Threat to Objective 1 status sets region against region in competition for funds

A great deal of confusion surrounds the proposal before Government to regionalise the State in order to maximise the "take" from…

A great deal of confusion surrounds the proposal before Government to regionalise the State in order to maximise the "take" from the European structural and cohesion funds for the years 2000-2006 and beyond.

Public representatives and vested interest groups from the more developed regions of the east and south have opposed the measure on the grounds that they would no longer retain their pecking order at the top of the EU funding list. And they criticise moves to treat the Border, western and deprived midland regions as special cases.

Objectively, however, the 13 Border, western and midland counties are special cases. They alone can qualify under the EU criteria for Objective I (maximum grant) status by having average EU incomes of less than 75 per cent of GDP. The rest of the State exceeds that figure.

As Charlie McCreevy told the Dail 10 days ago, the first truth to be recognised is that Ireland, as a single region, cannot qualify for Objective I status. As a result, we have been offered a transitional arrangement by the EU Commission which would gradually reduce funding during the next financial period of 2000 to 2006.

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It is impossible for Dublin, Cork, Limerick and the adjoining regions - in spite of their unemployment blackspots - to avoid losing Objective I status because of overall income levels. But the opportunity does exist for the more deprived areas to retain that status.

As the Minister for Finance explained: "Under the most straightforward regionalisation approach, the existing single region of Ireland would be reconstituted as two new regions, of which one could consist of those parts of the country where per capita GDP is below 75 per cent of the EU average. If such an approach were put in place, the region with a per capita income below 75 per cent of the EU average would qualify for full Objective I status, while the rest of the country would still be a transition region covered by Objective I, but on a diminishing scale."

Mr McCreevy added: "If a part of the country were to qualify for Objective I as a result of the proposed reclassification, this would not mean that the rest of the country would be treated any less favourably, in EU transfer terms, than they would have been anyway under the transition regime currently proposed for the country as a whole.

"The Government would insist that the non-Objective I part of the country would qualify fully for the transition regime, and we have no reason to believe any differently. In consequence, there is no loss involved for the rest of the country from a proposal which results in one part being Objective 1," he said.

But emotion, as much as logic and equity, is driving this debate. Removing an existing benefit always generates maximum political friction. In that regard, representatives from those regions about to lose Objective 1 status have directed their anger and frustration at those in the happy position of being able to retain it.

Dublin, which benefited disproportionately from European structural and cohesion funding in the past, is leading the charge. It is closely followed by Cork, Limerick, Waterford, Wexford, Kilkenny, Tipperary, Clare, Kerry, Carlow, Wicklow, Meath and Kildare, all counties which now enjoy average incomes in excess of the EU cut-off point.

At the same time that TDs from Leinster and Munster were objecting to change, the Council for the West was engaged in an intensive lobby in an attempt to prevent any Government backtracking. They quoted the Programme for Government, which undertook to seek Objective I status for the west of Ireland, the Border regions and all rural areas that would suffer from population decline in the post-1999 period.

It's all very tricky for the Coalition Government: how to treat the most disadvantaged areas fairly without generating a backlash from the richer, more populous regions. Charlie McCreevy has been walking on eggshells for months, wanting to do the right thing but dreading the possible political consequences.

He was in Washington last Wednesday when his parliamentary colleagues discussed the issue at Leinster House. Such heat was generated that a Government decision scheduled to be taken tomorrow may be postponed. TDs wanted Mr McCreevy to provide reassurances that economic blackspots in developed regions will be given extra national funding.

The Irish Congress of Trade Unions and IBEC are concerned at the possible change, and the Government is also involved in taking soundings from the IFA and the ICMSA. It would seem these interest groups simply don't believe the Minister for Finance when he insists the wealthier regions will not lose anything extra under the proposals. If the poorer regions gain, they reason, then surely the more developed regions will lose? The answer to this conundrum lies in the Government's belief that it can gain extra European resources by going down the regionalisation route. Not only for the period 2000-2006, but thereafter.

It will take a lot of tough negotiations at the EU summit in Cologne next March. But it can be done. The European Commission - and Monika Wulf-Mathies in particular - has objected to such "subsidy shopping". It insists the "envelope" of EU funding earmarked for Ireland for the coming financial period will not change.

But these matters are open to political dealing, as Albert Reynolds proved conclusively in 1992, and the Government seems determined to resist dictation from Brussels. It recognises the inevitability of losing our present levels of EU funding but feels a better deal can be cut than the one on offer. The problem lies in explaining the loss of benefit to high-income regions.

Democratic Left is most opposed to change on the grounds that the unemployment blackspots of Dublin, Cork and Limerick are likely to suffer even greater official neglect. The Labour Party leader, Ruairi Quinn, isn't quite so blunt. He argues that change will set deprived urban areas against deprived rural areas.

And John Bruton of Fine Gael sits uncomfortably on the fence, challenging the Government to say where it stands on its pre-election promises.

But the Opposition parties are sure of one thing: no matter what decision the Coalition Government takes, it will cause negative political fall-out, and they are likely to benefit.

The western, border and midland regions see the issue in stark terms. They want to break with the centralised planning system in favour of a regionalised model.

But while they may retain Objective I status, they are unlikely to be granted local autonomy. Officials look to the recent designation of Devon and Cornwall as Objective I regions in Britain as a template for the Irish experiment. They envisage regional spending being orchestrated, as before, under the umbrella of a new national plan.