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EU Priorities

How the EU / euro zone should meet future challenges

The Link between the EU’s Budget and its Values

Debate on 2021-27 budget is underway

The EU Commission wants to have agreement on the guidelines for the budgetary framework period 2021-27 by the planned summit in Romania on May 9th2019, based on proposals it made in May this year. Although agreement that early is unlikely, the debate on this issue of fundamental importance is underway and hardly anyone is paying attention. It is true that the EU budget at close to 1% of GDP is small in relation to total public expenditure at all tiers of government, of 40-50% of GDP, and that it is smaller in relative terms than most people in the EU think it is. However, the absolute amount of money is large at about €1trn proposed over the period 2021-27 and the image of the EU amongst voters is and will be affected by where the money goes.

As argued in by last blog, the priorities for spending need radically changing from the priorities of the early 1990s when the present structure of the budget was established under Jacques Delors, in line with present day priorities like migration and climate change.

 

Commission links budgetary compliance to rule of law

Another issue which the Commission rightly emphasized in a whole new and separate section of its proposals is ensuring that the money goes where it is intended and thus the link between spending and the rule of law. While the Commission has to authorise spending, its administration and thus ensuring that the funds are spent as intended is mainly in the hands of national and local tiers of government, with the courts taking a role if there are allegations of fraud or corruption. Because of justified concerns of embezzlement by organized crime,  the southern regions of Italy have received less than would otherwise have been their due over decades. However, Italy has been consistently characterised by a judiciary whose actions may have sometimes been controversial but have virtually always been independent of the government of the day. For example, during Silvio Berlusconi’s long periods as head of government over 20 years he was continually been in conflict with the courts.

The separation of powers between executive, parliament and judiciary is a fundamental precondition of the rule of law and of democratic institutions as developed over the last 250 years. Amongst the Copenhagen Criteria laid down at the European Council in Copenhagen in 1993, future members  were required to respect the rule of law and under the detailed Conditions for Membership, Chapter 23 on the Judiciary and Fundamental Rights made clear that this required an independent judiciary, since the rule of law must apply to all, including government. But even if the Criteria were met at the time that new members acceded, there was no guarantee that they would continue to be met. And indeed there has recently been a row-back over the Criteria, especially in Poland and Hungary regarding the independence of the judiciary (for example in Poland judges have been made to retire earlier than under previous rules to make way for government appointees). Such backsliding seems of most concern amongst new member states but there should also be no complacency about actual and possible developments in older member states.

The introduction to the section of the May 2nd, 2018 budget framework proposals on Sound Financial Management and the Rule of Law does not pull its punches in linking the two, stating that: “Only an independent judiciary and legal certainty in all member states can ultimately guarantee that money from the EU budget is sufficiently protected”.

 

Murder of journalists investigating corruption and misuse of EU funds

The link between ensuring EU money is spent as intended and the rule of law was tragically illustrated by the murder in February 2018 of the Slovak journalist Jan Koviak, together with his girl-friend, who had been investigating corruption involving the governing party Smer and links between crime in Slovakia and the Calabrian organised crime group N’drangheta, which among other things appears to have been passing on advice on how to embezzle EU agricultural funds. More recently a TV presenter in Bulgaria who had investigated fraudulent use of EU funds was killed on October 6th, although in this case it is possible that the killing was not linked to her work. On October 16th, 2017, the leading independent journalist, who had alleged corruption at a high level in the Maltese government, Daphne Caruana Galizia, was killed. While her work was not specifically concerned with EU funds, if the level of corruption is as serious as she alleged, it would certainly warrant a high degree of concern as to whether the use of EU funds in Malta is or will be free from misuse.

 

Budget debate is central to the future of the EU

The issue the Commission is highlighting is therefore a serious one with concerns not limited to the countries mentioned above. There is little chance that the proposal will be adopted as it stands, given that all member states have to agree to the budgetary framework and some will feel it is directed at them. On the other hand the budget also has to be agreed by member states which are not keen on continuing to hand over large net payments to countries which they do not think share their view of the EU’s values. Agreeing the next budgetary framework is therefore likely to be difficult both for this reason and because there will be big differences on the priorities for the new budgetary period. A long stand-off is probable and a crisis with no budget agreed, or only one to carry on essential administrative spending, is possible. Although non-administrative budget expenditure is not essential to the EU’s functioning it does indicate its objectives and values. The coming debate is therefore crucial to the EU’s future. It is also crucial that be an open debate. @



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