As regards new resources, the Commission claimed to be able to collect 22 billion euros, garnered from the common consolidated corporate tax base (legislation that has not yet been adopted), trading in CO2 emissions quotas and from the volume of recycled plastic packaging waste. The other sources referred to in the 2017 document have disappeared. Today, plastic is the only survivor, in the Commission’s latest document distributed before the end of the European Council last Friday (see EUROPE 12432/6). So what about the 22 billion?
On 30 May 2018, in a resolution supported by a very large majority (409 votes in favour), the European Parliament condemned the Commission’s draft multiannual financial framework (MFF) (see EUROPE 12030/2) as woefully inadequate to meet the EU’s objective requirements. On 10 July, the European Court of Auditors criticised the same document for its lack of justification (see EUROPE 12059/1). As for the Council the EU, it started its discussions in June (see EUROPE B12049B12), immediately revealing deep divisions that have now persisted for 20 months; the best efforts of the six-monthly Presidencies have been futile at best, aggravating at worst.
Meanwhile, over this period, many new players took up their duties: at the Parliament, Commission and European Council. The ‘von der Leyen’ Commission has expressed a high level of ambition, which we have reported in detail in our daily bulletins and which observers might struggle to imagine can be completed in the five years of its term of office, given the stranglehold on budgetary resources, particularly for anything related to the Green Deal, research, defence, the digital transition, space strategy, etc. What’s more, it would be ridiculously unfair to make farmers and cohesion beneficiaries pay for the shortfall of the British contribution to the EU budget.
There is a feeling that it is the Commission’s funding that would decrease the most.
The result is that the various draft versions of the MFF – from the ‘Juncker-Oettinger’ draft to the Commission’s ‘non paper’ via the Finnish draft compromise (see EUROPE 12381/1) or the ‘Michel’ version (see EUROPE 12426/1) – suffer from a mismatch in terms both of overall volume and the way it is paid for. To this we might add the shortcomings of the method currently used to calculate the result, and a likely mismatch between the final intergovernmental compromise and the demands of the Parliament, whose President David Sassoli has not been slow to point out that a positive vote from a majority of MEPs is vital for the Council of the EU formally to adopt the MFF regulation (art. 312 subparagraph 2 TFEU) (see EUROPE 12430/2). And as the Parliament let itself be taken along for the ride when the 2014-2020 MFF was approved, its appetite to repeat the experience is unsurprisingly lacking. As for the Commission, it is worth noting that in 2013, its President had little sway in the final compromise, despite being a member of the European Council. One would not wish the same fate upon President von der Leyen, who, to top it all off, is in the early days of her mandate, but given the current context, it is hard to see exactly how the Commission might regain the upper hand.
The only hope is that there are several heads of government with the intellectual rigour to widen their approach, which is currently based on the net contributor/net beneficiary dichotomy, and nothing else. Certain achievements paid for by the EU have led to reductions in national public spending. The benefits of the single market outstrip the cost of the contribution to the EU budget for all member states, but particularly so for Luxembourg, Ireland, Belgium, the Netherlands, Austria, Denmark, Malta and Sweden. However, this de facto privileged group is also home to the four ‘Frugalites’! Looking at the national contributions between 2014 and 2018 in terms of percentage of GNI, it is clear that by dint of their general rebates, the United Kingdom, the Netherlands, Sweden, Germany, Denmark and Austria are well below the European average: this group, once again, includes the proponents of frugality! Calling for an EU budget capped at 1% of GNI with the continuation, albeit degressive, of the rebates, is just cheeky.
The ‘Frugalites’ have another argument besides, but they don’t make much of it in public: according to Transparency International, the most corrupt countries of the EU are, in reverse order, Cyprus, the Czech Republic, Lithuania, Latvia, Spain, Malta, Italy, Slovakia, Croatia, Romania, Hungary, Greece and Bulgaria. Deducing that every penny of the cohesion funds is embezzled would be highly disingenuous, but sufficient guarantees for the effectiveness of the fight against corruption would help to reduce the relevance of the argument, and possibly to move forwards towards a balanced agreement. It is, moreover, in the economic interests of the net contributors to help the Cohesion countries to acquire a certain level of prosperity and expertise. They are, however, quite right to make the granting of funds conditional on the observance of the rule of law. The system of conditionality recommended by the Commission is better than that put forward in the ‘Michel’ document: it could do worse than to stick to its guns on this point, taking public opinion hostage.
You can embark on as many tours of the capitals as you like and fully exploit the ‘confessional technique’; nothing will change if the mindsets remain set in stone. A change of approach is urgently required, with a reminder of the code of ethics of solidarity within an effective Union; it could be the subject of a joint document by the Parliament and Commission – why not?
If the status quo does not change, the mismatch trap will spring shut. There will be no winners, only losers, and the further down the hierarchy of decision-makers you go, the more of them there will be.
Renaud Denuit