The European Union’s 2021-2027 multiannual budget proposal, presented on Wednesday by the European Commission, should not be accepted in this form by the Romanian Government because it provides for a 5% cut in European funds for cohesion policy and the common agricultural policy, the main European policies based on which our country receives European non-reimbursable funds.
But for Romania to be able to impose itself in the European budget negotiations, it must, first, ally with the other member states that benefit from these two policies and persuade the net contributing states.
Secondly, it must show that the funds allocated to our country are being used efficiently, which means to increase the absorption of European funds.
The Commission proposes 5% cuts in European funds for cohesion and agriculture
The European Commission has published yesterday the proposal for the future 2021-2027 multiannual budget of the European Union. In short, the Commission proposes for the European Union to do much more things in the period 2021-2027 with resources that do not reach the expected level.
With this multiannual budget proposal, they seek to balance the lack of budget revenue caused by the UK’s exit from the European Union and the need for additional spending in areas such as security, defence and migration. The UK is a net contributor to the EU budget with annual allocations to the European budget by EUR 12-14 billion more than it receives. The Commission therefore proposes a budget increase to EUR 1.279 billion for the period 2021-2027, accounting for 1.11% of the EU Gross National Income (GNI), compared to 1% now.
The proposal is not a positive one for Romania, as the allocations to the two main European policies benefiting our country, the common agricultural policy and the cohesion policy are reduced by 5%. The news should not come as a surprise to us.
The European Commissioner for Budget and Human Resources, Guenther Oettinger, has repeatedly said that the budget gap following the Brexit will be covered both by an increase in member states’ contributions and budget cuts. Combined with the need to allocate more funds in areas such as security, defense, research or programs such as Erasmus, we have a clearer picture of the Commission’s proposal.
How we can increase EU budget so as not to cut European funds
The cuts proposed by the European Commission are not the only solution to cover the gap left by the UK. I have said even two years ago, when the UK voted to leave the EU, that we can replace its budgetary contributions and cover the need to spend more money in priority areas without affecting traditional EU policies such as agriculture or cohesion. How?
By introducing new budget resources. In the past, there have been several proposals for such new budgetary resources to reduce allocations that governments of member states make to the EU budget. Possible sources of funding are taxes on financial transactions or large corporations, but also environment or fuel taxes, but all these proposals faced the refusal of EU countries, especially since such proposals need unanimity.
Unfortunately, the European Commission has not come up with sufficiently ambitious proposals to meet the EU’s budgetary needs.
We need to think that the diminishing of the cohesion policy moves us away from the EU objective of economic convergence. To be fair, although Romania has received EUR 45 billion in European funds in 11 years of EU membership, it is still far from Europe’s strong economies. That is why we must not accept cuts in the cohesion funds, the policy must continue at least by 2027.
Cutting funds for agriculture can also jeopardize two of the great advantages the European Union has brought us in its 70 years of existence: guaranteeing food security in the Union and giving Europeans access to quality food.
The European Commission will have to answer these questions in the next period, especially since the experience of the current budgetary programming period shows us that the final outcome of the negotiations with the governments of member states on the multiannual budget leads to lower allocations than stipulated in the Commission’s initial proposal.
The reason is that only the governments of the member states that decide by unanimity are involved in these negotiations, and the European Parliament is only called to endorse or reject the outcome of these negotiations. And since big contributors to the EU budget will want to make extra savings, we risk obtaining a result even worse than the European Commission’s proposal.
The European Parliament has asked for an ambitious proposal from the Commission. In the report we adopted in the March plenary session, the Parliament called for a 1.3% increase in the Gross National Income of all member states. Currently, this level is 1% of GNI. Thus, I will struggle for the final version of the budget to be as close as possible to the proposal I voted in March.
Linking European funds to compliance with rule of law, an alarm signal for PSD – ALDE government
Another proposal of the Commission with which I do not entirely agree, but which must raise questions to the PSD-ALDE government is the correlation between European funds allocations to rule of law.
The Commission has therefore proposed a mechanism for countries that violate fundamental EU principles, such as the rule of law, to risk the cancellation of payments from European funds; At the same time, though, authorities will be required to pay the money to end beneficiaries. I do not agree with approaches that in the end penalize the beneficiary of European funds – the farmer, the small and medium-sized enterprises, etc.
Governors must be the only ones to pay for governors’ mistakes. We see how the PSD-ALDE government has made a priority of attacking the rule of law and trying to get the hands on the judiciary by modifying the laws and forcing the resignation of the chief prosecutor of DNA. So, in this context, the message sent by the Commission is clear: attacks on the independence of the judiciary and the rule of law pose a risk to the European funds.
Good things: Increasing allocarions for research and Erasmus+ Program
However, to present the positive aspects of the Commission’s proposal, it should be noted that according to yesterday’s proposal, the Erasmus+ Program, the most successful European program, will have a doubled allocation and the research program budget will be increased by 30%. Other areas of targeted growth are security, defense and migration.
For example, EUR 27.5 billion will be allocated to security and defense, and EUR 34.9 billion to border management and migration. Last but not least, it is proposed a significant increase in allocations to EU external action to EUR 123 billion – 26% more than now. All these measures will make life easier for citizens in the European Union.
It is also proposed a stand-alone program to fund free one-month train tickets for young people aged 18 years, to visit Europe. This program is the continuation of the one we approved in the 2018 EU budget for which I was the Chief Negotiator of the European Parliament. It is a project to which I am very much committed, and I will struggle to see this European Commission’s proposal in the final version of the budget.
What Romania should do and what to do
There will be tough negotiations between two parties that have already emerged at the European level: those who want a budget even lower than in the Commission’s proposal (northern states, the Netherlands, Austria) and those who will try to maintain allocations at least at the present level (Poland, Romania, Spain, Italy).
The objective assumed by Jean-Claude Juncker, the European Commission’s President is to agree on a future multiannual budget at the Spring European Council Summit in spring 2019, to be held in Sibiu.
It would be a good opportunity for Romania, during the presidency of the EU Council that it will hold in the first half of next year, to have a budget agreement, and not any budget, but a good one for our country without the cuts that the Commission proposed yesterday.
But to achieve this goal, it is a lot of work to do. The Government must first demonstrate that the allocation of amounts similar to those existing at present is rational and based on a high absorption rate. That is why authorities need to speed up the implementation of projects with European funding and increase their visibility.
Secondly, we must, if necessary, take on some new conditions to keep our allocations. These conditions may take the form of some macroeconomic, fiscal and economic sustainability criteria – criteria that will, ultimately, be useful to Romania, and will even more protect citizens from irresponsible politicians who waste public money.
Thirdly, we need to establish a system of alliances with the countries benefiting from the cohesion policy, to have answers, counter-arguments to states that want to reduce these policies and negotiate as efficiently as possible. In the end, the future budget is decided by unanimity, so it cannot be adopted without Romania.
Our country needs to identify those files where it could make concessions to get more gains in the next multiannual budget. The strategic question that Romanian authorities must answer is: what conditionalities do we accept to receive as many funds as possible?
It is important to start negotiating on a strong, credible position, but also be aware that reaching unanimity is done only based on a compromise.
I, in the European Parliament, shall continue to promote a strengthened budget that would ensure a balance between the EU’s traditional policies, such as cohesion and agriculture, and the emerging ones that do not affect Romania’s interests.
To offer predictability to the European fund recipients, it is important for us to adopt the next multiannual budget as early as possible so that to be in force as of January 1, 2021, and beneficiaries to be able to absorb the funds.
