On Nov. 27, the EU Parliament approved the EU budget for 2020 and the new EU Commission. Compared to earlier years, a larger slice of the EU budget is supposed to go into investment addressing climate change (21%). In the same time, about half of the funds are meant to make the EU economy more competitive. Other areas receiving an increase in funding are those of research and development and border security.
The key problems the EU is trying to tackle during 2020 (and on) relate to the crises Brussels had to deal with during the last decade. High youth unemployment and the migration crisis have continued to haunt the socio-economics of European member states. In particular, the eurozone stability has been put under question, and lately the founding states of the EU (all members of the eurozone) are discussing policies to facilitate economic growth (while rumors of recession haunt all over the media). So, the discussions on the 2020 budget are just a preview of those to come, on negotiating the budget for the next 7 years: the 2021-2027 multi-annual financial framework (MFF).
The MFF, which is yet to be negotiated during the next year, takes a long-term approach and considers the EU strategic goals. It aims at aligning spending with the EU political priorities, helping to make the EU’s policies and programs more effective. One of the purposes of the MFF is making sure that the adoption of the EU annual budget is easy. The 2020 annual budget belongs to the 2014-2020 MFF, but it wasn’t really easy, politically, to have it adopted and that only shows the mounting pressure on Brussels and within Brussels apparatus. Since 2018 we have entered a transition phase, at the EU’s administration level. The national politics – and national policies and priorities triggered the need for change in Brussels. The new EU Parliament composition (considering the latest elections, in May 2019) has increased pressure for change as well.
From Junker to Von der Leyen
In May 2018, the Commission, led by Jean Claude Junker proposed a “modern budget”, launching the first budgetary reform since 1988. In essence, the new budget no longer awards funding on specific sectors (like education, health, etc.) but aims at responding specific goals, relating to problems that require a holistic approach. The ‘modernization’ has also brought a reduction in the number of programs/instruments used (from 58 to 37). Under the proposal, there is an increased focus on “integrated programs” and “synergies between instruments”. All this is meant to ensure better transparency and flexibility on spending EU funding.
While Junker’s proposal will likely be followed, tactics and details aren’t clear – because they’re still to be negotiated. We don’t know yet anything about the rules on specific national quotas. There isn’t yet any information on how exactly the funds will be allocated. We know there won’t be a specific instrument to facilitate investment in a specific area, like education or health, but, instead, there are several instruments that support investment in both health or education – and more areas. However, there is virtually no information about the application and award processes.
In theory, this makes it easier for the EU funding to tackle specific priorities, but it also means that the framework, as it is proposed, is meant to address problems that the EU is facing and not necessarily build “the future” for Europeans. This anticipates negotiations between those seeking to address dysfunctional areas, hoping to find practical solutions to structural problems and those seeking to address growth and deeper integration. Ideally, such negotiations should result in a balance where practical solutions to problems offer opportunity for growth.
In practice, as the proposal for the “modern budget” shows, we will likely see the EU funding and everything relating to the funding processes be redefined. Historically, about three quarters of the EU budget went to cover needs meant to support the EU common agricultural policy and increase EU cohesion, defined as integration and development achieved through diminishing regional disparities. This also meant that most of the funding went to the “new member states” in Central and Eastern Europe. During the last decade, the EU has had to address socio-economic problems in the eurozone, sourced in both long-term EU structural economic and financial issues and the refugee crisis. Consequently, the proposed MFF addresses migration and asylum problems and border security in pretty much all budgetary instruments proposed, making Western Europe appear to be the main beneficiary of the next 7 year budget.
The newly installed EU Commission, headed by Ursula Von Der Leyen will likely follow the budgetary structure proposed by the Junker Commission, although it is expected that (also in the name of reform) some administrative issues will be redefined. More, Von Der Leyen proposal for the MFF will have to consider the new political realities in the EU. It is not by chance that the annual budget for 2020 promises more funding for fighting climate change – and this trend will likely continue. Until 2019, we only had 3 main political factions into the EU Parliament: the right wing, the centrists and the left wing. Since 2019, the greens got a (strong) voice in Strasbourg, too. So, there’s no coincidence for Von Der Leyen promising the first “green law” of the EU as it was interviewed for her current job.
