The 2011 budget of the European Union is in tatters after an unsuccessful negotiation session between the European Parliament and the Council. The budget procedure must now start anew, with the Commission proposing a new draft budget. The apple of discord has been the Parliament’s demand to participate in the negotiation of the next multiannual budget framework (2014-2020).
According to some diplomats cited by EUobserver, the Parliament wrongly assumed that member states would agree to a budget out of fear of being labeled as “anti-European” in case of a breakdown in talks.
Well, obviously they weren’t. Three countries – Netherlands, Sweden and the United Kingdom, refused even to consider the demands of the Parliament. “There will be a budget, based on 2010 figures. There is no drama, the world won’t go under,” said one diplomat to EUobserver.
But of course. Who cares if the EU malfunctions due to underfunding? And how dare the Parliament ask for a role in negotiating the multiannual budget framework?
The governments of the Member States seem to suffer from some very peculiar type of schizophrenia. It was them that approved the equal status of the Parliament in the budget procedure. It was them that actively advocated in 2009 for the entry into force of the Treaty of Lisbon. It was them that welcomed “a major step forward” for Europe. But now they are ready to block the EU budget in order to prevent the European Parliament from participating in talks for the multiannual budget.
This attitude of hostility towards supranational institutions and the European Union as a whole already peaked with the disgraceful treatment of the President of the Commission during the European Council meeting while discussing the deportation of Roma citizens from France. It has now been shown once again in the form of nonchalant attitude to the EU budget procedure, as if it doesn’t matter anyway.
It does matter, as will be shown in the first months of 2011 when budget rollover from 2010 will be used. But I am much more worried about the obvious lack of ownership of the European idea in Member States’ governments. They seem to distrust both the integration agenda and the supranational institutions it implies. This is a well-trod path to institutional paralysis and inefficiency.
The European Commission has recommended to the Council to declare an excessive deficit for Bulgaria in 2009 equal to 3.9% of GDP. The further Commission recommends the Bulgarian authorities to bring the general government deficit below 3% of GDP in a credible and sustainable manner by 2011 at the latest.
I am not sure whether it is possible to lower the Bulgarian budget deficit below 3% in 2011. There is ample evidence that the Bulgarian government will really struggle to maintain its budget deficit in 2010 at 4.8% of GDP as proposed in the budget amendment currently reviewed by the Bulgarian Parliament. I really cannot see how this can be achieved.
The 2010 budget of the European Union was approved by conciliation delegations from Parliament and the Council. Three issues were solved – the funding for the EU economic recovery plan, funding for the closure of the Bulgarian nuclear plant Kozloduy and emergency aid to milk producers.
The EU economic recovery plan will cost €2.4 billion next year. €75 million will go for support for the closure of the Bulgarian nuclear plant Kozloduy. €300 million will be used as emergency measures for milk producers.
EurActiv reports on some budget drafts for the 2014-2020 financial framework. The really interesting part is the hinted idea of replacing current budget resources (mainly from VAT) with something that might be called European income tax. One of the considerations of the Commission appears to be that the financing of the EU budget from VAT is incomprehensible for the European citizens.
A bold idea indeed.
The new, 10th edition of the report Public Finances in EMU – 2009, has been published.
The report says that public finances in the EU have come under unprecedented stress as they play a central role in overcoming the financial and economic crisis.
The report summarizes the measures under the European Economic Recovery Programme (EERP). According to the report, automatic stabilizers due to larger government spending in the EU and particularly the more extensive social security systems than in the US, have contributed support to the EU economy.
The public debt-to-GDP ratio in the EU is expected to jump by 21 percentage points to 79.4% of GDP until 2010. The expected sharp budgetary deteriorations and increases in public expenditure-to-GDP ratios, in addition to pressures on many Member States’ public finances from rising age-related spending, will eventually require tough choices with a view to maintaining long-term sustainability.
The authors of the report believe that the Stability and Growth Pact contains the sufficient flexibility to cope with the unprecedented challenges of the crisis while at the same time providing a framework for future consolidation strategies.
Posted in Budget and Finance, Bulgaria, EU Reform, Institutional Affairs, Internal Market
Tagged Budget, Economic Crisis, Economic Policy, European Economic Recovery Programme, eurozone, GDP, Public Finances
In its report for the discharge of the European Commission for the general budget in 2007, the European Parliament has strongly criticized Bulgaria for the mismanagement of EU funds.
Here are some of the findings of the report:
“urgent steps are required to correct the weaknesses in the management of EU funds in Bulgaria”
“the Commission (…) froze EUR 250 000 000 in Phare funding, EUR 105 000 000 in Sapard funding and EUR 115 000 000 in ISPA funding in Bulgaria; (…) the final loss for Bulgaria under Phare is EUR 220 000 000”
“all actions and measures recently taken by Bulgaria need to be followed up by credible, structural corrective actions and a fundamental reform of all structures involved in the management of EU funds, so as to ensure the correct and timely take up of funds and a high level of transparency”
“[The Parluiament] asks the Commission to submit to it a special report on the state of play of the management and control of all EU funds in Bulgaria covering the period until 15 July 2009″