Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Committee of the regions - 04.11.2020

CoR President: "Addressing local finance disruptions cannot be left only to Member States"
COVID-19 has had an immediate and massive impact on our territories. How can we avoid repeating the same mistakes of the early weeks of the crisis? How can the European Union help cities and regions recover? 

In the throes of a second wave of the coronavirus pandemic, we discussed this and many other questions with the President of the European Committee of the Regions, Apostolos Tzitzikostas

You had a very challenging start to your mandate due to the coronavirus pandemic. What would you like to accomplish by the end of your term of office?

Bringing Europe closer to citizens through its villages, cities and regions is the priority of my mandate. The pandemic made this even more concrete and urgent. While local and regional leaders were on the COVID frontline, the Committee backed their efforts by setting up a platform for mutual exchange and support, and by putting forward concrete proposals bringing the EU at their side. 

We proposed an EU Health Emergency Facility and urged flexibility to reprogramme structural funds, we relentlessly voiced the need for an extraordinary EU recovery plan. Many of our demands were taken on board in the European Commission's proposals and in the July deal among Member States. The priority now is to keep working for a bottom-up, inclusive and sustainable recovery. At the same time, the increased awareness on the role of local leaders must lead us to take new steps towards a three-dimensional Europe, where, alongside EU and national actors, we can co-determine decisions, beyond a simply consultative function.

The CoR has just published the first annual European Barometer of regional and local governments, which catalogues cities and regions’ experiences in the first months of the COVID-19 crisis. What are the main findings of this first edition?

The Regional Barometer shows that the pandemic hurts us all but some areas are particularly vulnerable with big gaps in emergency and recovery capacities. We need to address this “new geography of regional disparities” and make sure that the next EU budget and “Next Generation EU” rely on smart planning based on the needs of our territories. 

In particular, the Barometer highlights two particularly worrying trends: a "scissor effect", with falling revenues and increasing expenditure, is putting the public finances of our municipalities, cities and regions at risk. Subnational authorities in France, Germany and Italy will lose 30 billion euros in 2020 alone. Over 90% of EU regions and municipalities expect their revenues to fall. If public services collapse, our recovery will be slower and more painful. 

As for the youth, the crisis risks a lost COVID-19 generation. Younger workers, often with flexible or short-term contracts, are especially exposed to unemployment risks without guarantees and safety nets. Furthermore, only six Member States are able to offer digital education for 80% or more of students. We need to help them and prevent this crisis from undermining our future.

The data suggests that Europe is in the throes of a second wave of the pandemic. What should be done to avoid repeating the mistakes of the early weeks of the crisis?

We learnt from the crisis that only a functioning partnership involving EU, national and local and regional governments can protect our citizens against a common threat. At the same time, we have also been taught that personal responsibility is central for our safety, both as individuals and as communities. 

The second wave is here, we do not know if this is its peak, but probably not. But we know that closing borders without any coordination or coherence between regions and countries does not work; that minimising the role of basic safety measures is a dangerous form of populism; that the EU needs more competences on health; and we all need to invest more in public health and public services resilience. This is particularly urgent in Member States where the dramatic evolution of public debt has led, over the past two decades, to a dangerous weakening of all public services.

According to the CoR’s Barometer, over 90% of EU regions and municipalities expect their revenues to plummet. What action is needed at EU level to help restore this lost revenue?

The scissor effect threatens both public services and public investment. Both must be addressed as both the crisis and the recovery will risk being especially painful   if local public services – which are decisive for social cohesion and local resilience - are not only preserved, but strengthened, made smarter and more sustainable. As for the funding of growth-enhancing projects, regional and local authorities represent half of the EU's public investment. Without reigniting this engine at full speed, the relaunch of our economies will be impossible. 

If an agreement among Member States on the EU's budget and recovery plans is reached on time, an unprecedented investment capacity is likely to bring concrete benefits and support for citizens and businesses in our regions. But addressing local finance disruptions cannot be left only to Member States. We need the EU to offer financial instruments and support schemes where national finances are unable to tackle the impact of the scissor effect. 

