The restructuring of the EU budget for the Multiannual Financial Framework (2028-2034) has been initiated by the European Commission, which, in order to simplify it, plans to replace its hundreds of programmes with 27 national plans, specific to each Member State, according to a DG Budget working document consulted by our colleagues at Politico last week (see EUROPE 13498/11), and which we discuss in this interview.
This change would confirm Ursula von der Leyen’s desire to move from a programme-based budget to a policy-based budget, along the lines of the ‘Recovery and Resilience Facility’. In an interview on Wednesday 9 October, Eulalia Rubio, a researcher at the Jacques Delors Institute and a specialist in the EU budget, shared her analysis of this forthcoming major change with Agence Europe. (Interview by Florent Servia)
Agence Europe – What do you think is driving this structural change?
Eulalia Rubio – The main drive is to make investment conditional on reform. The Commission is very pleased with how the combination of investment and reform has worked in the ‘Recovery and Resilience Facility’. So far, conditionality for cohesion policy is fairly weak. There are ‘enabling conditions’ to be met in order to receive the money, but these are the same for all Member States and it is up to the Member State to ensure this. For the Common Agricultural Policy, conditionality is applied to farmers, not to States.
The EU has already decentralised, with the establishment of national strategic plans. But governments are quite free to set their own priorities. With this new model, the Commission will be able to force certain Member States to make greater efforts to develop sustainable agriculture and others to adopt reforms to boost rural areas.
With this way of rethinking the budget, the Commission could negotiate different conditions for each State. Now, the Commission could negotiate different conditions for each State. Only by adopting certain measures, laws or regulations will Member States be able to receive EU money. For example, a State with major corruption problems would have to set up an independent anti-corruption agency or strengthen the powers of anti-corruption bodies.
Would the European Commission have a bit more clout to push through reforms?
Yes, but it is important to understand that the term ‘reform’ is used by the Commission in a broad sense. In the context of the RRF, a reform is an action with a significant long-term impact (legislative reform, adoption of a strategic plan, etc.). What’s more, these are not necessarily major reforms designed to improve the country’s macroeconomic or fiscal context (such as a reform of the pension system or the labour market). These reforms may aim to improve a sector or a policy.
Some questions remain: will these reforms be adopted at national or regional level? This raises questions for cohesion policy [the Committee of the Regions rejects the idea of a single programme at national level – ed.] Regional authorities could become dependent on reforms made by central governments.
The European Court of Auditors has pointed the finger at the lack of control over the post-Covid fund. Doesn’t the new organisation of the budget, which is inspired by this, run the risk of encountering the same limitations?
The European Court of Auditors is having a bit of trouble getting used to this performance-based system, because it changes the way it controls the use of European public money: identifying errors in payments that have already been made. The performance approach is based on much greater confidence in national control systems. In return, it allows the Commission to be more demanding when it comes to reforming national budgetary control systems.
If the Commission establishes strong benchmarks for the control systems of states with significant failings, then it could work. That said, I also agree with the Court of Auditors that we need a little more control at European level. For example, the Commission has a system for detecting unreliable companies and automatically excluding them from any European funding. However, this system does not apply to RRF financing.
How would the Member States react to a reform that would give more power to the European Commission?
I don’t think most countries are opposed to such a system. The ‘frugal four’, in particular, are quite happy for European money to be heavily conditional on certain reforms being carried out. As far as net beneficiaries are concerned, I don’t think they are opposed in principle; it will depend on what reforms are required of them.
See the non-paper setting out a national plan for each Member State: https://aeur.eu/f/dut