Hard decisions ahead in EU budget talks: What spending should the bloc prioritise? • FRANCE 24

Hard decisions ahead in EU budget talks: What spending should the bloc prioritise? • FRANCE 24

[Music] Hello, you’re watching Talking Europe. Tough choices ahead for the EU as it molds its next long-term budget. The current one expires in two years, but the EU Commission, Parliament, and member states are already working on their respective positions. Now, in policy wonk terms, the budget is known as the multifinancial framework or MF, and it sets the maximum level of spending. In the current period, 2021 to 27. That works out to an average of 173 billion per year. Within the overall amount, money is earmarked for specific areas such as cohesion and resilience, the single market, the environment, migration and border management and so on. To discuss the dilemas in the upcoming EU budget negotiations, I’m joined by two MEPs. Rasmos Nordst is a Danish Green politician and he’s the Greens EFA group shadow raort for the Parliament’s initiative report on the MFF. Welcome to you. Thank you. also joined by uh German Conservative uh MEP Nicholas Herst who’s the raorter for the EU budget 2025 and he’s also the chair of the committee on budgetary control here. Welcome to you as well. Thank you for having me Nicholas H. Maybe you can just set out for our viewers where we are in this whole process now in the process of the next multi-annual financial framework. We are just at the start. I think uh on July 7th the commission will come up with it uh its first uh draft and uh last time we it took about two and a half years for the whole process. So we are just at the start but of course we hear a lot of rumors uh a lot of you know things are happening we see leaks we we hear a lot we have our own initiative report as a parliament so we have our own um uh position on that so we’re at the start but uh already working on on it for quite a quite a time now and Rasmus Nordquist from what you’ve seen so far or what you’ve heard about what the European Commission and what the European Council wants to do are there any particular areas of concern or worry for you. I mean, we we we hear a lot and then we see leaks and leaks of course never happen out of out of nothing. There’s a lot of talk of a new structure and and uh it’s always good to look into how can we do things better but of course I mean sitting in this house we also need to have the right parliamentarian scrutiny over the budget uh and control with it. So, so, so there’s a bit uh of of of worry about what what they come up with with this idea about one program per country and stuff like that. But, but overall, I think there is a need of of being able to look at it with fresh eyes also because we have challenges ahead of us as we see it. And the uh we’ll get to the challenges, but um the parliament actually has a crucial role, doesn’t it? Because it has to approve the MFF when it’s finally agreed. That’s true. uh we are the co-lead on budgetary affairs and we take great pride in that and we want to defend that and of course we have to agree to the new multi-en financial framework for the next seven years and these seven years are also a problem because uh one of the ideas uh by the commission seems to be that we have more flexibility we agree on that from in the annual budget but you know it’s very tricky to organize that and we are very keen uh and I mean I’m I’m the chair of the budgetary control committee scrutiny transparency and accountability is extremely important and we as a parliament we will defend our role and of course on flexibility this is all linked to the commission wanting the EU to spend this 800 billion e on defense if it can does that mean sacrificing other things uh how do you see all that working out not as I see it because also I mean the what we’re talking about the long-term budget it’s from 28 and onwards and the investments in defense need to be done here now that’s also why rearm is is not inside the the long-term budget, it’s outside of it. Um, but it’s clearly that there is a priorities and the flexibility is needed. We also learned that in the last years. I mean, with COVID first and then Russians invasion in in Ukraine, that has demand, the flexibility that we are not used to because it’s also a good tool to be able to long-term plan. But of course, this flexibility that we’ve all of a sudden learned we need to have, I think, is a priority from all all of us. Yeah. And of course, flexibility is reflected in the 2025 budget which you negotiated, Nicholas Heb, which included some budget increases to deal with uh unforeseen situations, didn’t you? Yes, we did. Uh but it’s tough work. Uh because we don’t have the real flexibility. Uh a lot of money is earmarked as you said. Yeah. And we always have to negotiate with 27 member states who have quite different financial situations, quite different approaches towards the annual budget. And uh that’s tough work. And if the commission says we need to have more flexibility in the up in the future in the upcoming annual budgets in the new multi-annual financial framework, that’s fine, but uh everything else needs to be discussed and and we need to really distinguish all the things. For example, you mentioned the rear arm project is 800 billion euros sounds a lot but six but that’s what what’s happening right now. It’s 650 billions just you know that should be mobilized with private equity. It’s 150 billion uh that uh we are most likely will take up as loans uh as as deps by the European Commission and giving loans to member states. So that’s something totally different. We need to distinguish that. The next MF is something different. Sure. But there is a big issue which is hanging over the the next MFF not the current one which is repayment of these next generation EU loans. So in other words the co debt debt is really a crucial word I think in this whole discussion and uh those pro those loans are up for repayment from 2028 and the borrowing costs have been going up. I mean it is money that’s gone into investments and and and therefore it’s it has been a good thing to do. This is about how are we then going to repay this and that’s why the whole discussion about the size of the budget is important because if we just took it out as the budget is right now just over 1% I mean it would be huge yes but that we need to look into first of all is the new borrowing