The Brief – How much to pay for the EU?

The Brief is EURACTIV's evening newsletter. [EPA/EFE]

The tortured negotiations over the EU’s long-term budget, which turned into a Turkish bazaar, clearly show that EU leaders no longer agree on the added value of the bloc and confirm a slow decay of the project that was signalled by the UK’s departure.

Following more than 27 hours of talks, the 27 EU leaders failed to reach an agreement on the multi-annual financial framework for 2021-2027. Almost from the start, last week’s summit marched to the tune of a bloc of net contributors known as the ‘Frugal Four’ (Netherlands, Austria, Denmark and Sweden).

The intense talks were mostly about how to pare back European Council President Charles Michel’s already conservative proposal, until the large majority of governments advocating a more ambitious budget said ‘enough is enough’. The bitter differences among leaders have, thus far, made it impossible to schedule the date for another summit.

The ‘Frugal Four’ said Michel’s draft budget amounting to 1.074% of the EU’s GDP (€1,094 billion) must lose some weight, slashing up to €80 billion allocated to farmers and Cohesion funds.

Their staunch refusal to increase their contributions could be understood only if what they get in return was negligible, or the EU was merely expensive ‘accessory’ in today’s world.

But as relatively small nations, they benefit more from the internal market and Europe’s trade deals across the planet than many of their peers.

According to a European Commission estimate, the single market will generate during the next period an annual benefit of around €84 billion for the Netherlands (9,45% of its GDP), €35,6 billion for Austria (7,85% of its GDP), €22 billion for Denmark (6.21% of its GDP), and €29 billion for Sweden (5,31% of its GDP).

Their size also makes them incapable of dealing with urgent challenges including global warming, Europe’s diminishing global power or migration, as is also the case for any other member state.

Michel proposed cutting by 14% and by 12% Agricultural and Cohesion funds, respectively, compared with the current seven-year budget, to finance the long list of priorities Europe is facing.

In addition, he proposed a €0.02 increase per capita per year.

But that cost was unbearable for the taxpayers of the ‘Frugal Four’, their leaders said. According to Michel’s proposal, the Netherlands would contribute annually an average of €6,85 billion (in 2018 prices-0.83% of its GNI), Austria €3.64 billion (0,91%), Denmark €2,93 billion (0.88%) and Sweden €4.39 billion (0,85%).

Portugal, one of the leading voices of the opposite camp of ‘Friends of Cohesion’ would contribute  €2.01 billion, significantly more in relation to its GNI (0.99%).

A diplomat from one of the ‘Frugal Four’ said the issue is not merely the money, but a common understanding of what should be financed at the EU level and what should be done at national level.

Unfortunately, EU leaders don’t agree on this fundamental question. Some of them said there’s a decreasing appetite for the EU among their voters, as the last Eurobarometer somehow confirmed. But as long as the European project remains half-baked, nobody would want to taste what is coming out of the oven.

The ‘ever closer union’ has been in the freezer for years, and there is no common view on how to complete the monetary union or deal with some of the most important challenges.

Against this backdrop, it is almost an illusion to believe that some countries would think about their contributions to the EU coffers beyond what they get in return from Brussels.

But there’s always hope.

“Yes, there’s a transactional ‘bread and butter’ element. Member states all benefit from the Single Market, the monetary union and the free movement of people,” said Dutch prime minister Mark Rutte in June 2018.

“But it’s just as important that the EU ensures security, stability and the rule of law. The mere fact that we work together, that we’re embedded in this Union, it makes us stronger, safer and more effective.”

Ensuring those values today transcends the cost some leaders are ready to pay. A marginal percentage of our GNI should not be an obstacle for remaining “stronger, safer and more effective” in this turbulent and competitive world.

The Roundup

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Views are the author’s

[Edited by Zoran Radosavljevic]

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