NGO funding falls victim to EU's institutional rivalry

When the European Commission's President, Mr Jacques Santer, last month stood up to speak at the European Social Forum he was met by a protesting forest of waving red cards. "Off, off, off!"

Non-Governmental Organisations (NGOs) at the annual gathering of some 1,200 of those involved at the coal face of social policy were furious that, three days beforehand, the Commission had frozen budget lines worth £720 million in response to a ruling of the European Court of Justice (ECJ).

For many, particularly those EU-level networks lobbying on such issues as the rights of the disabled, the elderly, and the poor, the decision appeared to sound the death-knell of their organisations by choking off their lifeblood at precisely a time when the EU's leaders were preaching the need to communicate with civil society.

Many NGOs won a respite when the Commission restored three quarters of the suspended budget lines on Tuesday.

The amounts of money are tiny in EU terms, but are make-or-break to the NGOs, who have been caught in power struggles both between and within the EU institutions that are not of their making.

The ECJ case had been taken by Britain's last Tory government in an attempt to block Commission spending on anti-poverty programmes, which both the British and Germans argued were best left to the member-states. And they disapproved of the Commission's discretion to allocate "non-significant" spending to projects if it could persuade the budgetary authority, the European Parliament, to come up with the cash.

To the surprise of many, New Labour allowed the case to continue. The court ruled in May that the Commission's working definition of "non-significant" - sums under £4 million - was unacceptable. The result was that the Commission would have to get clearance from Ministers for far more budget lines under named specific legal provisions ("legal bases").

Its Legal Services and Budget Commissioner, Mr Erkki Liikanen, argued that the Commission now had to confine its discretionary spending to programmes that accorded with three specific headings: "pilot actions" - small-scale, experimental projects; "preparatory actions" - aimed at preparing the way for forthcoming programmes; or "autonomous actions" - anything, from buying fax paper to supervising nuclear reactors, which relates to the day-to-day functioning of the Commission. That narrow interpretation of the meaning of the court ruling was bitterly disputed at the Commission last month by the Social Affairs Commissioner, Mr Padraig Flynn. He argued that the court had left scope for a new, wider definition of "non-significant" to be agreed between the institutions. Nevertheless, the Commission, in an extraordinary shoot-firs-task-questions-later approach, went ahead and suspended all the lines for which there was not yet a legal base, pending an examination of each one. On Tuesday a legal base was found for many which will now go to Ministers for approval, others were found to fall into the three Liikanen categories, and many have been suspended partially or fully.

All told, 56 budget lines involving £300 million have been completely unblocked. Nineteen lines (£130 million) have been partially cleared - this means, for example, that while some work preparing future programmes on poverty is OK, funding of NGOs for the socially excluded and the elderly is not.

Sixteen lines (£265 million) remain frozen until their legal base is approved by Ministers and MEPs - these include some £160 million for the work of NGOs in the Third World, likely to be freed up today.

Eight lines (£16 million) remain frozen. These include such things as support for minority languages (£3 million), threatening the Dublin office of the Bureau for Lesser-Used Languages, co-operation with charities (£1.6 million), a programme for combating violence against women and children (£2.4 million), and an anti-drugs campaign (£1 million).

In response to protests the Commission has agreed, however, to continue 1998 funding to groups from the excluded sectors who are seen to have had a "legitimate expectation" of assistance.

Even many of those reprieved in the coming weeks do not have a future. Although they may have the support of 14 of the 15 member-states, their funding, if not provided for in a specific article in the treaty, will require unlikely unanimous backing next year.

Meanwhile, MEPs and member- states are sending out contradictory signals about their own positions. While MEPs specifically approved the axed lines and most are enthusiastic about restoring them, the chairman of the Budget Committee, Mr Detlev Samlamd, is also anxious to curb Commission discretion by insisting that expenditure should be tied to secondary legislation whose enactment the Parliament has a hand in. The prospects for the social NGOs' European networks are not good.