Parliament Secures Extra Time For Portugal And Spain Before Freezing EU Funds

By Jorge Valero

(EurActiv) — The European Parliament gave some leeway to Spain and Portugal on Thursday (6) before an expected suspension of EU funds takes place, as MEPs decided to continue their assessment by calling their finance ministers.

The Conference of Presidents, the European Parliament’s top political body, concluded that more information is needed before making a proposal to the European Commission on the suspension of the funds.

The Parliament requested entering into a structural dialogue with the executive after the Iberian economies breached the EU’s fiscal rules.

The leaders of the political groups decided, without debate, to ask the European Commission for further clarification of which programmes will be affected when a decision is finally made.

The legislature will also invite the finance ministers of Spain and Portugal to appear before a joint session of the Economic Affairs and Regional Development committees. MEPs will ask them about the national budgetary situation and what measures they plan on implementing to meet the new deficit targets set by the EU.

Sources explained that, ideally, both ministers would speak the same day, although the details of their appearances have yet to be finalized.

A European Parliament official explained that those who supported Commission Vice-President Jyrki Katainen’s hawkish view to immediately freeze the funds had “lost the battle”.

A broad majority of MEPs spoke out against freezing the funds during an exchange with Katainen, and Commissioner for Regional Policy Corina Crețu.

Spain and Portugal were found guilty of breaching the Stability and Growth Pact last July. Although the European Commission did not fine them, freezing structural funds was a “legal obligation”, Katainen told MEPs on 3 October.

The Commissioners insisted that EU money would not be affected if Madrid and Lisbon implement tax hikes and budget cuts, to meet the agreed deficit targets.

The extra time gained is badly needed in both countries. While Spain’s political parties are still struggling to form a new government, Portugal is reluctant to adopt further measures after it revised downwards its growth forecast for 2016.

A European Parliament official told EurActiv that, right now, “the most important thing” is to control the timing to ensure that Spain and Portugal escape from the sanction procedure without any scratch.

Depending on the answers offered by the Commission, the Conference of Presidents left the door open to requesting a new hearing with the Commissioners.

According to executive’s internal documents, the decision on the freezing of EU funds could come by the middle of November. The Council would then adopt it, unless there is a majority against it.

In regards to the final amount of the suspension, Crețu explained that the Commission will “significantly” reduce the figure given the high level of unemployment in both countries.