EU funding in doubt if local government reform stalls minister warns

Interior Minister Nicos Nouris on Monday warned that Cyprus could risk losing out on hundreds of millions in EU grants unless it reforms local government along certain parameters.

Nouris informed lawmakers that Cyprus stands to receive around €980 million in grants (not loans) from the EU Recovery Fund, provided however it meets certain conditions.

To qualify for the funds, Cyprus needs to submit to the European Commission a costed plan concerning reforms it undertakes to implement by 2026.

The government has already prepared a draft plan to be discussed with the commission later this month.

But these reforms, Nouris pointed out, include the overhaul of local government “for which there is a reminder that it is a long-standing recommendation of the European Commission over the last five years at least, and which of course is something that has not been implemented to date.”

If the worst-case scenario happens, the minister cautioned, Cyprus will not only fail to tap the EU grants, but will also see its own annual contributions to the EU wasted.

And should the island miss out on these grants, “it will drastically weaken the ability of the Republic and the government to provide assistance to people, the business world and the average person who need support in this difficult time.”

The issue – from the government’s standpoint – is that parliamentary parties intend to tinker with the provisions of three bills relating to local government reform, and to an extent that would make the plan unworkable.

The reform blueprint envisages consolidating the current number of municipalities (30) into 17 municipal clusters, the objective being to achieve economies of scale and allow these new structures to become financially self-sufficient.

But after months of talks, last week some opposition parties suggested having 20 municipal clusters rather than 17.

Such a last-minute change, the government insists, will effectively unravel the entire reform plan. It could also force the government to withdraw the bills – which it does not want to do.

If it does withdraw the bills, it will have nothing to show for to the EU.

For her part, House interior committee chair Eleni Mavrou told media that the bills relating to local government reform will go to the plenum sometime in the next few weeks.

In addition to the difference of opinion over the number of municipal clusters, she said, other pending issues include which authority will issue planning and building permits.

The bills as tabled by the government provide for the creation of district-level authorities issuing both these permits, as a sort of ‘one-stop shop’.

Currently, licensing for developments is an authority vested in individual municipalities, some of whom want to retain that power.

Another matter remaining to be decided is whether residents of municipalities and communities will get to vote in plebiscites for or against the proposed mergers.