being done like for for defense do we need to go into see a larger contribute from from member states or do we need to look more into own resources we need of course a a larger budget when we have a big chunk of money that’s going to go into repayment of old debt and then we’re going to look into the investment needed. It’s going to be a huge problem. It will take up to 20% of the future budget to repay those debts. So if we continue like today we have 20% less for future investments for irrasmos for uh research development and everything else. It is a problem. So uh I would you know I would you know put up a warning sign for everybody who says well depth is not a problem. It is a problem for us in the very near future and we will have to deal with it and this is strong dilemma. You want to respond to that particular point? We’re getting more into debt. Of course, we need to to always be aware of how do we take up death and what do we use them for. But it’s quite important to also see that we need investments up front sometimes and that’s where death comes in and can be be a very good solution. But then of course the budget need to be geared for also doing the repayments afterwards and and that’s where we look into that that that there is the question of the size of the budget. But but I mean depth is not bad. It’s about how do we use it? How do we do the the upfront investment sometimes needed in order to actually fulfill things we want to fulfill also investment in competition in in in our uh research in in Arasmus and so forth. Sometimes there needs an investment. That is true if I may respond. But then we also have to take a look at how did we spend the money and in next generation Europe the uh pandemic uh response as you said correctly um the core of it is a recovery and resilient facility as we call it. Yeah. Money going to the member states. Yeah. Almost 700 billion going to the member states. And in the budgetary control committee, we took a close look how was this money really spent and we have to say we don’t really know the final beneficiaries. Uh EPO the European prosecutor’s office opened a lot of cases for misuse and fraud. Uh the European Court of Auditors says it’s a big mess to control. And this is important because the commission obviously has the idea to take the RF as a role model for the next multi-annual financial framework for the future. So have to you know a current RF so to speak and I’m really against that and I’m glad that also the budget committee just recently uh agreed that the RF is not a role model is not a blueprint for the next MFF. Yeah I have to say on France 24 we did a report a while back in Bulgaria and even ministers admitted that there was quite a bit of unused money from this recovery and resilience facility. So if the commission goes on along this the same kind of thinking as your colleague is saying that’s going to perhaps create some more problems. It is indeed and that’s also why in in the position from parliament we’ve been quite clear right now that we don’t see this as a solution. This is also about learning about what we’re doing when we’re doing new things as it was the the the next generation EU. I mean we have to learn from this and have to say okay how can we take the good things from it? How can we actually also do things much better than we did? I mean for me uh to make mistakes is not always the biggest problem but we have to learn from them and that’s perhaps the issue here. One other final point which I think is important. The European Commission has proposed direct uh proposed directing a portion of the central budget funds um towards defense spending through using cohesion funds. Is that also setting a dangerous precedent where perhaps people who need the cohesion money might be uh might be left uh kind of out in the cold? That is dangerous but it’s necessary in these days. Uh and this is obviously especially important for the central eastern European member states. Um and I mean of course cohesion will be important in the future and we want to preserve cohesion policy. we don’t want to you know see coion policy vanishing in some uh you know competitiveness fund or whatever idea there might be in the commission. Uh but on the other hand I mean um it’s very important right now for the Baltics for Poland and other countries also for the Nordics uh to have uh sufficient funds for for defense that is the most important issue right now. Are you concerned about what’s going to happen to cohesion because a lot of it has to do with things like green transition helping with electricity bills for poorer people and so on. I think I think it’s it’s very problematic what what is proposed because we have to look into security as well. There’s a lot of things that makes up for our security in Europe. One thing is of course the defense that’s working that collaborate among the member states. But security and and and uh a strong unit is also about the cohesion. It’s about social issues. It’s about green transition. It’s about uh climate adaptation. It’s all these things as well. and and we shouldn’t forget about that when we’re doing a budget that actually also we need to have a good balance in Europe too large an inequality that’s not good for security that’s not good for stability it’s not good for businesses and as well the the green transition I mean if we don’t do the right climate adaptation in Europe we’re standing with a huge problem we saw it last year with all the floods with the fires with with all the problems so there is investment needed in a numbers of areas and to just start and and and shift around money as as as we see that that is highly problematic. We’ll have to end it there. Thank you so much to both of you for this discussion. Nicholas Herbst and Rasmus Nordquest. Thanks for watching us here on Talking Europe. [Music]

The EU faces long and likely tortuous negotiations on its next big budget, as the current one runs out in 2027. Many say the bloc shouldn’t have to choose between funding defence – the current big priority – and financing the green transition, the welfare state, development aid and so on. But even if these different areas are equally important, the reality is that there are tough choices ahead for the EU, as political factions emphasise their own priorities and member states defend their national interests.
#EU #budget #MFF

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