布鲁盖尔-The-EU-s-Multiannual-Financial-Framework-and-some-implications-for-CESEE-countries_10页_620kb

Summary of the EU's Multiannual Financial Framework and Implications for CESEE Countries

Core Content

The European Union's Multiannual Financial Framework (MFF) for 2021–2027 is under review, with a focus on its implications for Central, Eastern and Southeastern European (CESEE) countries. The EU budget, which accounts for about 1% of the EU's gross national income, is heavily weighted toward agricultural and cohesion spending. However, the effectiveness and fairness of these programs are increasingly questioned, especially in light of the changing global environment and the financial impact of Brexit.

Main Points

1. Current EU Budget Structure

• Financing: The EU budget is funded by member states' contributions, primarily based on GNI and VAT. It also receives 80% of customs duties and sugar levies.
• Spending Categories:
  • Common Agricultural Policy (CAP): Accounts for 38% of EU spending, with EUR 408 billion in commitments for 2014–2020.
  • Cohesion Policy (CP): Accounts for 34% of EU spending, with EUR 367 billion in commitments for 2014–2020.
  • Other significant areas include "Competitiveness for growth and jobs" (EUR 143 billion), EU institutions (EUR 70 billion), "Global Europe" (EUR 66 billion), and "Security and citizenship" (EUR 18 billion).

2. Common Agricultural Policy (CAP)

• Objectives: CAP aims to increase productivity, ensure fair living standards, stabilize markets, secure food supply, and promote sustainability and balanced territorial development.
• Structure:
  • Pillar 1: Direct payments to farmers and market support (EUR 313 billion), with 94% used for income support and 6% for market interventions.
  • Pillar 2: Rural development (EUR 96 billion), cofinanced by member states (25–75%).
• Issues:
  • Distribution: The historical model for older members results in higher per-hectare support, while newer members receive a flat rate, leading to inequitable distribution.
  • Effectiveness: CAP provides good income support for richer farmers but is less effective in promoting greening, biodiversity, and climate action.
  • Inefficiencies: There is a lack of systematic evaluation, and studies suggest the policy may not be achieving its environmental and sustainability goals.
  • Recommendations: Direct payments should be phased out or replaced with national cofinancing. CAP spending should be aligned more closely with environmental and biodiversity goals.

3. Cohesion Policy

• Objective: To reduce disparities and promote convergence among EU regions.
• Funding Allocation:
  • Less Developed Regions: EUR 185 billion.
  • Transition Regions: EUR 36 billion.
  • More Developed Regions: EUR 56 billion.
• Effectiveness: Empirical evidence is mixed, with some studies suggesting positive growth impacts and others indicating limited or no effect.
• Issues:
  • Targeting: Funds are often poorly targeted and managed.
  • Synergies: There is potential for better results through improved targeting and management.
• Recommendations: Focus on regions in true need, improve transparency and evaluation, and enhance the efficiency of fund usage.

Key Implications of Brexit

• Budget Hole: Brexit will create a EUR 94 billion shortfall in the EU budget for 2021–2027 if the UK's share is removed without increasing other contributions.
• Real Terms Cuts: Even with nominal increases, real terms cuts due to inflation will reduce the effectiveness of cohesion and CAP spending.
• New Priorities: Increased spending on border control, defense, migration, and digital transformation is needed, but current MFF proposals may not provide sufficient resources.

European Commission's 2018 MFF Proposal

• Positive Steps:
  • Reorganization: Shifts spending toward new priorities and European public goods.
  • Cofinancing: Encourages national cofinancing for cohesion and CAP Pillar 2.
• Deficiencies:
  • Lack of Transparency: The structure and implementation details remain unclear.
  • Inadequate Cuts: Rural development (Pillar 2) is cut more heavily than direct subsidies (Pillar 1).
  • Weak Tools: The proposed euro area stabilization and euro adoption tools are conceptually weak.
• Recommendations:
  • Increase Pillar 2: Relative to Pillar 1 in future negotiations.
  • Link CAP to Environment: Emphasize biodiversity and climate goals.
  • Systematic Evaluation: Improve measurement of the "European value added" of initiatives.

Conclusion

• The EU budget is not aligned with public finance theory and lacks efficiency in some key areas.
• CESEE countries benefit significantly from cohesion and CAP spending, but both require reform in terms of targeting, implementation, and effectiveness.
• The 2018 MFF proposal is a step in the right direction but needs further clarity and stronger reforms to ensure the EU budget serves its intended purpose and supports European public goods effectively.

References

• The document references several studies and reports, including those by Alliance Environment, ECORYS, and the European Court of Auditors, highlighting the need for better evaluation and management of EU spending programs.