When Prime Minister Rutte says the word “frugal” in his mouth, you know: it is about money again in Brussels.
Rutte used the English term for ‘economical’ on Thursday afternoon upon arriving at a European summit meeting. While the war in Ukraine and that between Israel and Hamas demand all the attention, the EU must also consider one of the most difficult internal issues this autumn: its own budget. In other words: who pays how much to Europe and who gets what in return.
The item was back on the agenda of government leaders on Thursday, earlier than expected. In 2020, EU countries reached a hard-fought agreement on the joint multi-year budget up to and including 2027. This concerns the money that EU countries pay to Brussels and which is used to finance joint priorities. For example, agricultural funds, support for disadvantaged regions or stimulating research.
After the 2020 agreement, the subject would, to many people’s satisfaction, actually be buried for at least five years. But now that the EU has had to deal with a series of crises in recent years, the old budget is already outdated, according to the European Commission. And so extra money is needed.
Support to Ukraine
This is required, among other things, to give the EU’s financial support to Ukraine a more stable character. To this end, Brussels presented a new fund this summer, from which Kyiv will receive a total of 50 billion euros in gifts and favorable loans over the next three years. That proposal is not very controversial and can count on broad support among EU countries – including among the group that is traditionally reluctant to cough up more money, including the Netherlands.
This is very different from the other financial requests that the European Commission presented at the same time. In addition to money for Ukraine, she is requesting additional financing for migration deals and stimulating innovation, among other things. Particularly significant is the extra money needed for the salaries of EU staff – which have risen sharply due to the inflation adjustment – and to pay the increased interest on joint EU loans.
In addition to the money for Ukraine, around 50 billion euros extra is needed. And that is meeting resistance, first and foremost from the group of EU countries that believe that they are already paying too much to Europe. For example Denmark and the Netherlands, but also Germany in the background – during the previous budget negotiations the group used the nickname ‘frugal’. Paying more is unacceptable to them. “Where can we save money, the question should be,” says an EU diplomat, “not how much more money.”
Trouser belt
Rutte also emphasized on Thursday that the Commission must make savings elsewhere to cover the additional expenses. “Our three priorities are: reprioritize, reprioritize, reprioritize,” said Rutte. “Just like in the national budget, you have to tighten your belt every now and then.” “I am convinced that the possibilities through a reprioritization of the expenditure program from the European budget have not yet been exhausted,” said German Chancellor Olaf Scholz.
According to the group, there are numerous pots of money from the Commission that could be saved. There would also still be a lot of unused money on the shelf in Brussels that could be given a new purpose. But according to the Commission, if Member States do not make additional money available, some European programs will have to make cuts of up to 30 percent. For example, on stimulating innovation or on certain research funds.
Other EU countries do not like the idea of budget cuts at all and actually want more money to be made available, for example for migration policy or the response to natural disasters such as forest fires. “It is quite clear that the EU has not allocated sufficient resources to support the countries affected by the climate crisis,” Greek Prime Minister Kyriakos Mitsotakis said on Thursday.
‘More money for defense’
“I am really concerned about how we are going to do this,” Estonian Prime Minister Kaja Kallas told journalists ahead of the summit. If it were up to her country, there would also be more money to strengthen the EU’s defense in response to the Russian invasion of Ukraine. “My point is: all crises have meant that the situation is completely different than when this budget was drawn up.”
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Thursday’s discussion was only the first time that government leaders discussed the topic and shared their views with each other.
Killjoy
Before an agreement is reached, which all 27 member states must agree to, heated negotiations will follow in the coming weeks. An additional spoilsport could be Viktor Orbán, the Hungarian Prime Minister who has made a habit of vetoing European decisions to force beneficial decision-making for his own country.
Exactly when the package should be completed also leads to disagreement. The Netherlands, among others, believes that although support for Ukraine is urgent, the rest of the discussion can wait a while. This is meeting resistance in Italy, among others, which fears that if the Ukraine fund has already been completed, the remaining money will not be available at all.
Kallas also urged haste on Thursday. “If we don’t address this quickly, we will only push it forward.”