Cohesion Policy and the EU Budget

As the second largest area of EU expenditure after the CAP, it is not surprising that cohesion policy should play a major role in EU budgetary politics. Historically, cohesion policy spending has been utilized as a compensatory mechanism to secure the agreement of poorer member states to further economic integration and liberalization, a fact that accounts for the very creation of cohesion policy and the expansion of EU structural spending after 1988. In a similar manner, but on a much smaller scale, special allocations under cohesion policy have become an increasingly utilized means for adjusting the net balances of individual member states and securing intergovernmental agreement on complex multi-annual budgetary packages. Spending on cohesion policy has also become a major issue in the growing split within the EU between net budgetary contributors and recipients, who are also generally the main beneficiaries of cohesion policy. While this north—south divide has always been a factor in EU budgetary politics, it has become a more significant cleavage since the late 1990s because of a worsening economic climate and the budgetary and fiscal constraints imposed by EMU.