EU budget negotiations: a zero-sum game?

28 September 2012, Public Service Europe

The seven-year EU budget could unlock investment and jobs, but only if the shadow-boxing around the negotiating table ends now.

Engaging in the debate currently approaching boiling point over the European Union budget for 2014-20, the so-called Multiannual Financial Framework, is not for the faint-hearted. Yet the MFF is of huge importance for European citizens situated outside the Brussels bubble. Heavy on acronyms and featuring a blizzard of arcane, overlapping policy minutiae and formulae – the famous United Kingdom budget rebate is remembered for Margaret Thatcher’s wielding of her handbag in Bruges in 1984, which is just as well because allegedly only four people alive understand how to calculate said rebate – the budget ultimately comes down to money. It is roughly €1trillion over seven years, as proposed by the European commission last year, to be distributed in varying sums across member states and economic sectors.

But it also comes down to how to spend the money. The commission has proposed that at least 20 per cent of the MFF should be spent on climate-related activities; environment non-governmental organisations want to see this figure bumped up to at least 25 per cent. Though, as we are also arguing, if in the negotiating texts clear-cut sums are not allocated to low carbon initiatives some time very soon – then European decision-makers in the European parliament, the commission and the member states will be jeopardising a historic opportunity. This future EU budget can secure tens of thousands of jobs, drastically reduce fuel poverty and improve quality of life for 500 million people living in Europe; all while doing a great deal to face up to the challenge of climate change and dwindling resources.

This requires several things to happen, starting with an end to the negotiation paralysis. However, anyone watching this week’s convening of the General Affairs Council – comprising EU ministers there to discuss the draft documentation on how the budget pot is to be dished out – might have been mistaken for thinking that within €1trillion there lies any potential whatsoever. Alexander Stubb, Finland’s foreign affairs, was nonetheless putting a brave face on things. He Tweeted: “Call me a nerd or a bit weird, but I like these negotiations on the EU budget for 2014-2020. It is concrete stuff.” By lunchtime, rather in contrast, Stubb was telling his Twitter followers: “Lunch with colleagues in Brussels. Discussing the role of the General Affairs Council not for the first, nor the last time.”

This reassessment, we can presume, was derived from the fact that with three months to go in which to settle thousands of technical points that will determine the destination of the budget, this GAC meeting merely confirmed what is widely known. On the one side of the negotiations sit the ‘friends of cohesion’ countries, consisting of the less developed countries in Eastern Europe – plus Greece, Malta and Portugal. They are concerned about moves afoot from the richer ‘net contributor’ countries that want to cut the budget total proposed by the commission, by roughly €100bn. One of the most trenchant presentations came from Hungary’s minister: a possible 30 per cent cut in cohesion money – cohesion policy being the key source of funds for the eastern countries and representing roughly 30 per cent of the total budget – would be regarded by Hungarians as ‘more punishment from the EU’.

On the other side, the ‘friends of better spending’ countries are dressing up their cuts agenda with an alleged focus on quality of investments. Nonetheless, at Monday’s meeting there was no mention of the budget’s environmental dividends, not even from the UK’s Europe minister David Lidington – a member of David Cameron’s ruling administration committed to being “the greenest government ever”. The World Wildlife Fund’s Sébastien Godinot warned: “Ministers seem more interested in fighting over topline amounts than getting value from what is already there.” Keeping the actual figures for each budget area off the table, as the Cypriot EU presidency – responsible for overseeing these negotiations through to the end of this year – is doing, is exacerbating the situation.

Indicative figures originally foreseen for release already are not now expected until November. The very real possibility of a crunch on climate spending as a result has been noted by the Institute for European Environmental Policy. Even with the commission’s 20 per cent climate earmarking figure plus some more ambitious proposals coming from the parliament, the lack of concrete numbers according to IEEP “does not necessarily imply an increase in available funds, in absolute terms, for tackling climate change”.

We are currently facing a literal ‘zero-sum’ game then with ‘quality spending’ little more than a rhetorical negotiating device. What could concrete EU funds-backed investments in the right places realise? According to the commission’s ‘Roadmap for moving to a competitive low carbon economy in 2050’, there are potential savings in fuel costs of between €175 and €320m by 2050. And annual average energy savings of €1,000 for every household in Europe. It also estimates that green investments can also stimulate job creation, with up to 1,500,000 new jobs by 2020.

A reality check on the budget’s low carbon scope though is provided by new CEE Bankwatch analysis into investment needs for energy efficiency and renewables in seven of the eastern member states. Even the €31bn proposed by the commission – for low carbon measures in all EU countries for 2014-20 – falls far short of the €172bn over seven years needed in these eastern countries alone. So how to bridge the gap between nervous net contributor countries and equally nervous recipient countries, which are still barely scraping through the Europe-wide recession or, in the case of Greece, staring into the abyss? An unlikely EU budget white knight loomed into view this week, in the shape of Polish foreign minister Radek Sikorski.

Writing in the British newspaper The Times, Sikorski sought to scotch a number of Eurosceptic myths about Britain’s place in Europe. Of the ‘monstrous EU budget’, he wrote: “UK companies have profited enormously from EU cohesion fund investments in central and eastern Europe. That improved infrastructure benefits UK exporters: higher prosperity in those member states means new markets for the UK.” For the UK, read also Germany, France and other western states. All in their own ways are winners from cohesion policy investments in the east. That it has taken Warsaw to point out the mutual gains achievable via the EU budget is ironic when Poland’s obstructionism on collective European climate goals remains fresh in the memory.

Yet a move away from the distrust and myth-making over the budget should be combined with a forging ahead now – with green spending taking centre ground. Take the news this week that Europe has reached the 100 gigawatt milestone of installed wind capacity. A fantastic achievement but further windpower growth, dependent on better infrastructure, is now being threatened by an investment squeeze. The European Wind Energy Association recognises the role that MFF 2014-20 can play in accelerating progress here; with multiple EU countries expected to benefit.

The EWEA is expected to call for ‘earmarking funds for grid infrastructure that benefit more than one nation,’ it has been reported. So real green achievement, with the promise of a lot more to come. The EU budget can unlock this and much more potential besides. But only if the shadow-boxing around the negotiating table ends now before it descends into brutal last minute, late night horse-trading come December. After five years of enduring a mounting crisis, Europeans deserve concrete negotiations about real quality EU budget spending – not least after the procession of muddling through that has marked the eurozone debacle.

Read more: http://www.publicserviceeurope.com/article/2513/eu-budget-negotiations-a-zero-sum-game#ixzz27kUQmrg5