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Three lies about the EU budget which our politicians keep on using

Franck Biancheri

(07/12/2005) Now that it has become obvious to even the blindest observer that the so-called “Blair’s vision” for the future of the European Union was essentially to preserve UK’s short term interests. It may be time to get into a serious budgetary debate, which the current debate on the EU budget is definitely not. Whether it comes from the net contributors or the net recipients, EU budget’s discussion for the past years have anything to do with horse-trading of the worst sort, and nothing with any attempt to rationally consider the general interest of the Union and its 500 millions citizens.

Each institution or each member state is just trying to get the most out of the discussion, with not a single general European interest rationale to organize the debate. I already wrote a few days ago about the lack of European collective leadership for a decade. The budget discussion is a perfect example of what happens when for 10 years there is no clear direction set for the EU course.

But to say that none of our beloved and respected leaders, neither any of our credible and efficient EU institutions are only horse trading rather than fighting for the general interest of the European citizens is of course a serious accusation. But, I think that it may be proved, while for their excuse most of them do not even know what they are doing.

On which basis can it be proved? On the basis of the very hypothesis the whole debate is conducted. A certain number of “truth” are used to fuel the discussion on EU budget issues which are simply not true; and therefore they get the whole process embark into a way which leads nowhere but to a succession of “dead-ends”. Let’s screen them.

First of all, the assertion that less money for the EU budget will necessarily mean a better EU is a complete nonsense. The less you give funds for action to a bureaucracy, the more it diverts its energy (and greed for power) into its only option left: regulating, producing directives and rules. Therefore if one wants to improve the way the EU is managed, one has to carefully weight the balance between action and regulation, at the core of any public administration process. Meanwhile, the budget level has to be defined by comparison to the tasks the EU should conduct. If one compares the 2005 EU and the 1995 EU, today’s EU is facing much bigger challenges in terms of economic development, social disparities, global competition than 10 years ago. To assert that the best way to cope with those challenges is to reduce its collective ability to invest money on priorities can only be sustained by the followers of Harry Potter and its magic powers. Because the only possible way to do so would be to transform both the political and civil service human resources of the EU and its Member states ministries into “super managers” able to deliver twice more output with half the resources. With magic or genetic modifications it may be possible, but as far as I know, none of the contenders of the current EU budget debate presented any such kind of miracle solutions. Therefore, one can forget about the “killing argument” that “better EU means less EU funds”.[1]

What is true on the contrary is that there is indeed an overall inefficiency in the way funds are managed. Strangely enough it is affecting both the European and the national levels, which in that case does not plead for focusing on EU expense amounts but rather on the way an EU wide efficient administrative network can be developed and improved. As underlined by Adrian Taylor in a recent article for Newropeans-Magazine ( “Make the Commission a coordinator, not a banker!” ), the key problem resides within the efficiency of the whole array of EU public funds (European and national) rather than a supposed to be “overfunding” at the European level.

Second, the idea that there are “net contributors” and “net beneficiaries” is the ultimate fraud when it comes to the EU finances question. French, British, German or Dutch companies buying market shares in Spain, Poland or tomorrow Romania, and therefore increasing their profit by a significant margin, which in turn should improve the tax income from the countries where those companies are based, while creating jobs over there as well.
Yes, I am certain that you already flipped at something which used to be true and is not anymore!
The revenue generated by the companies coming from the “richer” EU countries should balance because of their increased profits and therefore taxes the budget costs made by the same countries in favour of the poorer; while jobs creation should also balance the contribution made by each “richer” Member state’s citizen to the “poorer”. And then, sorry for our dearest “neo-liberal EU budget fighters”, but that where the ball stopped rolling about a decade ago. “Neo-liberal” policies killed the process by leaving big corporations free to cash in the profits without giving back taxes, nor jobs in the “net contributors” countries. No surprise that therefore citizens in the same countries start to be reluctant to keep on paying. Contrarily to the explanation given by the same politicians who allowed such a process to take place (but don’t want to be blamed for it), this feeling does not result from a less “European spirit” than before from their population, it directly comes from the weakness and lies of the current political leaders who do not want to put the true debate on the public agenda by fear to lose the support of their sponsors.[2] Again, there the issue has nothing to do with the amount of contribution. It has everything to do with the level of tax, the question of tax harmonization and the social commitment of the European business community. It also has to do with the very big lie which our leaders made a few years ago when they told their voters than enlargement will cost nothing much, leaving the new member states with the only possibility to go for “social and tax dumping” … which brings us to the current situation[3].

Third, the whole EU budget calculation system is indeed flawed, but it is not better at the national level. We face in Europe a very simple fact: our budgetary processes are obsolete. The way we funds our projects or our social programmes are just simply outdated, based upon methods from the 19th century, upgraded after WWII (a little bit more than 2 generations ago for those who have lost the sense of time). The systems work on allocated funds rather than on funds actually spent. Therefore much of the talk is about money which is in many cases never ever used, or only with 3 to 5 years delay. Meanwhile in most policies, not only in the CAP, but also in the Research Framework Programme or most of the EU programmes, some 50% of funded activities at least are meaningless, inefficient or just not existing. A European wide independent survey which I conducted in 1996 (survey), in cooperation with the late company Arthur-Andersen, assessing the evaluations of all existing EU programmes, exactly came to that conclusion. Eight years later not a single significant effort to change that appealing ratio has been implemented neither by the Commission, nor the Parliament nor the Council. So, what is essentially true when one talks about the EU budget today is that a big share of it, in every single sector, and not only the CAP, is just wasted, with the direct complicity of the Member states. But of course do not expect our political leaders to go into such kind of “details” (it may account for 50 billions euro a year in wasted money), they do not have the faintest idea on how does an EU funding programme or policy concretely operates.

The current debate on the EU budget is therefore a farce. It is a very good example of what the lack of democracy and transparency of the system generates. Leaders who assert lies or false “truth”. Figures which say nothing about what is really going on. A process of funding the EU budget which prevents the citizen to know exactly what he gives and for what? Major economic players which operate for their interest only, pretending they do not belong to anywhere in particular, while politicians are used to cover up the whole process.

Newropeans has been launched to change all that by putting some rationale and common European interests in the midst of all that farce. For EU budgetary issues as well democratization should top the agenda in order to give EU citizens a clear understanding of what exactly is being discussed. Real money used to serve real needs? Or fake billions used to legitimate national or inter-institutional power plays? A European tax seem therefore to us the best start to oblige the EU institutions and Member states to clarify the game, while starting to think of common rules serving our 500 million citizens interests, and not the “usual suspects” political tricks. Because whatever they tell you, the European process has a price tag, and those who say that you can get a prosperous, peaceful continent for a bargain are just taking you for fool.
To democratically clarify the debate, there is a need to make each citizen “a shareholder” of the EU rather than letting our national administrations and political parties play that role in our name. It means therefore a European tax, singled out from your national tax.
If you have to pay anyhow, you’d rather know how much, and what for, isn’it?
And then you can look around, not only in Europe, but also in your own country, and look for who is not paying its share of the European construction while benefiting of it as well.

Franck Biancheri, Président Newropeans
Paris (France)

[1] By the way, as we can see from the current « impasse budgétaire », all those proponents of « les sis better » always agree to cut the funds benefiting the neighbours, never the ones they do enjoy. [2] They do not care much about the support of their voters because they already lost most of it. [3] By the way, I cannot resist the occasion to ask you a question: Who is the best friend of rapid and continuing enlargement? Of neo-liberal US inspired policy for the EU? Of tax reduction? Of less social norms?  There are many of them of course, but one in particular has been very prominent those last years.