Brexit and solidarity gap cast pall over EU budget for 2018

Brussels Letter: British ‘hostage-taking’ and autocratic governments compromise budget process

European Commissioner for Budget Günther  Oettinger. Photograph: Thierry Charlier/AFP/Getty Images

European Commissioner for Budget Günther Oettinger. Photograph: Thierry Charlier/AFP/Getty Images

 

Although the UK remains a full member of the EU for the duration at least of 2018, Brexit and the tensions surrounding it were inevitably casting a shadow over the European Commission’s announcement on Tuesday of its budget for next year. And a new dimension to the politicisation of the budget emerged with the leaking of an official German government paper suggesting it might be used to put manners on wayward members that don’t respect EU core values. Poland and Hungary spring to mind.   

There are no big Brexit holes yet to plug in the €160.6 billion budget for 2018 – an increase of more than a €2 billion on the 2017 total – but the budget process is being compromised by the UK’s “reservation” on its approval of the midterm budget review of the EU’s seven-year budget for 2014-2020.

Ostensibly this is about the “purdah” that is imposed on important decisions in the run-up to UK general elections, but has been seen by most here as a piece of UK sabre-rattling.

In the end, everyone believes, the reservation will be lifted once the election is over and the money will be allocated as previously agreed. But no one is to be allowed to forget we are inhabiting a new dispensation in which nothing is to be taken for granted and every inch of ground will be fought over.

Jean Arthuis, the chairman of the European Parliament’s budget committee, referred caustically to this reservation as “hostage-taking”.

Alimony payments

The UK is expected to leave the union in March 2019, and so next year’s budget will have to make a first provision for either yet-to-be-negotiated continuing UK payments by way of the “divorce” bill (perhaps we should call it “alimony”?) or for substantial cuts to programmes. Net contributors such as Germany and the Netherlands are adamant they will not make up the balance.

The budget, the first from commissioner Günther Oettinger since he took over the budget and human-resources portfolio, necessarily reflects a continued commitment to agriculture and regional spending, as ever the two giants of the EU budget. Some €4.1 billion is allocated to migration and security policies, down 19 per cent on the year, and which includes the EU-Turkey deal on migration, greater resources for looking after the EU’s external borders and €560 million pledged in April to help Lebanon and Jordan handle the influx of Syrian refugees.

Meanwhile the influential news site Politico has unearthed what it describes as an “official German position paper” that says Berlin wants to look into “whether receipt of EU cohesion funds can be linked to compliance with fundamental principles of the rule of law”. 

Autocratic governments

Such a policy, albeit still only a glint in a German eye, would mark a radical politicisation of cohesion-fund allocation but may well appeal to member states frustrated at the way in which the autocratic governments in both Poland and Hungary have thumbed their noses at repeated entreaties from Brussels to respect human rights and the rule of law.

Political union, after all, it is argued, must mean more than regulating a market. But treaty provision for disciplining wayward member states is cumbersome and apparently ineffective – if it came, for example, to suspending voting rights, each state could simply veto the sanctions against the other.

The cohesion fund has been used since it was conceived by Jacques Delors to help countries such as Ireland catch up with the richer states, in effect to allow them to play on a level playing field. Poland has been allocated a total of €86 billion from various EU cohesion funds in the current seven-year programme.

Such “solidarity” is a core EU value, but cuts two ways, many Germans argue. It imposes obligations on the part of recipients to common values and also to assisting fellow member states in need.

And the refusal of much of “new Europe” to assist Italy and Greece by sharing in the resettlement of refugees has not gone unnoticed. As one senior commission official working on the next EU budget put it to this writer, “no one needs to say it explicitly, but when they come back looking for the next tranche of solidarity structural funding, the net contributors to the EU may well ask some hard questions”.

Solidarity, brother, cuts two ways.

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