The first round of negotiations between EU leaders for the approval of the budget for 2021-2017 has ended in disagreement. This comes as no surprise to those who understand how decisions are taken in the EU. Brexit has left the bloc with a funding gap of up to €75 billion. Net contributors to the EU budget want to cap the spending at €1 trillion. Net recipients want€1.3 trillion.
The problem is not just about belt tightening. The European Commission wants to promote an agenda for investment to counter climate change and push environmental protection under the “Green Deal” strategy. Some EU politicians want to add border security, migration, research, digitalisation and joint defence to the list of budgetary priorities.
Other countries, including France, want more of the same old spending on agriculture and cohesion. Two-thirds of the EU budgetary expenditure goes into agriculture and assisting poorer regions in the name of cohesion. Now that the EU already faces a challenge to fill the funding gap left by Britain, satisfying old expectations and new ambitions is not feasible.
While the Commission is asking all 27 leaders to give ground in the budget negotiations, Malta seems likely to be among those member states that have to give up most.
Malta’s economic success in the past decade means that it now no longer qualifies for as much cohesion funds targeted at the EU’s poorer regions. Such funds are targeted at regions with a GDP per capital below the 75 per cent of EU average. Malta has now surpassed this threshold.
Prime Minister Robert Abela has acknowledged the difficulties that Malta may face when agriculture and cohesion funds are curtailed but still feels optimistic that a deal will eventually be reached. The government had planned that Malta’s under-investment in the infrastructure over the past two decades would be remedied by substantial investment in the next few years. A metro system, a gas pipeline, 5G communication infra-structure and investment in robotics and artificial intelligence can realistically only be feasible if the EU financial support is guaranteed.
Some member states led by Germany fret about the lack of importance being given to other important issues that are being ignored in the way that the Union is planning its expenditure for the next seven years. The EU is underpinned by an agreement to strive for solidarity based on shared interests and harmonisation of living conditions. Yet some member states like Hungary and Poland seem to give little importance to principles of constitutionality and refusing to take in migrants.
The old budgetary framework would still guarantee funds to those states that are not adhering to EU core values on solidarity. This implies that a member state can decide to do what it wants; the money will still flow from the EU coffers.
It may take a few more weeks to reach an agreement on the next budget. There is no doubt that an agreement will be achieved as the liberal intergovernmentalism theory that explains how decisions are taken in the EU will once again ensure that at the end there will be an agreement limited to only those issues on which all member states agree.
Political leaders may need to put Union integration before national interests if the EU is to prosper in the long term.