The
year 2014 is a year in which the economic crisis already lasts for more than
half a decade. Many middle and lower-class people in the European Union go
through severe economic hardship, due to lower wages, lower unemployment benefits
and other personal subsidies, strongly elevated tax-levels, ubiquitous mass
lay-offs and structurally high unemployment.
The
large banks on the other hand, as well as the investors and speculators at the
stock exchanges, see their profits multiply. This is caused by the ample
availability of virtually free funding money from the central banks and – as a
side-effect – the soaring stock prices, as a consequence of the extremely low
interest rates and the generous lending capacity of the European Central Bank.
Consequently,
a division emerges within the society: between the lower and middle class
experiencing hard, economic times and the upper classes, having nothing to
worry about in the world. This increasing division in society leads to an
atmosphere of anger, mounting nationalism of a nasty kind, envy and despair
among the lowest classes. This is an atmosphere, in which people start looking
for someone or something to blame.
Almost
everybody’s favorite scapegoat at this very moment is the European Union – as an
utterly bureaucratic, technocratic and undemocratic institution, which is even “disconnected from reality” to the eyes of
many people.
Especially
during the last month, when
the EU dared to ask for additional contributions from the United Kingdom, Italy
and The Netherlands – based on their better than anticipated economic
growth figures – the qualifications
varied from ‘bad timing’ to reactions like ‘who are this bunch of darn idiots.
Are they from outer space?’
The
leading politicians of The Netherlands and the United Kingdom did their share
of jawboning and spinning against this decision of the European Union, but–
like I already predicted in the aforementioned article – paid their dues after all
(… admitting this really softly to those who did listen)
Few
commentators in the leading – often increasingly populist and nationalist – newspapers
had the guts to acknowledge that the EU was fully entitled to ask this money.
And even fewer newspapers acknowledge that the
EU is not a ’slot machine, which pays out more price money to all its
member-states than these countries have thrown in originally’. Europe
is a simple zero sum game: if one country claims more money than it has paid in
contributions, other countries have to pay extra contributions for that country,
whether they like it or not.
From
an older article of mine:
Every politician – and as a
matter of fact every European citizen – should ask himself in what kind of
Europe he wants himself and his children to live.
Does he want to live in a
“Europe-as-a-slot machine”? A Europe, where solidarity means that one claims as
much European subsidies and structure funds as he can, in order to make Europe
profitable for him and his country?! Or does he want to live in a narrowminded
“Europe-as-an-economic-market”, where the benefits of the union stop at the
lock of his national treasure chest?!
Does he perhaps want to live
in a Europe where all borders are closed again and where everybody is
retreating behind their white picket fences?! A Europe of mistrust, anger and
envy against the people with whom we share our lives and our European
continent?!
Or does he wants to live in
a Europe, in which 28 (or more) countries live together in relative peace,
cooperation and prosperity. An increasingly democratic Europe in which
countries help each other and in which problems are solved: very slowly, but
surely. And a Europe with sensible leaders of whom people can be reasonably
proud, because they represent us all quite good.
This
weekend, the Cabinet Chief of the European Court of Auditors, Gaston Moonen,
has written an excellent Op-Ed in the Volkskrant about this very topic.
In this
article, he argues that the European Union must have the ability to collect its
own funding, in order to become financially independent and treat its member
states in a more balanced way. This is something that I fully agree with.
Here
are the pertinent snips of this must-read article:
Discussions about EU funding
became a regular phenomenon in the Brussels-based political circus. Every year
Brussels lacks a part of its funding and the payment obligations mount, without
the necessary funds being in place.
How serious this problem has
become in the meantime, becomes clear from the latest annual report that the
European Court of Auditors published.
As a matter of fact, the EU does
have a deficit, which is disguised behind the name ‘Reste à Liquider’ (i.e. ‘outstanding
amount’), even though the EU is not allowed to have a deficit in its annual
budget after all. In other words: the EU is not allowed to spend more money
than it earns. And borrowing on the capital markets, on behalf of its own
budget, is a no-go area for the EU.