President von der Leyen has said that local and regional governments will be at the heart of our recovery. Are we finally witnessing a change in the way things are done at EU level?

We warmly welcomed the messages delivered by President von der Leyen at the plenary debate on the Barometer. Those words must mark a turning point in a phase when the emergency can push many to see centralisation as a way to simplify and accelerate investments. The President showed full awareness of the work carried out by local and regional leaders during these difficult months and of the need to involve them to ensure that funding reaches those who need it the most. Moreover, President von der Leyen shares our view that regions and municipalities are the best place to make the recovery green and digital on the ground. 

Two days after the exchange with President von der Leyen, we discussed our position on the Recovery and Resilience Facility with EU Commissioner Gentiloni. He reiterated the call on Member States to involve local and regional authorities not only in the delivery, but also in the shaping of recovery plans. We will cooperate to promote the partnership principle as well as to monitor and assess regions and cities’ involvement, in order to maximize the impact of this new powerful facility. 

How can we ensure local and regional governments are fully involved in the recovery plan?

The Committee has proposed a Code of Conduct on Partnership to steer the cooperation among the different levels of governments, in full respect of the diversified distribution of powers in EU Member States. 

The European Commission is committed to monitoring and assessing such involvement. Beyond regulatory aspects, we are working to make national government aware that there is no impact without partnership for two key reasons. We need to take into account the asymmetric impact of the pandemic. However we also need to coordinate the different funding tools to avoid overlaps, inconsistencies, or, even worse, that the new facility "competes" with structural funds and other financial instruments. There risk is that we end up supporting the most relevant, visible and promising projects, but not the most complex or demanding ones. We cannot afford such a counterproductive approach; we need to make the most out of each and every Euro of tax payers' money'.

In a meeting CEMR organised with elected representatives, MEP Jan Olbrycht has stressed the revolutionary nature of the recovery plan, being financed by pooled European debt to be reimbursed by new EU taxes. According to him, “The new funds will change the EU as it will create a stronger Union with own resources”. Do you share this view?

It is not the first time the European Commission gathers resources on international financial market but the convergence of Member States on a financial operation of this dimension is without any doubt an historic step for our Union, a game changer in the EU's growth and financial policies. 

The size of the EU recovery plan is fully justified by the impact of the unprecedented emergency we must cope with. But this should not lead us to forget the meaning and the implications of the decision to mobilize up to €1800 billion until 2027. And the European Parliament is absolutely right in its firm request to take a clear commitment on new own resources. However, markets' reaction to the bonds emission for the SURE initiative shows already a strong confidence towards the overall EU recovery plan. Let's make it work.

What could be the contribution of the Conference on the future of Europe?

The Conference on the Future of Europe should improve the House of European Democracy. To do this, the Conference must be more than a "beauty contest" between Brussels based institutions. It must reach out to citizens and identify viable solutions to fill the gap between the EU institutions and the Europeans. Among these solutions, we will propose to enhance the role and the active participation of the one million locally elected politicians from all across the EU. 

Local and regional authorities are a fundamental component of the House of European Democracy. Member States are the walls, EU institutions the roof, we are its foundations. If this Conference leaves us with words only, we will have wasted an historic opportunity. The Committee is proactively cooperating with the European Parliament, the Commission and the Council to promote ambitious objectives and an inclusive approach, in full respect of the recommendations on the active subsidiarity adopted by the Commission

What key issues should the CoR and CEMR closely collaborate on in the coming years? 

The creation and the achievements of the Cohesion Alliance are a good example of how effective and beneficial can be our cooperation. The broadening of the Alliance focus, with a renewed attention to all EU policies' (including Next Generation EU) contribution to improving cohesion and to the synergies between ESI funds and other EU funding tools, offers now good opportunities to step up our cooperation. 

I strongly appreciate the work carried out by CEMR with the Green City Accord, as well as on the Sustainable Development Goals. In this light, alongside the cohesion files, the territorial dimension of EU's recovery and of the Green Deal can be the key priorities for our common work. 
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