European Politico-economics QA Mega-thread - Page 1030

Instead there are guidelines and multiple funds for multiple areas, for example there is Infrastructure investment, grants for Small and Medium Enterprises, funds for Human resources and social equality etc. etc.

To get this money, one has to apply with a documentation, asking for a specified amount, and explaining on what it s planning to spend said money. Now, the country itself isnt applying, and most of the time it s not even its government who s asking for that money. In most cases it s local public authorities, say towns, villages or S&M Enterprises or NGOs applying for that money to invest it in roads, buildings, machines or cultural programs, trainings etc.

So what does that even mean, it means that a country isnt getting money, but is allotted a fixed amount from which said country and the entities residing there can apply for small chunks. Newer and poorer EU member states obviously are given a larger slice of the pie, but that does not mean they eat it too. In fact quite the opposite happens, member states that are doing well manage to absorb 99% of the allotted funds, while newer states where there are a lot of things lacking, manage to absorb significantly less, somewhere between 50-90%.
Not to mention that they are subject to fines and cancellation of payments for mismanagement of EU funds or flat out fraud due to corruption *looks at Romania*.

Furthermore, it complicates things that these 7 year periods arent for 7 years. For example the 2007-2013 period had payments processes in 2014, 2015 and in some exceptional cases even in 2016. This distorts the stats, since if you look at spending by the end of 2013, it looks like most of the money went unspent. And that s not true, since it might have been spent in the following years. On the other hand, it means there are years when a country significantly over-performs or under-performs in the absorption of EU funds, in general the first couple of years of a financial period mean very small absorption rate, while the last years (and the extended +2 or +3 years) show a very high rate.

What I m saying is, that it is so easy to manipulate stats, without uttering a single lie or using bad data. It just depends how you pick your criteria for the analysis and which time-frame you re looking at. Example, look at Romania's absorption in 2014, absolutely stellar, you can make a nice graph out of it and applaud. Or, look at them for 2017, terrible.

If you dared to open the wall of text in the previous spoiler, you ve seen that i mentioned that S&M enterprises are one of the beneficiaries of EU funds.
Now, take a random eastern European company from any industry. What characterizes (or characterized until very recently) these companies?
They have been working with "privatized" piece of shit equipment and machines left over from the communist regimes or managed to buy some amortized ones from the west, after they were written off.

So what do they want to spend money on? New, state of the art machinery. Can they afford it? No, it s too expansive, they have no capital, banks arent willing to lend them huge sums of money, even if they put in the machine in as collateral, cuz in the case they go bankrupt, where are they gonna sell that highly specialized, incredibly expansive CNC unit or production line.

Here comes the EU, saying, look, we will support 70% of the costs, buy those new machines, all you have to do is come up with the rest of 30%, and agree to a *small* list of requirements about this and that (HR stuff, environmental stuff etc).

great, let s say all is dandy, the firm gets the grant, and can buy the machine. Ok, where to buy it? In his home-state, other eastern EU states? Who are we kidding?
They re gonna buy German machines, or maybe Austrian or Dutch or other western European (not French tho). So that money the EU lent the company flows right back out of the country.
Do you know the best part, it is not illegal or prohibited that a Dutch businessman to open up a company in say Bulgaria, apply for EU funding, buy Dutch production equipment, hire cheap Bulgarian workforce and sell all their products back to the Netherlands, make a profit, and take it by the end of the year.
Oh and btw, after 3-5 years, you are usually free to do whatever the hell you want with your machines that you brought, say ship it out of the country if you want.
Ok, in all fairness, SME grants are a very small fish compared to big infrastructure spending say highways or airports, but as i said, it s a lesser known aspect, which i tought i d share.