Costa grabs role as regions’ champion in EU budget fight

Costa o 'Senhor Coesão', ou seja, O Campeão dos PEDINTES
OVOODOCORVO

Costa grabs role as regions’ champion in EU budget fight

Portuguese PM gambles he can fend off cohesion cuts.

By LILI BAYER AND IVO OLIVEIRA 2/2/20, 4:09 PM CET Updated 2/3/20, 4:41 AM CET

https://www.politico.eu/article/antonio-costa-portugal-regions-champion-eu-budget-fight/

BEJA, Portugal — In the EU’s budget battle, António Costa has seized the role of standard-bearer for the Continent's poorer regions in the South and East.

Portugal's prime minister on Saturday hosted officials from 16 other European countries in the southern town of Beja in a last-minute effort to fight proposed cuts to EU regional development funding from 2021.

The gathering took place less than three weeks before a summit in Brussels intended to hammer out the EU's budget for the next seven years. Costa held the meeting in a rural location, with many leaders arriving in private planes, and locals gathering in windows or at police barricades for a rare glimpse of foreign premiers.

"We are in the heart of one of the most challenging cohesion regions in Portugal," Costa told officials when opening the meeting, adding that gathering for a “display of union and cohesion” a day after Brexit “carries a very symbolic value” heading into the EU’s next internal battle.

Costa has put cohesion funding — one of the biggest chunks of the bloc's budget, slated to be worth more than €300 billion in the next seven-year cycle — at the top of his EU priority list. Not only has he played a leading role in the Friends of Cohesion alliance he hosted at the weekend, but he also pushed successfully for Portugal's European commissioner, Elisa Ferreira, to get the cohesion portfolio in the EU executive.

The reasons Costa has invested so much political capital are not hard to fathom. Cohesion funding — meant to reduce economic and social disparities across the bloc — has been vital to Portugal. Between 2015 and 2017, cohesion funding amounted to over 84 percent of public investment in the country, the highest share in the EU.

"You don't choose [the issue], the issue chose us," Costa told POLITICO when asked why he is taking on a leading role in the cohesion debate.

He added, however, that cohesion policy is important "for Europe as a whole" and "there are no countries who don't benefit from regional policy."

Saturday’s summit was just as much about optics as substance. Although the formal meeting lasted only two and a half hours, Costa took the time to stand outside the location — a 13th-century Franciscan convent — and welcome each arrivals individually, while making sure the press took plenty of photos.

Gambling on a deal

The budget battle offers Costa a chance to increase his own profile and Portugal's role on the EU stage.

It also carries significant risks for the socialist prime minister.

Big net contributors to the budget, including Germany and the Netherlands, want to shift EU finances away from traditional programs such as cohesion and agricultural subsidies toward other priorities — science, innovation and defense-related research, for instance.

With the bloc facing a host of new challenges, combined with a hole in the budget left by the U.K.’s departure, the European Commission suggested cutting cohesion funding by 10 percent. The Finnish presidency of the Council of the EU proposed an even larger reduction of 12 percent in its proposal last year, although that paper was widely criticized.

If Costa and his allies can’t claim some kind of victory when the budget deal is finally done — at least by fending off the worst of the proposed cuts — his credibility at home and abroad will take a hit.

In addition to Portugal, the Friends of Cohesion grouping includes Croatia, Cyprus, the Czech Republic, Estonia, Hungary, Malta, Poland, Romania, Slovakia and Spain — all of whom spared their leaders to attend the short meeting in Beja. Bulgaria, Italy, Greece, Latvia, Lithuania and Slovenia were also represented by ministers and officials.

The cohesion countries “don’t want to be forgotten or left out” in the EU budget talks, Portugal's Secretary of State for European Affairs Ana Paula Zacarias said in an interview ahead of the meeting.

One senior official present at the meeting said that the aim was to ensure the "unity of the group of Friends of Cohesion prior to the final stage of the negotiations,” and that during the gathering the countries did seem to present a united front.

In the declaration adopted Saturday, countries called for the budget deal to maintain spending for cohesion at the same level as in the 2014-2020 budget “in real terms” — an outcome that would require a major shift from the current proposals.

“No Member State should suffer a sharp and disproportional decrease of its Cohesion allocation,” read the two-and-a-half-page declaration, which also laid out multiple requests on the technicalities of financing rules for cohesion spending.

"This summit should have happened before the Commission presented their proposal, so it could influence [it]" — José Manuel Fernandes, Portuguese MEP

However, of the 17 countries present, neither Croatia — as the current presidency of the Council of the EU — nor Italy, a net payer, signed the declaration, a small reminder that major alliances including the cohesion group may ultimately be weakened under the pressure of competing national interests.

“We look at these negotiations with realism,” Zacarias said. “We want an agreement as soon as possible,” she said, adding that “we want to engage in the construction of a budget that is fair, that is balanced, and we want our positions to be heard.”

A second official present at Saturday’s meeting said that many attendees expressed some optimism about the possibility of a budget deal later this month, but that this attitude was not shared by all participants.

Mr. Cohesion

A former mayor of Lisbon, Costa has long taken an interest in cohesion spending.

During the financial crisis, he used his position to lobby in Brussels as a member of the European Committee of the Regions, working with officials from across the Continent to promote regions’ interests on the European stage.

He’s also seeking to build on a history of Portuguese leadership within the Friends of Cohesion group: In 2012, then Prime Minister Pedro Passos Coelho teamed up with Donald Tusk, prime minister of Poland, to organize a summit in Brussels to fight for cohesion funding in the 2014-2020 budget.

According to Portuguese MEP Margarida Marques, a member of the prime minister's Socialist party, Costa has an “important role in the EU” and “a leading role” for cohesion policy.

Costa’s ability to get results on the European stage “should be used in this matter,” said Marques, who is one of the European Parliament’s rapporteurs on the budget.

Nevertheless, Costa’s government has come under fire from opposition based on the fact that, according to the Commission’s proposal, Portugal could see a 7 percent reduction in the amount of EU cohesion funds it receives.

Portuguese MEP José Manuel Fernandes, from the opposition Social Democratic Party (PSD), said that the government could have done more earlier in the process, although he noted the Beja meeting was “positive.”

"Better late than never," said Manuel Fernandes, also a member of the Parliament’s six-person budget team, which supports increased EU spending across the board.

"This summit should have happened before the Commission presented their proposal, so it could influence [it]," he said.

This article is part of POLITICO’s coverage of the EU budget, tracking the development of the seven-year Multiannual Financial Framework. For a complimentary trial, email pro@politico.eu mentioning Budget.