However, this is another win for Western Europe. While climate change got on the agenda of Western countries, the “green revolution” hasn’t begun in Central and Eastern Europe. This is one reason Der Leyen’s idea to transform part of or the whole of the European Investment Bank into the European Green Bank is probably worrisome for some of the governments in Eastern Europe. So is the idea of more funding being allocated to all those projects supporting the sustainable green Europe to the detriment of funding the local administration’s investments into building new infrastructure.
The other promises on Der Leyen’s agenda, as she prepares to propose the 7 year MFF and start negotiating it, have to do with two other stringent problems in Western Europe: the high youth unemployment and the lack of a coherent, inclusive migration and asylum policy at the EU level (that would help burden sharing). Der Leyen spoke of the digital revolution as an opportunity directly linked to current social issues – she sees digitization is one way to solve the youth unemployment, among other things. The notion of “inclusive growth” has also been put high on her agenda as she seeks to work on finding solutions to those structural problems relating to specific social groups like the young people, the immigrants, but also the elderly and women.
While all her promises sound great – they sound better for Western Europeans than for everyone else on the continent. While the refugee crisis has hit the EU, it is the West that has been most affected. In the same time, the negotiations on defining a new migration and asylum policy, defining solutions to be applied if a new refugee crisis would struck again are matters that also relate to the EU’s external relations with Turkey (which are currently being discussed mainly between Berlin and Ankara). How these political talks will evolve during the next year will not only shape the EU, as it will have to start working on a “modern budget”, but their outcome has the potential to shape Turkey’s power along the EU’s borderlands, considering its national interest and its relations with specific EU member states.
Brexit as a shaper
In discussing the budget for the next 7 years, Brexit is on everyone’s mind.
First, due to the uncertainty of it happening and of the specific exiting process. In other words, we don’t have yet responses for critical questions: will it happen? When will it happen? How will it happen? All this makes it really problematic to address matters that relate to the UK and that are key for dealing with structural EU issues – migration and border security among those. If anything, the guess game on Brexit will eventually shape the migration policies of both the UK and the EU, while it remains unknown exactly how that will happen.
Second, due to one certainty Brexit poses: the fact that the UK will no longer be a contributor for the next 7 years budget. Considering the promises made by Ursula Von Der Leyen, but also the problems that the EU needs to deal with in the following years, it’s clear that the budget, in terms of the amount of money that the EU invest for its well-being, needs to at least be similar with past budgets. Brussels simply can’t afford less money. Mathematically, that means that the contributions of those remaining in the EU need to increase. Which, in turn, means the net contributors must increase their contributions. It is therefore expected that not only negotiations, but also political debates start in the EU member states with regard to the levels of national contributions.
It is always the voter who decides the politicians’ fate – and ultimately the politics of a state. That stands also for EU politics. It is the national states who need to agree on “how much?” and “what for” when talking about the EU budget, even if it is Brussels who initiates the discussions. The national states are bound by their national interests, while they are led by politicians that have to respond back to their voters. This is why, in the case of the next multi-annual financial framework (MFF) – or, in short, the next 7 years budget for the EU, Brussels will need to convince the European citizens, more than anyone else.
But, the hard work really begins after 2021. With all the politics involved, getting the member states promise an increase of their contribution will be relatively easy in 2020. The uncertainties posed by Brexit have resulted into a more careful consideration of the EU for the regular voter in Europe. In the same time, since the Brexit vote, France and Germany debates about reforming the EU have made the Europeans willing to give Brussels another chance. But it is how Brussels will tackle, yet again, the stringent socio-economic problems (which are unequally dispersed throughout the EU) that will determine the future of the EU. Therefore, it all really depends on Brussels performance during the next 5 years – and that includes the manner in which the EU member states (national leadership) negotiate their stance in relation to Brussels.
Brussels performance determines how the average voter perceives the EU politics and how the political game in Brussels influences the voter’s life, in a way that it matters. The proposals for reforms, both by the Junker Commission and by Von Der Leyen, aim at solving the trust issue, a problem that increased during the last decade, as the social and economic problems unfolded. The voter trusting the national politician, the political processes but also the voter trusting the European apparatus representing the European citizens’ interests was slowly turned down. Or so has been the voter’s perception. At the core, that’s why the vote for Brexit happened. Without trust, no process, no institution can survive. Therefore, it remains to be seen how and if these reform proposals deliver…trust.