Monday, February 11, 2013

A very predictable new EU Budget for 2013.


After nail biting negotiations of the EU Council to agree on the EU Budget 2013 that will transform EU's policies and finances for the next 10 years, the budget was agreed. Now it is up to the European Parliament to vote for it and approve it, in order to come in effect.

In the current economic climate it would make sense to cut the budget, and I understand people who want to see this happen. If countries are struggling, they need all the funds they can find to keep their economy afloat.

And of course the EU budget must reflect the reality that Europe faces. If there is a shortage of money, business can not go as usual for the EU and its institutions either.

But it is also irresponsible to follow a populist line if the funds can be found from doing what it needs to be done and the reforms that are needed, instead of grasping the easier solution of cutting the EU budget. Is saving the Banks more important for example?

In my opinion the EU budget should stay the same or even increase, in order to be able to invest in all those projects and programs that will make some difference in the future of Europe.

Having said that, the EU budget must be overall reformed and countries that were not contributing as much, is time to start giving more. Instead of relying on subsidies, these countries must be encouraged to invest and become more industrialized, become richer like the “core” EU economies and start giving their share.

Thus a more harmonized European economy is needed. The “core” countries will lose out a bit, but at least they won’t moan all the time of contributing too much and “sustaining too many freeloaders” as many British Euro-skeptics have put it.

If there is a more harmonized European economy, then it won’t be necessary for some countries to contribute more in the budget or others less. It will be fair, and the squabbles between the states of who gives more or less will stop.

So we will be able to increase the EU budget and invest in all the spheres that will be beneficial for all European economies. But I think that it will be the “core” countries that will object more to such thing.

Also the priorities of the budget will have to change. Where and how the money is spent, will be decisive for Europe's future, economy, unity and integration. We need to spend more in spheres that we haven't been until now.So far the budget was rather "predictable" and that does not change much Europe's future I am afraid.

From what we read from various sources reporting on the debate that took place and the matter that it did, this summit has showed once again, that our heads of states and government have no vision for the future of Europe. "They do not understand the need to provide the EU with sufficient resources to give Europeans a future.  All we have is a market made of vetoes, cuts, rebates and long term austerity." (as noted by Pietro De Matteis, co-President of the European Federalist Party, in an official statement).

One EU diplomat complained that Van Rompuy had adopted crude tactics in which he bought off individual member states with "gifts" while cutting EU-wide infrastructure projects such as the Connecting Europe initiative. "Growth has been the victim of the bazaar," the source said. (source: http://www.guardian.co.uk/world/2013/feb/08/european-union-budget-night-talks).

I find this shameful not from the side of Mr. Van Rompuy, but the very need to bribe some members in order to come into an agreement shows the real state of the "Union." Every state still thinks on a national level and by bribing them, the EU officials only kick the can down the road. Any "solution" under such climate can only be temporary.

The draft budget 2013 freezes future expenditure: the increase of commitments (i.e. tomorrow’s payments) is at the level of inflation (2%). It also freezes the Commission’s administrative budget at well below inflation level, while cutting its staff by 1%, the first step towards the goal of a 5% reduction of staff in 5 years.
At the same time, it proposes a 6.8% increase in the level of payments.

This contributes directly to growth and jobs in Europe. The EU budget must meet its contractual obligations of current and previous years vis-à-vis the Member States and other recipients.

€62,5 billion in payments are devoted to job friendly growth in Europe. A particular effort has been made towards the Research framework Programs (€9,0 billion, 28,1% increase on 2012), the Competitiveness and Innovation Program (€546,4 million, 47,8 % increase), structural and cohesion funds (€49bn, 11,7 % increase), life long learning (€1,2 billion, 15,8 % increase). (source: http://www.talktoeu.ie/?p=2778)

Personally I am disappointed that Agriculture is still taking up almost one third of the EU's expenditure. A single sector of Europe's economy occupies one third of its budget. Is that wise? It is encouraging though that more funds will be directed towards innovation and education, thought not enough if you ask me. And of course it remains to be seen how many states will actually fully implement these decisions and how.

Will these funds be able to get Europe not just out of the current crisis, but prevent any future similar crisis from happening and help stabilizing and harmonizing Europe's economy? I think not. It looks to me that this is not in our leaders' agenda. All they seem to want is to deal with the current crisis quickly and do not disturb or alter the current status quo of the continent.

I understand that they need to keep the balances between the interests of their country, the lobbies in the country who support them, the European interests and the lobbies that work on a continental level. But if they want to be seen as the hero of the day and remain in Europe's history, they should be bolder and agree on a budget that will be decisive.

Instead they seem to care in keeping the critics back home happy and  safeguard theirs and their party's prominence in national politics. Sadly, European leaders still think "nationally." How can we ever achieve an agreement on a budget or any solution for Europe in this mind-frame?

So for the next 10 years we can expect no real change in Europe, apart from a soothing effect on the crisis; until the next one of course. European leaders do not think for the long term. Change and any progress in our continent happen with a tortoise pace, while changes in the world happen with a hare's.

Unless European leaders can outsmart the global changes with the patience and confidence of a tortoise, Europe's future is uncertain. Hopefully our generation will be able to witness the results of their decisions and judge them accordingly.


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