Many people are under the impression, wrongly in my view, that Spain is one of the EU's new growth miracles. I think the above par Spanish growth of the last 2-3 years can be easily understaood in terms of a rate of interest which is below the rate of inflation, and an extraordinary housing bubble. But the issue of EU structural funds goes much further than Spain. If the community is unable to resolve this question adequately, then what hope is there for substantial progress on other, even more important issues (agricultural reform, pensions......?).
Spain has staved off a threat to the billions of euros it reaps in European Union subsidies because of last-minute compromises in the Convention on the future of Europe. The convention's proposals for a European constitution, backed with general acclaim last Friday, include provisions that could give Madrid a veto over EU spending until 2017. Spain's biggest budgetary issue by far is its receipt of EU "structural funds", which total a third of the EU budget and are meant to help regions that lag behind in their economic development.
A debate on the draft EU constitution will be one of the main items on the agenda of this week's EU summit in Thessaloniki in Greece.Spain has been assigned more than €38bn ($45bn) for the 2000-2006 period, more than any other member state. The country's continued receipt of large subsidies has become particularly controversial because of the entry into the EU next year of 10 new members, many much poorer. But the Spanish government has been handed a strong weapon to hold on to its subsidies by Article 54 of the Convention's text, which says that all countries will keep their veto the first time they negotiate the multi-year "financial framework" under the new constitution. The long ratification process makes it almost certain that the constitution will not enter into force until after the spending for the 2007-2011 period has been agreed. As a result, the clause would give Spain and all other countries a veto over spending between 2012 and 2016."You could say this is a concession to the Spanish," one convention official admitted.
Valéry Giscard d'Estaing, convention president, has been particularly concerned to reduce Madrid's objections to his final proposals, since they could prove more fundamental than any other country's complaints. Spain, together with Poland, is unhappy about measures to make countries' voting weights more proportional, since José Mara Aznar, prime minister, did well at the last negotiations on the subject at the 2000 Nice summit. But if Mr Giscard d'Estaing's proposed compromise on this topic is reopened, it could endanger deals on other institutions, such as the number of members of the European Commission and the European parliament.
Other countries such as Germany, the traditional paymaster of the EU, are relatively relaxed about conserving vetoes on spending in the short term if they are eliminated later on. But despite the crucial importance of structural funds for the Spanish economy, Ana Palacio, Spanish foreign minister, insisted she wanted to preserve her country's voting power "for reasons of principle, not money". She said Spain's rising wealth meant it would soon be a net contributor to the EU budget. Ms Palacio said that Spain, like Britain, would fight its corner in the intergovernmental conference that decides what to do with the convention's proposals between October and next March. "Spain and Britain never cause trouble," she told the Financial Times. "We are just very clear on what we will fight for, and we will do that."
Source: Financial Times
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