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Negotiations over the 2014-2020 EU financial perspectives are set to be fraught with difficulties. Though they are independent of those – still unresolved – covering the amendment of the 2012 budget and the approval of the 2013 Commission proposal, the contradictory positions staked out by the negotiators bode ill for the final outcome. The differences represent, however, only relatively limited amounts and certainly derisory when compared with the sum total of public expenditures of the Member States, all the more that the latter are quick to include their contributions in their “outlays” while failing to consider benefits as “receipts”.
The problem does not reside in finding a compromise that will allow such Head of State or Government to claim “victory”, earning him the applause of his home public opinion, or such other to have preserved intact a specific existing advantage. No! The drama is the total lack of ambition and vision of all the negotiators!
It is already clear that even if the most ambitious proposal – that of the Commission already lower than requested by the European Parliament – were to be adopted, the 2014-20 financial perspectives would not provide the most elementary resources to finance any significant new initiative in terms of economic stimulus or job creation.
To take the EU budget hostage under the pretext of the austerity imposed on Member States is hypocritical; it dashes any hope of fostering the progressive implementation of greater “solidarity” that everyone demands but nobody is prepared to finance. It makes hardly any difference whether the British request for a budget freeze at 2011 levels or the Commission proposal wins the day: in either case the result will be far short of the needs.
To attempt, in a crisis environment, to enforce a rigid budgetary framework covering the next seven years is likely to asphyxiate the whole process of integration and kill any hope of finding at Union level any credible contribution to solving the political, economic and social challenges raised by a world in rapid transformation. The result can only be a strengthening of nationalist and protectionist lobbies, forerunners of the inexorable end to the magnificent European adventure that has served its citizens so well since 1945.
Instead of focusing on an unsatisfactory compromise, the European Council should, temporarily, limit itself to the adoption of annual budgets (starting with 2013) while taking the necessary time to redefine fundamentally the budgetary framework of the Union over the long term and integrate it in a new Treaty. This would imply identifying new “own resources” which could, furthermore form the basis of an autonomous borrowing capacity that remains still largely underutilised.
Pushing even further these Utopian/politically incorrect thoughts, the EU might set itself the goal of reaching over 20 years a budget totalling the equivalent of 20 per cent of EU GNP, raising it each year by 1 per cent. The financing could be based, on the one hand, by new “European” taxes such as a 0.01 per cent charge on electricity and communication bills (easily collectable through the limited number of providers) and on the other hand by increased transfers from Member States, to the extent that the EU budget would assume corresponding national expenditures in areas such as defence, foreign affairs, research and development, education etc.
Such a perspective would create over time very considerable margins for EU intervention; it would foster both vigour and hope into the European project while allowing sufficient time for a progressive implementation calendar. This initiative could blend with the proposals put forward by the Thomas More Institute last September: “The time for federalism has come!”
Here is certainly a worthwhile debate that can replace advantageously the forthcoming petty carpetbaggers bargaining, the outcome of which can only be disappointing. Failing agreement (a high likelihood), the spectacle afforded by disunity over the budget will immediately raise the question of the capacity of the Union to move forward on other key matters such as the Banking Union. It should then come as no surprise if markets react nervously to such a display of incoherencies.
Paul N Goldschmidt, Director, European Commission (ret); Member of the Advisory Board of the Thomas More Institute
Tel: +32 (02) 6475310 / +33 (04) 94732015 / Mob: +32 (0497) 549259
E-mail: paul.goldschmidt@skynet.be / Web: www.paulngoldschmidt.eu