On December 7th, as Europe further slips into an economic and financial crisis Nouvelle Europe's staff organized a debate about an aspect of our common future : the next budget, which will define the European Union's activities for the years 2014-2020. Here is a summary of what has been said.
His Excellency ambassador of the Republic of Poland Tomasz Orlowski, Alain Barrau, financial expert Nicolas-Jean Brehon, Noëlle Lenoir former French minister for foreign and European affairs, and former expert of the Polish presidency of the Council of the European Union staff Piotr Kaczynski took part in this debate, which was moderated by Nicolas Escach of the ENS school of Lyon.
The opening words by the ambassador of Poland set out the context in which this budget is being drafted. To him, "it's not just about saving Europe [...] not just about keeping the common currency but inciting growth in the whole of Europe". In his words, the EU needs a gain in competitiveness and boost growth in order to resist to those booming countries such as Brazil or India.
He told the audience about how his presidency is already working with member states to defuse tensions and prepare this budget the best it can. This included, to this day, two aspects which are the aspects and length of the pluri-annual divisions of the budget as well as a debate on a subject which is dear to Poland : the use of the budget to enhance infrastructural and energetic interconnexionx in the EU.
He also pointed out that although the current treaty does not set out the need for the European Parliament to be present during negociations or debates, the Polish presidency has chosen to invite it as an associate in their preliminary work, which does indeed take place with the full support of Belgium (current holder of the rotating presidency system).
In a few words, Alain Barrau underlined the importance of associating the European Parliament to negociations. In his mind, this budget needs to reflect choices and display a "turning point in European economic life, with regards to monetary issues and lack of growth". According to him, preliminary debate with all member states and institutions is crucial if a consensus is ever to be reached and to avoid a dead end situation.
It is also highly symbolic, he said, that Poland held the presidency as a non-Eurozone state which has a relatively important demographic weight and a economy worth noticing.
Nicolas Escach speaking on behalf of Alain Lamassoure.
On behalf of Alain Lamassoure who could not attend, Nicolas Escach wished to share with us a few of Lamassoure's thoughts. He pointed out the significance of the French, British and German coalition asking that the current budget grow no more than a single percent, although it is Margaret Thatcher who agreed to increase member states' contributions to 1.24% of national GDPs.
He said that it is hard to project an idea in the public man's mind other than that of an EU as a "leviathan, which uses considerable funds to finance projects resulting in little to no added value". He mentionned a "budget war", and deplored the perception that many Europeans had of the EU as a "Trojan horse" of globalization, deregulation and other things perceived as negative.
Noëlle Lenoir opened her her discourse by setting out one crucial argument in her view : the need to give the EU its own resources and end the system of national contributions where it is member states which provide institutions with most of their funds. To her, the system which started in the 1970s in part with a French supreme court decision where contributions are partly based on VAT, customs and a tax on sugar must be deepened.
To her, "the way a country contributes to any organisation shows how seriously it is taking its membership", citing the importance of Japan in the United Nations. Europe must choose, she said, whether to remain in an intergovernmental system of "mutualize" budgets and move towards a more federalistic system. She added that it is further contradictory that states may not want to do this as the EU's compentencies and actions are now even more important and numerous (with the example of an emerging common diplomatic network) and budgets are not increased.
She said that measures will be implemented in 2018 -although some will be in place from 2014- to increase the share of the EU's own resources in future budgets, with the increase and simplification of the VAT contributions scheme. She also spoke of Franco-German proposals to create a tax on financial transactions with the possibility of the money going straight to the EU's deposits, citing the possibility of a budget with 44% of it coming from direct, rather than state contributions.
Even though, she said that the crisis pushed state to ask for a return of intergovernmentalism which Lisbon had not anticipated, and it is a contradiction with the mutualization of budgets. She deplored the "I want my money back" syndrom, which she said does not only apply to Britain but also to Germany or Sweden for instance. In order to counter this, she said that it would be better for budgets to be entirely paid for by citizens, from their income tax for instance, with the exact amount given written down on a piece of paper in order not just to connect citizens to the EU but also to show them how small it is and get them involved.
Speaking about current negotiations, Nicolas-Jean Brehon detailed his experience of negociations, saying that negociators made some heavily calculations and that net contributions (ie the total contribution made to the EU minus everything that is gotten back) is the actual basis for negociations.
He said that there is a consensus from countries which give more than they receive that they can not, and do not want to give more, as illustrated by Britain or Germany. While Britain wishes to diminish its contributions, he said that countries such as Germany who understand the vitality of their contributions and indirectly benefit from their redistribution to other states are simply asking for a freeze.
To him, the major setbacks that the 2014 budget is already having to deal with are the economic and financial crisis freezing the increase of the budget to 1%, the need for a reform of the financing system as pointed out by Noëlle Lenoir, and the fact that 75% - too much he said – of the budget goes out to agricultural and cohesion policies while it direly needed in other areas. He said that "only 7% of it is used to further links between Europeans, and everyone agrees that this must be enhanced", but that "those who benefit from the Common Agricultural Policy and those who benefit from structural funds each put a lock on their most lucrative aspects, freezing the entire budget”.
Speaking about Poland, Piot Kaczynski said that Poland was in a position where “it has to choose between the CAP and structural funds”, which are both vital to her. He deplored the lack of consensus in early negotiations for an ambitious budget even in the committee made of twelve states who fully back Poland. He deplored attacks in the British press which pointed out to the uselessness of structural funds citing a Dutch study whose results showed that for every €250 that are invested by this fund, the average resulting added value is €2,500.
Speaking about current debates, he said that “Britain has made surrealistic proposals”, that “Germany's plans would be unbearable” and praised “reasonable and rational” Finnish proposals. He said that even though it is associated, the European Parliament was currently strongly opposed to the proposals made by the Commission to freeze the next budget in nearly all areas.
He did say that he was confident, and said that although they are long negotiations are always dynamic and never static and that although current positions are radical, they are only negotiating techniques and should not be taken seriously. Although he is confident that states will change their state of mind and consensus will be reached, he stated that Poland will face a “long and bloody battle”.
Picture credits : The Gladstone Budget box by HM Treasury on Flickr.com