Tuesday

22nd Jan 2019

Opinion

Europe's budget stasis

  • The seven-year 'multi-annual framework' budget is the product of behind-closed-doors thinking in the Commission's HQ in the Berlaymont - it still has to get past national governments and the European Parliament (Photo: European Commission)

Contrary to what the bloc's critics say, the European Union is no colossus suffocating Europe's member states.

On an annual basis, its proposed budget for years 2021-2027 remains trivial: it will account for a little over 1.1 percent of the EU's overall national income. If there is a problem, it lies in how that money is going to be spent.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The Brexit referendum of 2016, the protracted economic crisis in the eurozone, and the refugee wave of 2015 supposedly opened a period of deep reflection among European leaders about the bloc's future reforms.

But if the proposed multi-annual financial framework (MFF) unveiled on Wednesday is any indication, European institutions are committed first and foremost to the preservation of status quo.

For one, a solid two thirds of the budget are dedicated to "cohesion policy" and agricultural subsidies.

Although they are "moderately reduced" as the European Commission statement put it "to reflect the new reality" the two areas which have historically formed the bulk of the EU's spending are not going anywhere in the upcoming decade.

To be sure, the framework reflects the changing environment the EU finds itself in: strengthening the EU's digital capability, supporting economic reforms in member states, coping with migration challenges, and investing in common foreign and security policy.

But compared to the legacy spending areas, the new priorities are miniscule in size.

Less than three percent of the overall budget is going to be spent on migration and border control – and less than eight percent on research and innovation. Tackling climate change – touted as one of the bloc's key areas of focus – is being given 0.4 percent of the budget's overall resources.

Of course, the commission's proposal is now going to debated and scrutinised by member states, which need to agree on it unanimously, and by the European Parliament.

Many states treat the budget as a common-pool resource and like with past MFFs this exercise will likely strengthen those spending areas that yield political benefits to national governments.

The commission proposed that the "cohesion" spending – used predominantly used to fund public investment in poorer EU member states – is to be tied to a tighter scrutiny of rule of law.

"The new proposed tools would allow the Union to suspend, reduce or restrict access to EU funding in a manner proportionate to the nature, gravity and scope of the rule of law deficiencies," says the commission.

To be sure, the Polish and Hungarian governments already see this as a thinly veiled attack and can be expected to argue that the move is meant as revenge for the two countries' rejection of the commission's refugee relocation mechanism.

Whether or not they are right, the new rule is unlikely to bring dramatic change.

Although the proposed mechanism gives significant leeway to the commission to act, identifying a breach of the EU's founding values by a member state still requires unanimity of all other member states according to the treaties.

With more than just one potential troublemaker in the EU, the European Council is unlikely to ever reach such a decision.

But here's the worst part: the antiquated nature of the EU's budgeting.

Soviet-style central planning?

If Soviet-bloc countries followed five year plans, the EU abides by a seven-year MFF.

Of course, the bloc has its annual budgets but the framework sets the ceilings for large spending areas – agriculture, cohesion policy, research and innovation, and so forth.

So even if the commission is to be lauded for the focus on areas critical to Europe right now – migration, security, and the single market – it is worth bearing in mind that the proposed budget is one for the next decade which will surely bring about challenges no one can foresee.

The EU is not on the verge of collapse.

But the current respite from internal and external troubles is increasingly becoming a missed opportunity.

The proposed budgetary framework will do little to build resilience in the face of its future crises – and even less to turn Europe into a dynamic, formidable global power.

And that is something Europeans might come to regret in the not too distant future.

Dalibor Rohac is a research fellow at the American Enterprise Institute in Washington DC

Analysis

Hogan's carrot: reform to soften CAP cuts

The European Commission is dangling the prospect to farmers of being able to dodge financial cuts in the upcoming EU budget – but only if national governments agree to a mandatory redistribution of subsidies.

Commission launches seven-year budget 'bargaining'

While the European Commission's post-Brexit EU budget proposal for 2021-2027 calls for a less-than-expected increase in spending, prime ministers of net payer countries have already called the starting proposal "unacceptable".

What is fate of non-euro EU states after Brexit?

The UK's withdrawal from the EU will heighten fears of marginalisation among the eight member states - Bulgaria, Denmark, Croatia, Poland, Romania, Sweden, Czech Republic and Hungary - that have not adopted the euro.

Salvini and Kaczynski - the new 'axis' powers?

Populists and Eurosceptics are slowly realising that the goal of dismantling the EU is not only unrealistic, costly and unpopular - but also deprives them of valuable opportunities to accumulate political capital and exert influence.

How to troll the European Parliament elections

The May 2019 European parliament elections will take place in a context which make a very promising ground for protest votes and extreme views, aided by bots and algorithms.

News in Brief

  1. EU hits Mastercard with €570m fine
  2. Romanian minister prepares to cancel corruption cases
  3. Sefcovic: no gas supply problems this winter
  4. Report: Commission warning on passport-sale schemes
  5. France summons Italian ambassador over colonial remark
  6. May U-turn on fee for EU nationals in UK
  7. French data watchdog gives Google €50m fine
  8. EU hits Russians with sanctions over Salisbury attack

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. France and Germany hope to revive EU with Aachen treaty
  2. May pushes defeated Brexit deal, offers no Plan B
  3. European Parliament targets 'fake' political groups
  4. What is fate of non-euro EU states after Brexit?
  5. Turkish NBA star takes on Erdogan
  6. 'Meme ban' still on table in EU copyright bill, says MEP
  7. Brexit power grab by MPs hangs over May's 'Plan B'
  8. Polish mayor's funeral marred by Tusk TV dispute

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  2. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  3. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  4. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  5. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  6. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  7. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  8. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  9. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  10. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  11. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  12. Mission of China to the EUChina: Work Together for a Better Globalisation

Join EUobserver

Support quality EU news

Join us