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EU Priorities

How the EU / euro zone should meet future challenges

EU needs to make radical reforms to its budget

The next EU budgetary framework period starts at the beginning of 2021. It is none too early for a serious debate about what should be the priorities. The only suggestion that has received publicity so far is President Macron’s proposal for a euro zone budget. This could be a good idea but not for the reasons given by him or most others. The euro has lasted for almost two decades without a budget of its own and can continue to do so. One country, Greece, needs debt relief. Other countries may need help with crucial public services and investments at a time when their own constraints, including their debt, make these difficult to afford. But suggestions that stronger economies should help weaker economies for no other reason than that they are stronger will always be resisted by the stronger economies, given that they are already making significant net contributions.

The purposes of EU budgetary spending need to be re-examined from first principles. Most spending over the last 30 years other than agricultural support has been on helping poorer countries improve their transport and communications infrastructure, based on the proposition that this is a condition for economic growth. Most EU countries now have fairly good infrastructure of this kind and there is little reason that its further expansion is necessary.

New priorities: migration

There are however major priorities that have recently emerged. The most obvious is the handling of migration pressures, which are not likely to go away. One priority should be for EU countries to make a contribution, along with other countries from Lebanon to Uganda, in receiving migrants fleeing wars in Syria, Sudan and elsewhere. Many of the newer EU member states do not want to make such a contribution. That should be respected as their right but given that this issue is now one of the major ones confronting the world including the EU, the EU budget should be accordingly re-oriented to helping those countries that are willing to take in refugees. Given that the new member states may resist that – and budgets require unanimity—the only answer may be to have a euro zone budget because it is primarily euro zone countries that are –whether voluntarily or involuntarily—taking in refugees from war, as well as other migrants.

Funding is specially needed for the handling of the migration flows coming across the Mediterranean. Many of those coming from sub-Saharan Africa can possibly be returned. For example, while there is war and terrorism in parts of Nigeria, other parts are peaceful so those fleeing the unstable parts of the country should be able to go to the more stable parts. But it is clear that this can only be managed in a way which respects human rights, if Nigeria is helped financially and in other ways to absorb internal migrants while for those who reach Europe sorting those who clearly have refugee rights under the Geneva Convention from those who can be returned is itself an expensive and demanding process which countries like Italy and Greece struggle to afford. The idea that there is a clear division between refugees and economic migrants that can easily be identified is a myth. Between those clearly one or the other is a very large grey area, including those mentioned above from countries where some regions are in conflict.

And environment

Another priority area which has come to the fore since the EU’s current budgetary policy was formulated when Jacques Delors was Commission president is the wide range of environmental challenges facing EU member states and the world as a whole. The terrible and lethal fires both sides of Athens in July are only the latest example of increasing damage to the environment and human life from such forest fires affecting all south European countries and more recently also north European countries. Research and action is needed for example through breaks in forests to halt or reduce the spread of such fires but there is also a need for more investment and current spending on fire-fighting services, that budgetary constraints in Greece and elsewhere have instead reduced. Such spending should be another priority of EU budgets in both the short and medium term.

The EU budget effectively limited to 1% of GDP is very small in relation to the public expenditure controlled by member states and it is unrealistic to suppose that this is going to be changed in the foreseeable future. But some items of spending should be reduced and others increased. Moreover, there should no longer be a bias in favour of capital over current spending given that current spending for example on migration is an urgent priority. There may well be a case for reducing EU-wide spending, if agreement on priorities cannot be reached. A significant euro zone budget could then be initiated without necessarily increasing the total for euro zone members of the EU plus the euro zone budget above the present 1% of GDP.


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