If there is an issue that maximizes the tension between the leaders of the European Union, it is the negotiations for money. Every seven years, the Heads of State and Government are locked in the mastodontic building of the European Council in Brussels and they spend the night the white discussing the budget Multi-annual EU. A battle that confronts the richest countries that are net contributors to the community coffers (led by Germany, Holland, Denmark, Austria and Sweden) against the main beneficiaries who have lower income levels (Poland and Eastern countries, but also Spain, Portugal or Greece). The white smoke never arrives before the first lights of the next day.
After several months in the freezer eclipsed by other more urgent files such as brexit, the negotiations for the next budget of the 2021-2017 period begin to warm up. It will be the first after the goodbye of the United Kingdom, that leaves a hole of up to 14,000 million euros in the community accounts. To close the gap, the European Commission has proposed cut agricultural aid (5%) and also structural funds for regions (7%). In contrast, other items considered a priority increase, particularly funds for immigration, research, defense or Erasmus.
But the scissors alone will not be enough to cover the void left by the United Kingdom. Therefore, the Community Executive also calls for an increase in contributions from member states. In fact, Brussels poses a small increase in the budget, from the current 1.03% of Community GDP to 1.11%, a figure that represents an expenditure of 1.28 billion euros in seven years.These numbers were prepared by the Minister of Economy, Nadia Calviño, shortly before leaving her previous position as Director General of Budgets of the Commission.
Net taxpayers have rebelled against the numbers of the community Executive. They reply that a smaller EU (without London) should also mean a smaller community budget. The red line of five austere club, the limit that should never be exceeded, is 1% of European income.
As if that were not enough, Germany has hardened its position in recent weeks in the face of the threat of impending recession. If last year the Government of Angela Merkel He was willing to raise his contribution to the EU, now has entered into a war of figures with Brussels. He claims that his net contribution to the multiannual budget (that is, the difference between what he pays and the community aid he receives) it will double from 15,000 to 33,000 million euros a year. Unassuming amounts in a context of economic slowdown.
The European Commission responded already last week that Berlin figures are inflated and "irresponsible". The net contribution of Germany will be much lower: it will increase progressively to 23,500 million net in 2027, according to the Commissioner for Budgets, Günther Verheugen. This Tuesday, the Community Executive has gone a step further in its dispute against the club of the five austere ones and has published its calculations on the evolution of the gross contributions of all the Member States for 2021-2027.
Will Spain remain a net beneficiary?
In the case of Spain, the contribution to the community coffers will go from 10,170 million euros per year on average in the current 2014-2020 budget to a total of 11,950 million per year on average over the next 7 years. That is to say, Spain will have to pay an additional 17.5% for the next multiannual EU budget. Measured as a percentage of income, the Spanish contribution will rise from 0.86% of GDP in the current period to 0.95% on average in 2021-2027.
Does this mean that Spain will become a net contributor to community coffers for the first time? That is to say, Will it pay the EU more than it receives? Not necessarily. But at the moment it is impossible to calculate it, because the Brussels data omit the other part of the equation, the calculation of the average EU aid that each Member State will receive. The Community Executive is limited to pointing out that agricultural subsidies to Spain will fall from 0.57% of GDP in the current period to 0.44% on average between 2021 and 2027. For its part, regional funds will only be reduced from 0, 39% to 0.38% of the income level. The rest of the funds cannot be distributed by countries beforehand, Brussels argues.
In 2018, the last year with available data, Spain collected a total of 12.270 million euros of community funds. Discounting our country's contribution to the EU, the positive net balance was 1,857 million euros. On average, Spain has received net EU aid amounting to 2,050 million a year between 2014 and 2018, according to Brussels calculations. A figure equivalent to 0.18% of GDP.
In absolute terms, the main net contributors to the community coffers are Germany (13,500 million annually), France (6,870 million), Italy (3,970 million), Holland (2,580 million), Sweden (1,740 million), Belgium (1,150 million) and Austria (1,120 million). The list of net beneficiaries is headed by Poland (10,650 million), Hungary and Romania (4,640 million) and Greece (4,490 million).
In response to criticism from the austerity club, the Community Executive alleges that the impact of the EU budget cannot be measured solely from the net budget balances. There are other factors that must be taken into account, for example the benefits that each country derives from the single Community market. The most favored country in this chapter would be precisely Germany, with 208.020 million a year (5.22% of its GDP).
According to preliminary estimates from Brussels, If your proposal goes ahead, Spain could remain a net beneficiary for the next seven years. The reason is that it has lost ground in terms of economic convergence in recent years due to the crisis, which will allow it to maintain most of the structural funds.
In addition, Spain's participation is not limited solely to agricultural and regional subsidies. It is also one of the main beneficiaries of the Erasmus student exchange program (whose endowment is multiplied by two in the new budget), research funds (which increase 50%) or immigration spending (which almost triples).
However, a cut in funds such as the one claimed by the members of the austerity club would push Spain to the position of net contributor to the EU budget.
Friends of cohesion against the austerity club
To counter this downward auction, the countries of the South and the East have created have created an alternative forum baptized as 'Friends of Cohesion'. The 17 member states that comprise it (Spain, Czech Republic, Slovakia, Hungary, Poland, Lithuania, Latvia, Estonia, Bulgaria, Romania, Greece, Slovenia, Croatia, Portugal, Cyprus, Malta and Italy) met on Tuesday in Prague to coordinate positions. Although many countries have sent their prime minister, the Spanish secretary of state for the EU has assisted, Luis Marco Aguiriano.
Cohesion is a key piece of European integration that guarantees that no region is left behind. Today I have come to the Summit #FriendsofCohesion in Prague to defend that next #MFP promote convergence and competitiveness in all regions of the EU. pic.twitter.com/Q7Gt4WNRNy
– Marco Aguiriano (@marcoaguiriano) November 5, 2019
Faced with the 7% cut in regional funds proposed by Brussels, attendees (except Italy, the only net taxpayer among them) have signed a joint declaration asking that the current level of funding be maintained but given more flexibility for member states on how to spend money, reducing bureaucratic burdens.
The two sides have flatly rejected, albeit for conflicting reasons, the compromise proposal raised by the Finnish presidency of the EU, which places the multiannual budget between 1.03% and 1.08% of GDP. As if that were not enough, the other EU budgetary authority, the European Parliament, claims to increase the threshold to 1.3% of GDP.
European leaders had pledged to reach an agreement on the multiannual budget during the next summit held on December 12 and 13 in Brussels. But the positions are so far apart and the level of tension is so high that Commissioner Oettinger has already admitted that it will be impossible to achieve that goal. Any additional delay could cause a breakdown of European aid to farmers or regions and municipalities from 2021.