Portugal writes to Brussels asking that Cohesion and CAP not be a bargaining chip for Defence

Portugal argues that the new challenges that the EU is facing cannot be met at the expense of current EU policies. In other words, the commitment to competitiveness and Defence should not be financed with Cohesion or Common Agricultural Policy (CAP) funds.

In a letter addressed to the President of the European Commission, to which ECO has had access, the Portuguese Executive argues that Cohesion and Agriculture should be autonomous funds with adequate funding, thus taking a stand against the possible cuts in the Cohesion Policy and in funding for Agriculture.

“The next Multiannual Financial Framework must express sufficient ambition, guaranteeing both the stability of current policies and the response to new challenges. The increase in new areas of expenditure in the coming years must not be at the expense of existing policies and the fundamental principles of the Union”, reads the letter.

This letter, delivered to Brussels on Monday through diplomatic channels — although a first version arrived last Friday — comes after another, in which 14 Cohesion-friendly countries, including Portugal, rejected the cuts that are expected to be on the table.

On 16 July, the EU Executive will present its proposal for the Multiannual Financial Framework. On the table, according to Politico, is a 20% cut in funding for Agriculture and Cohesion. The aim is to redirect funds from “old priorities” to new challenges, such as Defence, Innovation and Enlargement. Cuts may be the solution, given that some Member States, such as Germany and France, are opposed to increasing contributions to the EU budget.

But before the negotiations begin, countries are signalling their positions. The friends of cohesion have written a letter in which they call for a “robust budget and a regional allocation methodology that reflects the different levels of development of the regions”, but also “specific autonomous legislation for Cohesion Policy”, i.e. separate from Agriculture, because only in this way will the next Multiannual Financial Framework be able to provide “unity, competitiveness and long-term convergence between the regions of the European Union”.

But individually, Portugal is also trying to set the pace in this dance that will drag on for two years, not least because it knows it will be judged on how it conducts these negotiations. The president of CAP, the Confederation of Portuguese Farmers, Álvaro Mendonça e Moura, said it all on ECO dos Fundos, ECO’s fortnightly podcast on European funds: “We’ve already told the Prime Minister that a fundamental point in the way Agriculture will evaluate this government’s actions will be the way the government fights in Brussels on the issue of the Multiannual Financial Framework and the autonomy of the Common Agricultural Policy (CAP)”.

In the letter sent to Brussels, the government defends “a strong and autonomous Common Agricultural Policy, based on its two-pillar structure”. This is because the CAP “is necessary to respond to crises and face emerging challenges”. Portugal believes that the “inclusion of flexibility instruments is crucial to guarantee the continuity of agricultural activities and the stability of the sector, allowing the CAP to fulfil its crucial role in promoting the internal market and building a more sustainable and secure future in all regions of the EU”.

The European Commission’s intention was to place Cohesion and Agriculture in a single fund, in a “country by country plan”, as stated in the communication ‘Towards the next Multiannual Financial Framework’. But for the Member States that benefit most from these two policies, which currently absorb around two thirds of the EU budget, this course of action could jeopardise the common nature of the CAP and weaken Europe’s food security and sovereignty. Creating a single fund would mean putting an end to the two pillars of the CAP (direct aid and rural development), an idea that the Portuguese Minister of Agriculture, José Manuel Fernandes, has also rejected, considering that it would be “the destruction” of the CAP.

“The Cohesion Policy Funds and the Common Agricultural Policy Funds must remain autonomous”, the Executive clearly states in the letter. Even so, the government argues that “an effort should be made to simplify in order to reduce unnecessary administrative burdens and avoid the proliferation and overlapping of instruments”. “It is essential to reduce the number of instruments, clearly define the scope of each one and articulate and create synergies with other funds, based on a strategic approach”, reads the text.

In a reply sent on Monday to Portuguese MEP André Franqueira Rodrigues (Socialist Party), who formally questioned the European Commission on the future financing of the CAP under the next Multiannual Financial Framework and on the risk of diluting this fundamental policy in a possible “single national fund”, the EU Executive does not seem to rule out the possibility of integrating the CAP into “individual national plans”, arguing that these should guide reforms and investments in line with the EU’s common priorities.

For the Portuguese government, “Cohesion is not an alternative to competitiveness and economic growth”. Recognising that “Cohesion Policy must be modernised”, it must also “preserve its structural nature as the main instrument for long-term investment” and “build on its distinctive strengths — shared management, multi-level governance and the partnership principle — and focus on the least developed regions and Member States”. Portugal emphasises the need to “pay special attention to the outermost regions”, which include Madeira and the Azores, which have access to more funding due to their status.

Cohesion Policy “should not be focused on responding to emergencies and external shocks, without prejudice to ensuring a margin, necessarily limited in financial terms, for rapid, flexible and less administratively costly response mechanisms to unexpected events affecting the regions”, suggests Luís Montenegro’s Executive. “It is important to defend a more effective, focused, simplified and results-oriented policy, pursuing the path of modernising Cohesion Policy”.

In an integrated approach, Portugal argues that “it is crucial to address the remaining obstacles and fragmentation of the Single Market, ensuring a level playing field between member states”. “Competition rules and state aid control are essential to support competitiveness and ensure the smooth functioning of the Internal Market”, reads the letter. And “no relaxation of state aid rules should be implemented without a proper and evidence-based approach”.

The negotiations promise to be tough, because the next Multiannual Financial Framework, in addition to addressing the new priorities, namely the commitment to Defence, will be called upon to start paying off the debt incurred to pay for the “European bazooka” — 650 billion euros, at a rate of 30 billion a year. And there are no new resources.