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A forward-looking budget for Europe?

A forward-looking budget for Europe?

In early May, the European Commission (EC) presented its budget proposal for the period 2021-2027. Last Friday 29th of June, the European Free Alliance (EFA) organized a debate on the issue of the new budget proposal at the Representation of the European Commission in Barcelona. The debate was attended by the Secretary General of the Ministry of the Vice-presidency and of the Economy and Finance, Albert Castellanos; the European Commission representative in Barcelona, Ferran Tarradellas —who presented the proposal— and the MEPs Isabelle Thomas and Jordi Solé.

During his speech, Albert Castellanos, who participated on behalf of the Catalan government, said that the preparation of the budget came at a moment of “certain fragility” of the European project. “Britain's imminent departure from the European Union does not only mean a considerable loss of resources for European coffers but also a retreat from this house of cards that is today the European Union of states”, he declared. Castellanos also stated that the rebuilding of balances after Brexit adds to the two challenges that the EU faced in this period: the response to the financial and economic crisis and the management of refugees. “Two challenges to which the EC failed to respond properly and turned to weaken the credibility of the European project”, he said.

Amount of budget: 1.1% of GDP

As regards the main figures of the European budget, Albert Castellanos considered that the overall amount “doesn’t generate too much enthusiasm”, as it stagnates in relative terms (1.1% of GDP) and loses resources in absolute ones as a result of Brexit. However, he added that “good news arises from EU own resources”, now that the European budget opens the door to gradually assuming the partial tax collection due to corporate incomes, to emission rights trade and to non-recyclable plastics production. Castellanos defined this setting as “a significant step towards the right direction”, saying however that it remained still “far away” from the recommendations formulated in the Monti Report on EU own resources”. As long as the EC doesn’t collect large tax figures such as Corporate Income Tax or Value Added Tax, he asserted, “it will hardly have sufficient political power and autonomy to develop its own policies without being subject to Member States’ veto”.

On the resources allocation, Castellanos pointed to both improvements and setbacks. In the chapter of improvements, he mentioned the bet on a Smarter Europe, with a 50% increase of R&D resources and the setting up of a digitization fund, “insufficient yet, but a necessary signal”. He also welcomed the doubling of the Erasmus program budget, “one of the most successful instruments promoting academic and work mobility”. In this respect, he added that “conditioning funding allowance to the observance of rule of law would also be great news and a significant improvement, even though recently we’ve heard too often that Catalan fundamental rights violation was just a matter of “domestic policy”.

Diminution of cohesion policy resources

As for the setbacks, the Secretary General regretted the Cohesion policy diminution of resources (7%). “It will inevitably lessen the scope of a policy which not only aims at reaching an ever greater European convergence but also at empowering regions.  I firmly believe that the European project will only find its salvation through a better and deeper application of the subsidiarity principle, which is the only way for the EU to answer properly to the diversity of challenges it currently faces”, he said. “Reducing cohesion policy’s budget is definitely a poor decision”, insisted, adding that “the proposal of linking cohesion policy to the implementation of European semester’s recommendations reminds us bad memories”. “With our 4 Motors for Europe partners, Catalonia has already clearly rejected the macroeconomic conditionality proposal. Indeed, all we would need is a penalty (fewer structural funding) for being part of a non-compliant state while as a Region we do our best to meet the deficit target!” he stated.

Albert Castellanos also spoke of the criteria ruling the repartition of European funds, mentioning “two worrisome features”. “First, it seems that funding distribution won’t be supervised nor validated by the European Parliament. Since these funds come from EU resources, the EP should at least have a say on it. Moreover, such proceedings could lead us closer to a two tier EU”, he said. But perhaps, he declared, the worst news is that funds aimed at security and border control will grow way more than those directed towards foreign policy and development cooperation. “Even leaving aside moral considerations, does anyone think that Europe could become a politically sound project putting emphasis on border surveillance instead of providing a solid and homogeneous foreign and diplomatic action? We are all aware that this last option isn’t the easiest one to take, but if we don’t try, it will simply be impossible”, he said.

Budget allowance criteria

Regarding the implementation of the budget, Albert Castellanos focused on the fact that “sometimes budget allowance criteria are way more important than its global amount or its thematic orientation”. On this matter, he made three observations. First, on accountability: “It is surprising that despite European bureaucracy’s weakening, we haven’t managed yet to ensure a responsible use of European funds. A few days ago the European Court of Auditors presented a very critical report on the resources invested in the high-speed train, underlining its poor return on investment. The introduction by the EC of spending principles to adopt a new budget is thus a wise decision. But until nobody bears the consequences of European public resources misuse, there won’t be any guarantee that these practices won’t happen again”, he explained. 

Secondly, he was in favour of matching the Multiannual Financial Framework (7 years) to MEPs mandate (5 years), “since this mismatch allows political representatives to reject any accountability in the case of public funds misuse”. And lastly, in the chapter of execution, Castellanos mentioned the efforts that should be made to adapt the instruments to the proposed political objectives: “Thanks to my recent political experience, it appears clear to me that the ERDF —European Regional Development Fund— suits very well for financing infrastructure, but not as well to fund research and innovation policies. As just as the European Strategic Investment Fund (Juncker Plan) has failed to demonstrate its added value since it has financed projects that wouldn’t have been carried out without its contribution. Don’t you feel like we should be more pragmatic and outspoken when it comes to considering what's really possible?” he said.

The Secretary General stated that through this budget proposal “the Commission responds with a too weak voice comparing to the magnitude of the challenges posed by the future”, adding that the credibility and sustainability of the European project “calls for more ambitious bets”. “Although it may seem paradoxical, these bets will only be possible if we are able to generate a more lively debate in those areas where the member states have less influence”, he said.

Economic impact on Catalonia

Concerning the impact of this budget proposal on Catalonia, Albert Castellanos stated that “Catalonia never looked at Brussels from a selfish perspective but from a sincere desire to bring added-value and to be heard”. This explains, he said, that “despite the recent disappointments and a clearly unfavorable fiscal balance” —Catalonia has contributed almost €1,7 billion more than it has received, and only Sweden and Holland have experienced such a negative balance — Europeanism in Catalonia has mainly turned into Eurocriticism, but not into Euroscepticism”. “That’s probably because we know that we need to build ‘another Europe’, to find another way to affirm our belonging to European democracies, even though some turned to be inconspicuous than we would have liked to when fundamental rights were denied at their home doors. We hope to give teeth to the warm words of Jacques Delors when he said that the European project usually comes out stronger after a crisis”, he added.