Berlin says poor countries must reform to get EU funds

Germany has endorsed the European Commission’s proposal to tie the EU’s next seven-year budget to national reforms and said there is “no basis” for increasing EU countries' contributions to the bloc’s €1.2 trillion cash pot. 

Germany is the EU’s largest economy and contributes about a quarter of the bloc's budget, known as the Multiannual Financial Framework (MFF). 

In the next long-term budget, to run from 2028 to 2034, access to a substantial part of that money should be conditional on the achievement of “milestones,” reads a German position paper obtained by Euractiv. 

More specifically, cohesion funds, designed to help poorer regions catch up, should follow a “performance-based approach” designed to “provide stronger incentives for national reform measures”. These funds account for around a third of the total EU budget.

It is the same approach as the EU’s €648 billion pandemic recovery fund, where national capitals had to apply with a reform plan, and would get funding only after they had made changes approved by Brussels.

The Commission made the same pitch for the bloc’s regular budget last month. "This is the strongest incentive you can set to get things done," Commission President Ursula von der Leyen said. 

The move is likely to inflame tensions between Germany and poorer countries in the EU's South and East, which are vehemently opposed to any such reform.  

Germany also ruled out boosting its own payments to the next budget, despite the “historical challenges” posed by Russia’s growing military threat to the EU. “There is no basis for increasing the volume of the MFF in relation to economic strength,” the paper says.

Instead, the paper notes that the EU and national capitals “must take on more responsibility for security and defence” through “demand aggregation” and boosting “incentives for collective development, production, and procurement”. 

CAP U-turn?

“We want CAP to remain an independent policy area, with rural development as an integral part of it,” the paper says. Germany had earlier this month declined to join a group of 20 EU countries that called to preserve the current structure.

The third of the budget reserved for farmers should continue to be more “oriented towards objectives and results,” and “income incentives must be significantly strengthened in the provision of climate environmental and animal welfare,” they wrote. 

The Commission will present its MFF proposal on 16 and 23 July. 

German media and the Financial Times previously reported on Germany’s position paper. 

Nicoletta Ionta contributed reporting.

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