Yet, future obligations must
be made by the EU, and for these obligations sufficient funding is not available
nowadays. In the longer run, this leads to
forwarding current financial obligations to the future, thus only increasing
the void between financial obligations and funding. At the end of 2013, this ‘reste
à liquider’ amount on the EU balance sheet mounted to €322 billion; more than
twice the amount of the annual EU-budget.
On top of that,
the EU-budget acts also as a warrant for some EU lending programs, established
to fight the crisis (consolidated these warrants
amount to nearly €60 billion).
The
EU Court of Auditors is worried, by the mounting risk that the EU could not
meet its future obligations. Besides that, postponement of payment obligations
could lead to reputational damage and it could have consequences for the
effectivity of EU funded projects.
In the eve of each EU multi year program, all the member states fight
fierce battles in order to collect as much money as possible for their own projects.
Subsequently, when the member states’ annual EU bill is due during the
settlement of the EU budgets, many member states try on the other hand to set
these EU budgets as low as possible, in order to minimize their national EU
payments.
This results in: mounting future obligations, as well as distrust and
disappointment among EU citizens, regarding this troublesome decision-making,
in which discussions about the net-receipts from the EU or payer’s positions rule.
Multi-year after-taxes instated by the European Commission, which are based on
agreements made by the member states, put oil upon the flames.
The core problem is the financing of the EU. As long as member states have to pay the large majority of the EU money from their own budgets, the annual catfight about ‘who has to pay what’ won’t change. And it might even worsen, in times of economic crisis. In the future, the financing of the EU should come from sources, which are independent from the budgets of the 28 member states.
The core problem is the financing of the EU. As long as member states have to pay the large majority of the EU money from their own budgets, the annual catfight about ‘who has to pay what’ won’t change. And it might even worsen, in times of economic crisis. In the future, the financing of the EU should come from sources, which are independent from the budgets of the 28 member states.
In the remainder of the article, Moonen argues that the
European Council (the most important institution within the EU, having the
government leaders as members) has torpedoed such plans to establish
independent sources of EU funding, for the simple reason of ‘being not ready
for it yet’.
That makes sense in these increasingly nationalist
times, in which the European Union is blamed for much that is wrong in Europe, but
it is a shame indeed.
I do believe that a more independent EU, with fully independent
funding, could be a catalyst for more sensible and less ‘envious' spending of
EU money (see first red and bold paragraph). The scarce EU money
should be put to work where it is needed most and not for building bridges to
nowhere, which are developed for the simple reason that individual member
states don’t want other countries to get ‘their’ share of the EU money (see third red and bold paragraph).
Making the EU funding independent from the member
states, could put an end to the EU being the ‘slot machine for the European
countries’. And perhaps it could even put an end to the squanderous removals from
Brussels to Strassbourg and vice versa.
Exactly this habit within the EU, in combination with
the continuing stories about Members of European Parliament, who sign their presence
forms in order to earn their presence fees and leave immediately afterwards,
give the European Union such a bad name among many hardworking and law-obiding
citizens (see second red and bold paragraph).
When the European Union would not be so dependent on
France, Germany, the United Kingdom and Italy for its contributions, it could
become easier for the European Commission to ignore the French, German, British
and Italian egoes, if necessary. In my opinion, this would make the EU more the
union for all European citizens; not only for the ones from the largest
countries.
Yet, it will be a longshot to establish such
independent funding. Many citizens and many government leaders within the
European Union feel that their interests are served best, by a European Union
which is tightly at the leash of the European Council. EU contributions coming out
of the national budgets, while being scrutinized by the European Council, form such
a tight leash.
In my humble opinion this is a grave mistake, but
nevertheless one that we have to live with. Yet, I am glad that Casper Moonen
took the time to express his – currently not very popular, but yet very
important – point of view.