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Europe

EU Cuts Impoverished States Some Slack

When the European Commission announced its suggestions for allotting regional aid for 2007-2013, a sigh of relief went out from eastern Germany, where severe cuts in funds were feared.

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Economically-depressed eastern Germany builds on Brussels subsidies.

The EU gave its poor regions a helping hand on Wednesday. Instead of making the member states curse their relative prosperity, Regional Policy Commissioner Michel Barnier assured the 15 that their underdeveloped regions would continue to receive structural aid even after ten poorer, needier states join the bloc in May.

Besides proposing that structural aid for weak regions should encompass €336 billion ($430 billion) from 2007 to 2013, the commission soothed fears, particularly from eastern Germany, that some regions currently dubbed weak would forfeit Brussels' subsidies. It said that fair regulations must be put in place to help regions that are no longer eligible for the structural aid.

EU regions can receive the subsidies if their GDP per capita is below 75 percent of the bloc's average. When Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia become full members that average will drop.

Revelling in their poverty

Ein Traktor fährt bei Weimar auf einem Feld, Strohballen

A tractor on a field in Weimar.

The concession to the "old EU" was music to eastern Germany's ears. Nearly all of the regions of the former German Democratic Republic currently receive the highest amount of structural subsidies and, based on the most recent data -- from 2001 -- most will continue to be eligible after EU enlargement in May. The EU granted the eastern German states €20 billion in aid from its 2000-2006 funds of €213 billion. Altogether, Germany receives around €28 billion, the third-highest recipient after Spain and Italy.

The structural aid is meant to even out the developmental differences between European regions. The EU's poorest region is currently Dytiki Ellada, Greece, where the GDP is 53 percent of the EU average, according to the 2001 data. Inner London ranks highest with 263 percent. Germany's richest region is Hamburg, ranked 4th with 171 percent. Come May, the bloc's poorest region will be Lubelskie, Poland, where GDP is a mere 29 percent of the EU average.

Tit for tat

EU Budgetary Commissioner Michaela Schreyer threatened to slash Germany's structural aid over the weekend if the German government didn't give way on its insistence that the 2007-2013 budget be capped at 1 percent of countries' gross national income.

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