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The EU coming together to beat the crisis

covid 19 ward at stefan zeromski hospital in krakow
The time to make a difference is now

By Elisa Fereira

They say that greatness is forged in crisis. If so, today the forge is working overtime: the worst pandemic in a century, the worst economic and social crisis in decades – and this is before we reckon with challenging long-term transformations, from the digital revolution to the carbon neutral economy.

With each beat of the smith’s hammer, we are taught to embrace the new, such as teleworking and home-schooling. We are also reminded of precious things we used to take for granted, such as our health and our social interactions. Most of all, these changes force the questions: “What future do we want, for Cyprus and for Europe? How can we adapt to the new, while keeping the best of what we have?”

As Europeans, we must answer this question together, because one thing is clear: no country can face this alone. We need Europe in the crisis – vaccine procurement as a block gave us a buying power far beyond that of any single country. We also need Europe in recovery – for the first time, we are using Europe’s triple-A credit rating to borrow on the financial markets. The result will be a €672.5 billion (€312.5bn in grants and €360bn in loans) – recovery investment fund: the Recovery and Resilience Facility (RRF).

With some €375 billion of grant investment in the period 2021-27, Cohesion Policy remains one of Europe’s largest investment policies. So we will play a key role, hand in hand with the RRF, in both crisis and recovery. The story of the European Union is one of convergence between countries. However, experience shows that convergence can slow down, pause or even reverse during crises. Already, we see indications that the symmetric shock of Covid is producing an asymmetric impact in our regions. This illustrates the importance of cohesion as a long-term development tool, not just in “normal times”, but also during a crisis and its aftermath.

In fact, Cohesion is already playing a part. From the beginning of the crisis, from April last year, through the Coronavirus Response Investment Initiative, we have been delivering support in the regions that needed it most. And we are still delivering: ventilators in Spain, lab tests for Corona in Italy, infrastructure and training for digital schooling in Poland and Croatia – the list goes on. To date, we have already mobilised more than €22 billion all over Europe. You can follow the investments in near real time on our dedicated website. At the time of writing, we had supplied nearly 500,000 SMEs with working capital to keep them afloat, and supported 2.5 million people in short term working arrangements or in healthcare.

But while we still struggle to contain the pandemic, we also need a plan for solid, long term recovery. With the funding from Cohesion policy and the new Recovery and Resilience Facility (RRF), many countries and regions will, in the coming years, have a European investment budget two or three times the usual size.

For Cyprus, the availability of some €868 million for the funding period 2021-27 will allow to support the growth of SMEs, and to invest in research and innovation and  digitalisation, while investments in energy, sustainable water and waste management and green urban mobility will contribute to the circular economy. To further sustain the green transition, the new Just Transition Fund will top-up the cohesion policy with €101 million for the same purpose. To exit the Covid crisis, some €112 million will be available to Cyprus in 2021 under REACT-EU.

With this once-in-a-generation opportunity, how will we invest? How will we draw up the seven-year cohesion programmes, starting this year? What Cyprus and what Europe do we want in 10 years’ time? I propose three key priorities.

First, the recovery must be for all Europeans and all regions. The lesson of economic history is clear: in every crisis, some regions bounce back, while others may stagnate for a decade or more. As I meet decision makers at all levels, I always insist that we cannot have a recovery for half of Europe, while the other half is left behind! But I am still concerned about long term trends: for over a decade now, we in the Commission have regularly published a regional competitiveness index. For several member states, the index shows a persistent and growing gap between a few large cities, often capitals and the rest of the country – without action, we risk a very imbalanced future.

Risking everything on a single development pole reduces the resilience of the economy and is a source of social division. Countries must invest strategically in different regions, in a balanced network of big centres and smaller and mid-sized cities, so that the whole territory remains economically vibrant with local businesses and quality jobs, public transport, energy networks, recycling and waste systems, healthcare, education and skills infrastructure.

Second, investment must target the drivers of long-term economic transformation. Europe is on the verge of a great twin transformation: the digital revolution and the transition to a carbon neutral economy. Therefore, in rebuilding the house of our European economy after the fire of Covid, we cannot simply return to the old: we must take the opportunity to build anew.

Member states must formulate future-proof strategies for the development of their countries. Building on the comparative advantages of their different territories and developing new competences. At least half of new cohesion investments will target smart and green projects, from innovation networks and digital enterprises to renewable energy. There are also special provisions for specific challenges, such as regions heavily dependent on fossil fuels, notably coal mining or coal power stations: the new Just Transition Fund will support them through the transition.

Europe has a common view of where we want to be by 2030. So we need clear national visions outlining where each country wants to be in ten years. Such comprehensive strategies should include the necessary reforms to modernise national administrations, policies and frameworks. They should also detail the corresponding investments, private and public, including European support, to turn them into reality. These national integrated development strategies are the best foundation for all the European investments – the various funds of Cohesion Policy and RRF – maximising their effectiveness and synergies.

Third, local actors and citizens must be full partners. We are making fundamental decisions about the future: such broad decisions require broad consultation. In cohesion policy, we are committed to the “Partnership Principle”, bringing together regional and local actors, social partners, communities. I am personally committed to ensuring that, as cohesion policy programmes are prepared, rapid action is combined with genuine partnership.

Europe closer to citizens goes beyond the partnership principle: it also means making sure that the available funding reaches people. Citizens must see the benefits of EU membership, the tangible results of European solidarity in their daily life.

As we are tested in the forge of history, we have a unique opportunity to rebuild and plan the Europe we want. Let it be inclusive, where all regions share in the recovery and no Europeans are left behind. Let it be future proof, laying the ground for a successful digital revolution and transition to the carbon neutral economy. And let all this be decided in full democratic consultation and partnership. This is the cohesion policy I want to see, in the programming of the coming months. And this is the Europe I want to see in 10 years’ time and beyond. If you feel the same, I urge you to get involved in the discussion. The time to make a difference is now.

 

 

Elisa Fereira is the EU Commissioner for Cohesion and Reforms

 

 

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