Hungarian minister: A budget for the eurozone will destroy the EU

Eniko Gori.jpg

A second budget for the eurozone would result in treating countries differently and ultimately destroy the EU, Enik? Gy?ri, Hungary's state secretary for European Affairs, told EURACTIV Germany. 

Enik? Gy?ri is a former Hungarian ambassador to Italy (1999-2003) and MEP. In 2010 she was appointed minister of state for European Affairs and chaired the general affairs council during the Hungary's EU presidency (first half of 2010). She spoke to EURACTIV Germany’s Michael Kaczmarek.

The national battle lines on the 2014-2020 EU budget were defined many months ago. Now we are a week from the decisive European Summit but member states insist on their national interests. Will the EU find a compromise?

We have very high concerns. We are quite worried if there will be an agreement on the next multi-annual financial framework [MFF] at all. This is a big mystery for all the players. We have been negotiating about the MFF more than a year now and we are still discussing the overall amount of the budget.

There is a very deep division among the players. There is a clear numeric majority of member states stating that we need a decent budget to fulfil all treaty obligations and the EU 2020 objectives, which have been agreed by all 27 member states. And a decent budget needs at least the size the Commission proposed.

There is another group of member states which are saying that during an era of budgetary cuts at home, we need to cut at the European level, too.

I do not agree with this logic since the EU budget is very different in its nature than the national budgets. I do believe in the European added value of the common budget. So we need fiscal consolidation on the national level and a reasonable budget on EU level.

What makes us extremely worried besides the overall volume of the budget is the cohesion envelope. The members of the so-called cohesion countries are convinced that cohesion is in the interest of the European Union and that cohesion is an investment in the future. We want a decent-sized cohesion envelope.

The Commission already proposed a 5% cut and the last proposal of the Cyptriot presidency recommends even a 7.5% cut for the overall cohesion envelope. And if you look at the details you will see that the least-developed regions suffer the most. They might face cuts up to 20%. And Hungary is supposed to lose 30% of its cohesion envelope compared to the present period.

We cannot accept that. This is a red line for us in the ongoing negotiations. For us this money is vital to create growth and jobs. We would consider it a kind of punishment, if a member state which works hard for fiscal consolidation with good results is cut off from the most important source of development.

For a well-functioning single market we need a common budget. We need more Europe but not more than one Europe. We believe in one single budget with one single institutional system. So if our problem is duly addressed we are ready for a compromise. We are in favour of finding an agreement, but not for a compromise at any price.

For years we've experienced a high-speed European integration in the eurozone that might indeed lead to more than one Europe. In December member states are supposed to adopt a roadmap towards a genuine economic and monetary union. Is Hungary pleased with the current state of negotiation on this dossier?

We are quite worried about the potential developments. We are concerned on how this genuine economic and monetary union will look like and what this will mean for the non-eurozone countries. Hungary is one of those.

We are very much in favour of a well-functioning eurozone. If something goes wrong in the eurozone it has imminent effects for us. We also agree that for a well functioning eurozone, for a common currency zone, you need stronger economic cooperation. So we have nothing against anything that is on the agenda. But we want to avoid that there are new walls build for those countries which are in the European Union but not yet in the eurozone.

We do not want to see our situation deteriorating just because of stronger euro zone cooperation. We are in favor of the integrity of the European Union and its institutions. We want all these things compatible and accessible for non euro zone countries. Our message is: Do not build new walls between the euro zone members and the non euro zone members.

Look at the proposals for a banking union and the single supervisory mechanism that is on the table. The Commission’s original draft made us very worried. We do not see how it fits together, having an integrated financial market inside the European Union but having different supervisory systems.

Since the Council Conclusions in October, we have been more optimistic. We hope that this approach will be translated into a modified legislative act. Those non-eurozone member states who decide to participate in this single supervisory mechanism should have the same treatment, the same rights and obligations, equal representation, equal parts in the decision making, equal rights in the European Banking Authority and not to be able to be voted down. Furthermore we have to solve this backstop issue since there is no backstop tool for non-eurozone countries. You cannot have these imbalances inside a system if you are part of the same system.

Do you have other concerns regarding the roadmap to be adopted in December?

Yes, regarding this mysterious fiscal capacity, which is a kind of plan for having an EU Budget II – I think that will destroy the European Union. This kind of fiscal capacity, mentioned in Van Rompuy’s paper, could have two objectives: First, the quite understandable objective to absorb macroeconomic shocks in the eurozone, which was missing in the current crisis.

But the second objective to assist countries which go through structural reforms is extremely problematic. Why? Take the example of Hungary. In the last two years we have been implementing very serious structural reforms because we want to finish with the debt and because we are under excessive deficit procedure.

In the framework of the European Semester and these exercises there are clear requirements by the European Commission that you have to do these reforms. We receive no compensation for it. But if this fiscal capacity is established and you are a eurozone country, then you may get some funding for that. For doing the same you are treated in a very different way and you even get some financial compensation? That would be very unfair. It would be really the end of the Union if we will have this two rank Union membership.

Another idea regarding the eurozone reform concerns the voting system in the European Parliament. Chancellor Merkel has sympathies for a solution that only MEPs of eurozone countries vote on eurozone legislation. Do you back this idea?

I don’t think that it would be convenient for any of the MEPs if some colleagues have to leave the room if a eurozone subject comes up. I am far from being convinced of that idea.

Chancellor Merkel has repeated on several occasions that the eurozone should be compatible and accessible for non-eurozone countries. Do you think she makes a good job in implementing this approach?

We have all our trust in her. We think that Germany understand Central Europe very well. Germany is a Central European country; it is an open-minded country and knows our countries best, knows our economies and sees the perspective in Central Europe. We hope that by being a country with strong efforts of fiscal consolidation we belong to the same camp. We do not want any growth for the price of further indebtedness. We refuse that kind of growth.

Some eurozone countries suffer deep fiscal, economic and social crisis. Do you still want to join the club?

Hungary is improving its macroeconomic figures, which imply that we get closer to the eligibility Maastricht criteria for the eurozone but we are not there yet. It does not make sense to have a forced rush. We should be very well prepared to be able to cope with all kinds of pressures within the eurozone. What we have learned very well in the last decade is that it does serve neither the joining countries nor the eurozone interest if a country joins to early and unprepared.

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