Bad timing. Reflection on how to fund Europe will enter a new institutional stage this week when the European Commission publishes a reflection document on potential sources of new EU funding. The new Financial Perspectives will not come into force until 2014, but there is already fierce debate on a huge number of controversial issues. This is clearly not the right time for thinking big - it would be a pipedream to imagine that a sharp rise in the EU's budget is possible at a time when the EU institutions themselves are calling on member states to rein in their spending and balance their budgets. The EU can hardly turn round and demand extra cash for Europe, and anyway the member states that cough up most of the EU's cash are on an austerity drive and would simply refuse to pay more. It is true that there are good reasons for increasing the EU budget - working together can make funding more efficient and eliminate duplication, but at the present time, this argument is simply not sellable, be it to public opinion or most of the political world.
The buried option. What can be done to meet the increasing funding requirements? The first temptation to which some of the Brussels intelligentsia succumbed was certainly not very wise or imaginative - consisting of reducing the two most costly EU policies (cohesion policy and the common agricultural policy - CAP). How? By reducing the cohesion policy to a sprinkling of aid for the poorest member states and by cutting back the CAP by slimming down funding for farming or by getting member states to co-fund direct farm payments. Both ideas caused uproar and both the cohesion policy and the CAP suddenly found defenders who made a convincing case, in my view. We have regularly reported on these arguments in our newsletter and I have often expressed views in my column. The simplistic starting point - shifting the bulk of the budget to supposedly more modern objectives gave way under criticism. The critical importance for European civilisation of farming in every country has been recognised for reasons like safeguarding nature, territorial balance, food security and helping prevent famine around the world. The safety of the CAP is far from guaranteed but the real issues have been raised and it is significant that Europe's leading industrial power is on the right side. As for cohesion policy, reactions to the idea of scrapping it have exceeded all expectations and it has been recognised as a crucial pillar of EU action beyond national borders.
One solution. The problem remains of how the EU will be able to deal with the new work awaiting it. I will simply summarise the situation as revealed in the news reported upon each day in our newsletter. New EU responsibilities are being fleshed out. The common diplomatic corps, for example, is gradually becoming operational. Some funding will become available from reallocation of unused EU funding (which in the past was returned to the member states), reducing some budget lines and monitoring some expenditure more closely. These are palliatives rather than solutions as such. According to the head of the European Parliament's budgets committee, Alain Lamassoure, there is only one real solution - creating new EU funding sources. The EPP political group has already made statements to this effect (see EUROPE 10222). Lamassoure described how this could work - the EP would agree to the 2011 (and no doubt to the 2012 and 2013) budget not increasing very much at all, as long as member states agree to start debating independent EU funding options (also known as “own resources”, see EUROPE 10234). He points out that the new work (energy, immigration, space, the diplomatic corps, etc) all needs funding but not a single euro exists for it at the moment. Should there be a European tax? This is clearly not the right terminology because the combination of “European” and “tax” would be fatal. Lamassoure has other ideas, like the idea of a tax on bank profits, a bank transaction fee or some of the VAT levied on imports. But he prefers to wait and see what the Commission comes up with in its reflection document, which will not be new legislation but rather a report clarifying the issues (assessing new funding requirements) and setting out possible new funding options. An explosive issue, which I will be returning to tomorrow.
(F.R./transl.fl)