'Poor four' citizens look forward to cash gift from the EC

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The Independent Online
EVERY citizen of Spain, Portugal, Ireland and Greece could receive a present of pounds 109 in the next five years, courtesy of their fellow members of the European Community.

The 65 million inhabitants of the EC's four poorest countries will not get the windfall paid into their own bank accounts, but they will receive indirectly more EC aid per head than any developing country in Africa or Asia. The plan - called the Cohesion Fund - is the idea of Henning Christophersen, the Danish member of the European Commission, who unveiled the fund's 1993 draft budget after its approval yesterday by the 16-member Commission in Brussels.

The four countries already receive plenty of money from two different schemes, the structural and regional funds, under which the Community promotes economic development in particularly poor areas.

But the Cohesion Fund is the first time that the idea has been applied to entire countries. In 1993, the Commission wants to spend some 1.5bn ecus ( pounds 1.1bn) on it. Over the five years to 1997, it hopes to find a total of 10bn ecus, in the hope of giving such a jolt to the four economies that they move up quickly towards the Community's economic average.

The money will be spent on environmental and infrastructure projects, ranging from roads to bridges and from telephone systems to railways. According to the project's champions, the fund's lucky recipients will have to prove that the money will be put to good use, and will help to bring the less developed outer reaches of the Community into the mainstream of the single European market.

This is aid on a scale never imagined before. Even the Commission admits that it dwarfs the Marshall Plan money the United States pumped into a tattered Europe after the Second World War. But it is by no means certain yet. The programme was agreed by the EC's 12 member states at Maastricht last year, and seen by the poor four as the price they were to be paid for signing up not just to a future common foreign and security policy, but also to a single market straight away and full-scale monetary union six years away.

It suffered a setback in the spring when Danish voters, many of whom were enraged by the prospect of what they saw as massive transfers to idle southern Europeans, voted against Maastricht in a referendum. Legally, the Cohesion Fund as planned last year cannot come into effect until the Maastricht treaty is ratified.

The hopes of the four were raised at the Lisbon summit at the end of June when, under heavy pressure, the heads of government of the 12 member states affirmed their intention to put the Cohesion Fund into practice in 1993, come what may. Only a few weeks later, however, the EC's budget committee - the council of ministers responsible for looking at the Community's year-by- year spending - voted for a cut in the 1993 budget, and allocated no firm sum at all to the aim of cohesion.

Mr Christophersen remains undaunted by that setback. As a former Danish finance minister and EC budget commissioner, he insists that the first reaction of the Council to the budget is often very different from the compromise that emerges after the European Parliament has looked at it and the Council has had a chance to reconsider.

But there are signs that the debate over cohesion may be unprecedentedly bitter. It is not only Danes who have charged that the fund is unnecessarily extravagant, and raises the risk of frittering away huge sums in white elephant projects.

The fund's proponents insist that there are some important safeguards built in. To qualify, the four countries have to reduce their budget deficits, and cut inflation in line with agreed 'convergence programmes' for joining a single European currency.

Yet they are likely to receive money for three full years from 1993 to 1995 - probably amounting to billions of pounds - before the Council of Ministers can seriously question whether their economies are well enough managed to allow the money to be well spent.

Although Britain's is likely to be among the loudest voices for restraint this year on cohesion, it may not continue so for long. Over the past six years, its Gross National Product per head has fallen eight points to below 95 per cent of the EC average. Britain may become a recipient, rather than a payer, before the fund's five-year programme has ended.