of Article 174 TFEU.  Out of that exercise the Opinion made a number of forward looking proposals. As the draft moved from initial proposal last June, to vote at COTER Commission stage in September and final vote at Plenary in December, the evolution of the text is quite telling, which will be examined next.

Key proposals

The main message of the Opinion is that “though EU Cohesion Policy has a key role to play in enforcing Art. 174 TFEU, this mandate is binding on all other EU policies, which must not undermine the goal of territorial cohesion between these territories;”. There is wide agreement among subnational leaders that funding is not enough, and EU policies such as those relating to the EU single market also have an effect on the prosperity of those areas. This is the case of State aid (where some areas are exempted from certain subsidy rules), but also public procurement which makes it difficult for public authorities to “buy local”. There was ample consensus about this: Territorial Cohesion is not just about EU Cohesion Policy.

However, when one of the key proposals of the Opinion was put to final vote, significant differences arose.  The Opinion proposed that “each Member State establish a catalogue of basic public services, in line with the European Social Pillar and the Charter of Fundamental Rights, that would be available in a given Art. 174 area in order that citizens can use it when deciding whether to settle in that territory”.  In other words if Article 174 is cross-read with other key parts of the same EU treaties (not to mention Article 175 TFEU that requires all Member States to coordinate their economic policies to achieve territorial Cohesion) it is no longer a hodgepodge of all the “losing” regions, but a tool to extend those other basic rights and essential public services to all Europeans regardless of where they live.  Predictably, some regions were opposed to such recognition, arguing the principle of subsidiarity (that seeks to prevent excessive EU expansion into domestic affairs).  

More widely, regions are keen to put demands on the EU, but are much less inclined to introduce requirements that will also make their own provision of public goods (and EU funds) accountable to local residents.

In the same vein, the Opinion “calls for post-2027 Cohesion Policy to include specific EU-level spatial targeting and earmarking for regions with areas mentioned in Art. 174. Potentially, this should also comprise other policies in the EU budget that have a territorial dimension, including any successor to Next Generation EU.”  However, there was quite some discussion about the first ever EU-wide definition of a demographically declining area for the purposes of EU Structural and Investment Funds, originally put forward by the CoR and which was finally included in the ERDF Regulation (EU) 2021/1058. 

Some regions were not happy with the present definition, which was the result of an extremely difficult balancing act in the negotiations for the 2021-2027 EU Cohesion Policy, even if it has not yet been put into practice anywhere. The purpose of that definition is precisely targeting the European Regional Development Funding  that many regions are entrusted to spend in 2021-2027.  

That said, the Opinion urges the use of the  definition for other funds, such as the Just Transition Fund, Next Generation EU’s National Recovery and Resilience Plans, as all these funds shall contribute towards integrated and place-based actions.

Indeed, the Opinion is strong on the issue of Integrated Territorial Development, an issue at the core of AEIDL’s mission. Given the proliferation of EU funding instruments (traditional Cohesion Policy, Just Transition Funds and the new COVID-19 funding package Next Generation EU and its EUR 600bn Resilience and Recovery Facility), this is a challenge for regional and local institutions.

Indeed, the financial response to COVID-19 was so revolutionary due to its size (amounting to an extra financial package equivalent 2/3 on top of the traditional EU budget), timescales (to be financed via EU debt and new EU taxation) and methods (to be spent very fast with almost none of the controls that exist in Cohesion Policy or CAP). Thus, it is unlikely that post-2027 EU funding will be the same again. This also concerns the future shape of Cohesion Policy and the relationship with the Common Agricultural Policy. During 2014-2020 both were somewhat coordinated but this has ceased in 2021-2027. At some point there was talk of a “Single Fund” that would merge all these funds, or at least a single rulebook. But even the Commission is aware that the current dispersion is not tenable, hence the Long Term Vision for Rural Areas is proposing a “one-stop-shop” to better deliver all these funds in a coordinated fashion. Moving beyond that will be one of the key policy battles ahead. 

The Opinion is also aiming to be ambitious in developing new geographies. It  welcomes the European Parliament’s proposal, asking the European Commission to draw up an “EU Strategy for Islands” with an action plan to encourage growth and innovation in a sustainable way, protecting the environment and people living on islands, as well as an “Islands Pact” to involve all actors via a multilevel, cross-sectoral approach, and which is deeper in policy, legal and funding depth that the macro-regional strategies that exists for the Baltic Sea or for the Alps. 

A key barrier to that is the resistance of Member States as they fear a loss of sovereignty. This is why the Opinion urges the Council to unblock the European cross-border mechanism (ECBM) as it is a much more effective tool than the EGTC, and would remove 50% of the barriers that hamper the development of border-regions, particularly around cross-border healthcare, preventing a repeat of the so-called “covidfencing” that so greatly undermined the four EU freedoms during the height of the pandemic.

Last but not least, and among many other issues, the Opinion expresses concern about the quality of data available at local and even sub-regional level. Weak data makes for weak public policy and funding decisions. The Commission will support the Long Term Vision  by launching the new EU Rural Observatory. This will be a public, online rural data portal containing relevant statistics, indicators and analyses based on data from multiple sources, at the most appropriate territorial granularity and timely updated. This joint effort with Eurostat and the Joint Research Centre is supported by other tools (Degree of urbanisation, TERCET urban-rural classification, Functional urban and rural areas). A number of research projects such as GRANULAR – in which AEIDL is a partner –  are trying to provide better data and construct methodologies for better assessing policy impacts in rural areas, going beyond the recently released Rural Proofing guidelines that AEIDL officials contributed to.

What’s next ?

AEIDL, through the projects in which we are involved such as as SHERPA (science-policy-society interface for better rural policies), MOVING (supporting mountain areas), BEATLES (climate-smart agriculture), DESIRA (digitalisation in rural areas) and our new projects GRANULAR, CODECS and TOOLS4CAP , FUTURAL and RURACTIVE, will continue producing new ideas on both rural and urban development for the EU institutions, national and subnational authorities and indeed local stakeholders.

However, we do not want to work alone on this. If you want to get engaged in the future of the EU and local development, AEIDL launched on 24 November the European Local Innovation Forum (ELIF). This is an online, voluntary, free, participatory process that anyone can join and co-produce better community-led local innovative policies. We hope you can join us!

The Policy Unit of AEIDL gathers experts who foster community-led innovation by facilitating peer learning, co-creation and transfer of knowledge. The Unit also provides analysis and evaluation of relevant EU policies and advocates for an enhanced support to community local action in thematic strands such as rural and territorial development; green growth, environment and climate action, or employment, entrepreneurship and inclusion. It acts as a knowledge hub to inspire and connect local and EU stakeholders.