‘Always Coca Cola!’ – why EU regional funding is not so refreshing!

Civitas, 1 December 2010

The Financial Times and the Bureau of Investigative Journalism have launched a comprehensive database in order to ‘track every penny distributed through the EU’s Structural Funds to date’.

This website is a serious attempt at improving transparency around EU spending, and it provides a window of opportunity for the EU to restore citizens’ trust in an area frequently criticised for its flaws and misallocations. However, many will recently have been discouraged to see yet another succession of critical headlines, this time inspired by the high number of multinational corporations and ‘undeserving’ recipients of the EU funds.

Big household names such as IBM and Coca Cola, although not highest on the recipients list, have been awarded structural funds on several occasions.  Whilst the funds total thousands or millions of euros rather than billions (mere drops in the ocean compared to the EU’s total expenditure), it undermines the value of the fund and raises valid questions about whether the resources are really being allocated to areas where they would be the most beneficial. All told, seeing these companies benefitting for EU funds, no matter how well they qualify under current regulations, leaves a rather bad taste in the mouth and adds weight to calls for the funds to be reformed.

The EU’s Structural Funds aim to remove ‘the development disparities among regions and Member States,’ whilst improving their ‘economic, social and territorial cohesion’. Funding global conglomerates seems more than a little tenuous and hardly the most effective way of achieving these goals.

Combined with the Cohesion Fund resources (totalling €70 billion), the €278 billion assigned for the EU Structural Funds equals 35% of the EU budget for the 2007–2013 period. Getting this spending right, and closing loopholes that perhaps allow those less deserving of the funds to qualify for large chunks, should be a high priority for the next round of EU budget negotiations.

The EU has defended the latest embarrassing exposé by stating that, ‘Cohesion policy brings significant benefits to the poorer regions of the EU, but is also benefiting the whole of Europe.’

Unfortunately for the EU, however the scandal is spun it is hard to argue that the €59,708 awarded to MacDonalds for staff training, or the €902,071 given to Coca Cola to upgrade production lines, or the €3 million allocated to Nokia Siemens Networks for network diversification,  are benefiting ‘the whole of the EU’. IBM is one of the largest companies in the world, employing around 400,000 staff and with a reported total equity of $22.63 billion in 2009. The fact that IBM managed to secure funding to the tune of €24 million for a variety of projects, speaks volumes about the current regulations governing the fund.

There are clearly inherent flaws in EU regional policy as it stands.  We should be encouraged that these problems are now being openly debated in the public domain, because it may push the EU into a serious course of action, even if it is ultimately spurred on by embarrassment rather than genuine concern about its spending.