This week I continue my #MFFtour27: on Thursday, I will be in Romania and the following day, in Bulgaria. My visit comes in a special year for them. It marks their 10th anniversary of their EU membership, which in itself is a cause for celebration.

Throughout that time, they have hugely benefited from structural funds and set up remarkable projects such as a digital radiographic system for the inspection of tiny automotive components in Romania or linking the port of Varna in Bulgaria better to the rail and road network.  They therefore have a strong interest in the European Structural and Investment Funds, and would not like to see reductions here or indeed for the  future EU Budget as a whole. Net payers, by contrast, have already called for cuts as they are not keen to finance the gap that will emerge eventually because of Brexit.

How are we then going to square the circle? After all, we need every single Member State to agree, as the EU long term budget, termed Multiannual Financial Framework (MFF) requires unanimity in the EU Council to be adopted.  

Financing Added value only

My starting point in this debate is that the budget is not an end in itself. It helps us implementing what we want to do. This is why the debate must start with the question, how Europe should look like in 2025 or 2030. To help identifying these priorities, I propose a simple test: Does this policy, this instrument provide an EU added value? In many cases, this could mean that it is simply cheaper for taxpayers if we spent it at EU level than 27 ministers in parallel for their country. In others, it means that is more effective than spent at national, regional or local level.

Undoubtedly, if we look at a ‘Big Science’ project – high-performance computing, or joint undertakings involving microelectronics, quantum technology or biotech – this added value is there. Because no Member State can manage such projects on its own.  Only the EU, the Member States and industry together have a chance to retain a competitive edge over China and the United States.

Then, take the issue of border protection. Altogether, our 28 EU Member States have still around 100 000 border guards controlling borders between Passau and Salzburg, Germany and Poland and other EU internal borders. Would it not make more sense, if they would instead join our 1600 or so EU border guards at the EU external border in Crete, Piraeus, Macedonia and elsewhere? You do not need a university degree in mathematics to work out that if we would control our external borders together and register all those who want to come to us and, internally, allow free movement without controls at Europe’s internal, national borders, this would be more cost effective. That is a true value added.

And structural funds? I believe they have a European added value too. Taking money from rich countries, such as Luxembourg with a per capita GDP of 60 000 euros, and strengthen a country such as Bulgaria with a per capita GDP of 6000 euros, makes sense for all of us: It strengthens the infrastructure Bulgaria cannot fully finance on its own but needs to catch up: to be a more attractive place for economic investors, to create jobs, to create the income to import goods and services from other EU countries. In this way, economic and social circumstances have the chance to converge. This is clearly added value for the whole EU.

New deal: Give and take

          But coming up with a list of EU policies having a value added will not alone do the trick. What I am proposing to net beneficiaries and net payers goes much beyond this, it is a new deal. It is a give and take on both sides: Net payers would pay a little more into the EU pot for the guarantee that every single Euro paid is spent efficiently and has an added value. Net beneficiaries by contrast, would have to accept more control over their structural projects in exchange for avoiding drastic cuts. One of the mechanisms by which this could work is conditionality. It means that structural funds are more aligned with structural reforms the EU wants the Member States to carry out. Every year, the EU Commission gives recommendations to its Member States on how to strengthen its economy, be it investments in broadband, universities or others, without any obligation to do so. One could therefore think of a positive conditionality: If these recommendations are implemented, the Member State would get extra money from a fund. But one could also make it work the other way round, as negative conditional ties.

                                      A fair 50:50 deal

          It is evident that this new approach will not be easy to accept by net beneficiaries, as they traditionally structural funds are more bottom up in their approach. But given the financial constraints, this would be a far better option for them than facing drastic cuts. For the same reason, they will have to accept some cuts in the existing programmes. At the moment, we are reviewing every single programme in terms of his added value. If it does pass the test, ok. If not, it will be scrapped. At the end, this means that in terms of cuts and extra money, we will also have to strike a fair deal. I personally believe that 50 percent of the money needed to close the financial gap should be covered by cuts and the other half by additional money from net payers. 

          After all, what we need is a fair deal, and if it is perceived as such, I am convinced, we can all agree on.

More on twitter: #MFFtour27

 

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