The Implementation of Rural Development Policy in the New Member States: Constraints and Lessons for Romania Dr Robert Ackrill (Nottingham Trent University) Irina Râmniceanu (ASE and European Institute of Romania)

The budgetary constraints that affect EU policies Goal of my talk: To provide context and a broad introduction to Rural Development policy in an enlarged European Union Two main themes: The budgetary constraints that affect EU policies Review some of the features of how the NMS8 have implemented Rural Development policy thus far 24 February 2019

EU Budget Constraints: 1980s: a series of budget crises, breaching the Balanced Budget Rule 1988: Major budgetary reforms, including multi-annual Financial Perspectives (transparency and control) 1992: CAP reforms, introducing direct payments with in-built spending limits 24 February 2019

Overall spending limit: Impossible for every country to maximise their budgetary gains Also – consensus/unanimity decision-making Total EU and CAP spending represent zero-sum games Result: Countries will defend their existing spending shares 24 February 2019

Implications for New Member States? 1999 budget agreed for six New Member States 2002 accession agreement – more countries, no more money Option 1 – reform policies (CAP) to maintain equitable shares Option 2 – give the new member states less 1 is consistent with a Common Agricultural Policy, but 2 is consistent with the EU15 defending their budget shares Need for spending restraint? Pass that onto the NMS……. 24 February 2019

(VERY) Approximate Shares of EU Budget Spending, 2004 24 February 2019

Average ‘Base’ Yields, NMS10 and EU9 24 February 2019

Treaty of Rome – respects the letter if not the spirit This set the tone for Romania’s (and Bulgaria’s) negotiations Clear differentiation on direct income payments …..but Rural Development spending? “Non-Compulsory Expenditure” – so amounts are determined directly 24 February 2019

Rural Development Spending, € per Hectare, EU23 24 February 2019

Rural Development Spending, € per Worker, EU23 24 February 2019

No clear evidence of discrimination over Rural Development funding But what about co-funding demands? Martin Hallet (European Commission): Generally, less than 1% of projected GDP Never more than 25% of projected EU budget receipts Never more than 50% of net budget transfers But evidence from the EU15? 24 February 2019

Implementing Rural Development: the choices of the NMS Pre-accession, SAPARD offered 15 measures Now – Rural Development, 31 measures This offers targeted support to domestic needs, but is complex Is there a pattern to SAPARD/Rural Development implementation? Environmental/competitiveness orientation? Rural Development supports “multifunctionality” Promotes the “European Model of Agriculture” 24 February 2019

Environmental Competitiveness The Basis of Classification of Measures as Environmentally- or Competitiveness-Oriented Environmental Competitiveness Explicitly agri-environmental Investment in holdings Water resources Land re-parcelling Forestry Producer groups Less Favoured areas Processing and marketing Renovation and rural heritage Early retirement Semi-subsistence farming Compliance with EU standards Training and infrastructure 24 February 2019

Comparison of Environmental-Oriented and Competitiveness-Oriented Policy Take-up, SAPARD, NMS8 + Romania 24 February 2019

Comparison of Environmental-Oriented and Competitiveness-Oriented Policy Take-up, NRDPs, NMS8 24 February 2019

Why might pre- and post-accession implementation be so different? Copenhagen Criterion – Ability to compete in the Single Market Bias towards measures that were easier to gain approval for Measures where there was domestic experience or a reference-point But once in the EU: The measures adopted tend to attract higher EU co-financing rates Wider experience had slowly been gained through SAPARD But still limited, given the importance of agri-environmental measures in the Rural Development Regulation 24 February 2019

Thus far, we have seen: Flexibility is an important element of Rural Development, given widely-varying national needs But, so far the Rural Development policy menu has been unstructured and has been biased towards competitiveness-measures The structure of budgetary support has been very complex, with different sources, co-financing rates and documentation There are concerns over the ability of the NMS to co-finance measures and also to utilise the available funds 24 February 2019

But Rural Development post-2007? Single funding source (European Agricultural Fund for Rural Development) Single document (National Strategy Plan), to be implemented through the National Rural Development Programmes (NRDPs) The available measures will be more structured: Sectoral Competitiveness (minimum 15% of budget, 75% EU co-financing for ‘convergence regions’) Environmental Measures (minimum 25% of the budget, 80% EU co-financing for ‘convergence regions’) Diversification and Quality of Life (minimum 15% of budget, 75% EU co-financing for ‘convergence regions’) 24 February 2019

But therefore greater demands on national administrations This adds up to: Clearer structure More choice But therefore greater demands on national administrations So, Romania needs to focus on gaining as much experience as possible between now and 2007 implementing Rural Development, but especially environmental and diversification measures 24 February 2019