EU cohesion spending is non-cohesive and out of control

In a crushing report, the European Court of Auditors (ECA) went after EU spending on plans for a European high-speed rail network. The institution calls current plans “very unlikely”, and describes them as having “low added” value. And yet, the Juncker Commission does little to nothing to reduce cohesion spending, which, according to its own auditors, is a waste of money.

The European Commission set a target in a 2011 white paper to have a European high-speed rail network by 2030 that is more than 30,000 km long. Through co-financing national rail projects, the EU’s executive branch intends to connect member states more adequately and make rail traffic increasingly attractive in times in which air travel is cheap, yet considered to be harmful to the environment. The researchers from the ECA audited Austria, Germany, France, Italy, Portugal, and Spain – which together received over 80 per cent of all EU funding for high-speed railway lines since the year 2000. They criticised that there is “only a patchwork of national high-speed lines, planned and built by the member states in isolation”, that some of the border traffic infrastructure (notably that between France and Spain) is completely outdated and unfit for the demands of high-speed rail, and that there is simply no proper coordination between member states.

Concerning the planned 30,000 km by 2030, the ECA is very sceptical. The auditors noted  that by the end of 2017, only 9,000 km of high-speed lines were operational, with 1,700 km under construction. By this standard, the Commission can never meet its promised targets, stating: “We consider it unlikely that this target will be reached, because it takes around 16 years for high-speed rail infrastructure to be planned, built, and to begin operations.”

Even more crushingly, the report points out: “We found that the EU’s current long-term plan is not supported by credible analysis, is unlikely to be achieved, and lacks a solid EU-wide strategic approach.”

But it’s not only the strategic approach that is a total disaster: current projects are continuously underfunded from the start, then massively delayed, ultimately costing multiple times the initially estimated amount. Five of the ten lines audited by the ECA had experienced construction delays of more than a decade.

This includes projects such as the German “Stuttgart 21” between the German cities of Stuttgart and Munich. The 267 km stretch of of high-speed rail was estimated at €1.8 billion, then €4.5 billion in 2003, €6.5 billion in 2013, and €8.2 billion in January 2018. By now, the costs are estimated at €13.3 billion, while the project is still not completed. Stuttgart 21 is now 17 years late, provided the project will be completed according to current estimates. How exactly the European Commission continues to make these expensive promises is absolutely mind-boggling.

It’s hardly conceivable  that the European Court of Auditors will find better results for any other part of the EU’s cohesion funds; however, the Juncker Commission does little to reduce spending on the programme. While the budget that is currently being proposed (and yet to be adopted) for 2021-2027 does include a reduction in cohesion spending of 5%, the EC also points out that: “Cohesion Policy will have an increasingly important role to play in supporting structural reform and in the long-term integration of migrants.”

With migration policies increasingly coming under fire and many member states being chronically underfunded in this area, it is difficult to imagine that countries will let the Commission get away with even a small reduction such as this. If the Juncker Commission were to be consequential, it would tell member states that even the ECA agrees that this spending adds little to no value, and is therefore a programme we can scrap completely. That is, of course, pure fantasy. In the reality of daily politics, Central and Eastern European member states will just request cohesion spending matching that of the current cross-border projects of Germany, France, Austria, Italy, or Spain. Given the low standards of rail infrastructure in these regions, we’re in for a wild spending ride…

We cannot continue to promote this Keynesian economics-style of public infrastructure spending, because it clearly doesn’t work. If there is a need for infrastructure spending, and connecting lines are indeed lucrative, then there is an opportunity for private businesses to “jump on the bandwagon”, so to speak. Given the track record of public spending in this area, I earnestly propose we get off this train.

This article was first published by Values4Europe.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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