Energy, telecoms and transport take a hit

Reduced funding for the Connecting Europe Facility.

After the budgets for agriculture and cohesion funding had been spared from deeper cuts, it fell to spending on infrastructure, research and international aid to bear the brunt of the cuts.

Cuts to funding of the EU’s Connecting Europe Facility (CEF),to support investment in energy, transport and communication infrastructure, were particularly brutal. From an initial budget proposal of €50 billion, the CEF was reduced to €29bn.

Privately, some European Commission officials lamented the wisdom of cutting by more than 40% areas of the budget with the potential to boost growth. But Günther Oettinger, the European commissioner for energy, put on a brave face, saying the amount left in the budget was “at least a door opener”, although Europe would now have to make some tough choices. “For example, we cannot co-finance all grids necessary to connect off- or on-shore wind parks to the big cities,” he said.

A spokesperson for Siim Kallas, the European commissioner for transport, said: “This is less than we asked for, less than is needed, but more than we have for essential transport investments under the current budget.” She pointed out that the European Parliament might yet make changes. “The CEF, and transport within that, are amongst the Parliament’s top priorities for the budget negotiations,” she said. “We hope they may be able to regain some ground.”

The Commission had earmarked €9.2bn in the CEF for developing broadband and digital services. Member states cut this to €1bn.

Neelie Kroes, the European commissioner for the digital agenda, said that the plans for broadband roll-out would have to be completely abandoned. Member states would now have to pay for this investment themselves, she said.

What the outcome of the budget negotiations suggests is that member states had no great loyalty to the CEF, which was largely a creation of the Commission. They may be suspicious of the Commission’s involvement and sceptical that they can come up with sufficient matching funds that are a prerequisite for EU funding. For several states, traditional cohesion funding is a more attractive option.

The cuts to the CEF have a knock-on effect on efforts to tackle climate change. The leaders said in the summit conclusions that climate action “will represent at least 20% of EU spending in the period 2014-20 and therefore be reflected in the appropriate instruments”. But such “mainstreaming” – the inclusion of overarching goals across policy areas – creates an accounting difficulty. Where a CEF project – for example, the construction of a cross-border smart grid – might have counted in full toward the EU’s climate action target of 20%, it is difficult for many sectoral projects to quantify their contribution to the target.