For a Twenty-First Century European budget

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

The European Commission's EU budget proposal is out of touch, lacks ambition and is wedded to an outdated concept of 'ever closer union', argues Czech MEP Jan Zahradil.

Jan Zahradil is a Czech MEP and the chairman of the anti-federalist European Conservatives and Reformists group in the European Parliament.

"The European Union's budget is still in many ways stuck in the 1960s. Its priorities seem to hark back to a day when the great challenges facing [Europe] were food security, poor social conditions and the view that further integration was the only answer following two devastating world wars and the threat of Communism on the doorstep.

The world has changed beyond recognition since then. Unfortunately, the EU budget has not [changed] much.

This is why the EU budget debate that we are now embarking upon is crucial. Budgetary priorities must be set to meet some of the EU's new challenges and opportunities – such as the rise of BRIC countries and our comparatively lacklustre competitiveness, the prospects for the Single Market thanks to the Internet, mass migratory pressures, security challenges, and our demographic crisis.

The European Commission's proposals for the next multiannual financial framework do contain some recognition that there should be a shift towards the 'new spend' areas and away from the 'traditional spend' areas. For example, there is a reduction in direct subsidies in the CAP [Common Agricultural Policy] in anticipation of reform proposals later this year, and the Commission has made some proposals to reduce the costs of its own operations, although these could go further.

In contrast, the funding for Research and Development will increase and there is an indication that structural funding will be better targeted along a 'money for projects' rather than a 'projects for money' basis. However, the shift in priorities is generally in the right direction but not nearly fast enough.

Rather than moving small amounts of money piecemeal from one area of spending to another, I would much have preferred the European Commission to sit down with the member states – rather than argue with them – and conduct a comprehensive review of spending.

This would entail going through the budget in great detail and asking for every line whether it adds value to the taxpayer by being spent at a European level, rather than a national level. I genuinely believe that had they done this, they could have found a number of areas where savings could have been made.

This would have enabled the Commission to at least not increase the EU budget in real terms, whilst still delivering seed-corn investment in new technologies, new infrastructure and new R&D which would greatly [help] the EU's economy to lift itself from its malaise.

However, instead it is once again asking national governments to, in most cases, borrow more money that they cannot afford, to send to Brussels in the knowledge that large amounts of it will be spent on items that have questionable value to the economy.

This is why the heads of government of five EU countries – who mostly pay the bills of the EU – asked the Commission to show restraint in a letter last December. They are trying to pay down their own debts and cannot afford increased payments to the EU. There is a perception in many member states that the EU is a black hole into which taxpayers' money is sucked. This MFF proposal will not help assuage that perception.

As well as the size of the budget, we also have concerns about proposals to enable the EU to raise more of its budget through 'own resources'. Firstly, our concern is based on a point of principle. If the EU is forced to go to national governments every few years and ask for a new budget then this acts as the ultimate anchor of accountability. If the EU has the powers to raise its own taxation then that link is broken and the EU is no longer the servant of the member states. 

National governments raise taxes whilst international organisations receive contributions; this situation should not change. The EU is no state and it should not become one. Why, then, should it have the right to raise its own taxes? Or is there again a hidden federalist agenda behind it? I suspect so.

And in particular, we are extremely concerned that a Financial Transaction Tax is being considered. Such a tax, without a G20 agreement, would severely risk causing the relocation of many transactions – and therefore many financial services businesses – out of the EU. The idea needs to be dropped now.

Overall, I believe that the Commission can be accused of a lack of ambition in these proposals, despite its partially positive efforts. Unfortunately, the ongoing debate in the European Parliament could be expected to make the situation even worse.

The EP, reinforced by the Lisbon Treaty, is increasingly tending to pose itself as the one and only remaining vanguard of the integration process (which, in the EP's understanding, means only to follow the old and outdated Schumann-Monnet dogma of 'ever closer union') and to repeatedly show some muscle-flexing towards member-state governments, which it treats like recalcitrants. That of course leads us nowhere.

The EP, as it is now, is much more a part of the problem than part of the solution. We still have a way to go to find a solution to the mess that we find ourselves in."

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