Ahead of the informal summit of the heads of state or government on 23 February, the European Commission on Wednesday 14 February presented a menu of proposals for the forthcoming multiannual financial framework (MFF) 2021-2027, pending its formal proposals, anticipated for Wednesday 2 May.
The proposals of this document on the traditional regional and agricultural policies could cause some gnashing of teeth, particularly on the part of the local authority organisations.
“With the communication we are publishing today, we are presenting a catalogue of different areas in which Europe can really add value (…). We could also call it a ‘menu’, from which member states must order”, the Commissioner for the Budget, Günther Oettinger, explained to the press, adding: “and it will be up to them to decide whether they want the added value that Europe can offer. And if they do, whether they are equally prepared to pay for it”.
The proposed options more or less follow the five scenarios on the future of the European Union presented by the Commission in March 2017 (see EUROPE 11736). However, the fifth scenario, which provides for an increase in the EU budget, is largely absent from the so-called traditional policies.
The document sets the tone and confirms the emerging trends: the envelope for the Common Agricultural Policy (CAP) and the cohesion policy - currently representing 70% of the EU budget - will certainly be reduced in favour of the new political priorities (management of the migration challenge, security, defence), or policies with proven European added value (Erasmus+, Connecting Europe Facility, research and innovation).
The Commissioner stressed that it was not about pitting old and new priorities against each other, but added that if the budget is not increased, then decisions will have to be made.
The (new) political priorities in favour…
The Commission is proposing to earmark a substantial proportion of the future EU budget for new political priorities.
Concerning the management of Europe’s external borders and the budget for the European border guard and coastguard agency, it is proposing three options: - the current system exploited to its maximum for a budget of €8 billion over the next seven years (0.8% of the MFF); - a fully integrated external border management system (comprising 3,000 European agents) at EU level, for a budget of between €20 and €25 billion over seven years (between 1.8% and 2.3% of the MFF); - a system for the management of the external borders of the EU requiring around 100,000 agents, to reach a level comparable to that of the US and a budget of €150 billion over seven years (or 14% of the MFF).
The European Defence Fund, launched in June 2017 (see EUROPE 11803), also gets a mention. The Commission is proposing a budget of at least €3.5 billion for the entire period, earmarked for research in the field of defence, as well as funding for industrial development of €7 billion to leverage €35 billion. The Commission is also developing the idea of a separate financing mechanism with an envelope in the region of €10 billion for the entire budgetary cycle, to support operations with a defence dimension.
In order to bolster the most popular European programmes, the Commission is proposing to double the number of young people benefiting from the Erasmus + programme to cover around 7.5% of young Europeans. Ambition on this scale would cost around €30 billion, according to its forecasts. Under a second, far more ambitious scenario that would aim to cover one third of young people, the Commission puts the budget at €90 billion.
The financing of infrastructure, connectivity and digital competencies will very much belong to the major priorities of the future. The Commission suggests doubling current investments, to reach a budget of €70 billion. From this envelope, the institution hopes to support the development of European super-computers, artificial intelligence, robotics and ‘Big Data’.
As regards the future of the fundamental research programme that will take over from Horizon 2020, the Commission is developing three scenarios: - the first scenario would be similar to the current budget (around €80 billion), which would not respond to European under-investment in the field, according to the Commission; - an increase in the envelope of 50% to stand at €120 billion; - doubling the framework programme to €160 billion.
… the traditional policies, not so much
The options proposed for the traditional policies are less ambitious, particularly for the structural and investment funds. Furthermore, the announced figures are in current prices rather than constant prices, which is one way of padding the envelopes a little, according to several European sources.
For these funds, the institution put forward three scenarios for the next multiannual financial framework: - the first scenario is the status quo, with a budget of around €370 billion (35% of the current MFF) to cover all regions; - a second scenario, focusing on the less developed regions and the cohesion countries, providing for a drastic cut of around €95 billion over seven years, and not covering all regions;- a scenario in which the focus would be on just the regions of the cohesion countries, corresponding to a reduction of €124 billion.
For the CAP, the forecasts are based on the same logic as that of the cohesion policy. The Commission suggests three scenarios: - the status quo scenario, with a level of spending at €400 billion (37% of the MFF), which would allow for small and medium-sized farms to be supported; - a 15% cut, equivalent to €60 billion; - a scenario providing for a 30% reduction, or €120 billion.
As regards Economic and Monetary Union (EMU), the Commission’s proposals are in line with its package of December 2017 (see EUROPE 11920), including a new budgetary line of €25 billion to support structural reforms.
Conditionality a clear issue
Central to the forthcoming political battle stands the possibility of making the award of European funding conditional on compliance with the fundamental values. Without saying so, this is aimed at the countries of Central and Eastern Europe, which have an appetite for structural funds, but some of the governments of which are skirting the limits of the rule of law and refusing to take any migrants already present in the EU from Greece and Italy into their countries.
Similar conditions, linking the structural funds to compliance with European budgetary rules, already exist. However, the sanctions in place were never applied when the matter arose for Spain and Portugal.
The Commission warns that introducing these rules of conditionality could have an adverse effect on students, researchers and civil society organisations – but did not refer to any regions by name.
Doing more with less
On the basis of the positive experience of the Juncker investment plan, the Commission is increasingly proposing to use the EU budget as an instrument to raise capital on the financial markets.
With this in mind, the EU Fund for Strategic Investments (EFSI) will be increased, in order to swell the volume of investment in the EU to €2 trillion.
There would also be an end to the fragmentation of financial instruments currently prevailing (around 40), to create a single instrument.
The Commission has also mooted the idea of creating a Union Reserve, to be fed into by European money not spent at the end of the programming period, which could lead to an extra €21 to €28 billion over seven years, according to its calculations.
A tight timeframe
Oettinger once again stressed the importance of the member states reaching a unanimous agreement before the European elections of the end of May 2019. The official argument invoked is to avoid losing a year in putting programmes and interventions into place on the ground.
The Commission has, moreover, decided to bring its formal proposals on the post-2020 multiannual financial framework forward to Wednesday 2 May, having originally scheduled these for the end of that month.
However, a European source close to the dossier cast doubt on the realism of the Commission’s stated ambition. One important parameter, the Polish general elections of autumn 2019, could throw the anticipated calendar out. Certainly, the outgoing Polish government will be very reluctant to accept budget cuts in the cohesion or agricultural policies.
The Bulgarian Presidency of the Council of the EU is to host a ministerial conference on the future of the EU budget in Sofia on Friday 9 March.
The Commission document is available at: http://bit.ly/2EqgvP5. (Original version in French by Pascal Hansens)