10 november 2020
18:54
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In the final battle over the EU money, the European Parliament, in addition to linking subsidies to respect for the rule of law, also raised an extra 16 billion euros for future-oriented investments in health and innovation.
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Almost four months after ‘the historic EU top in July‘there is an agreement between the EU institutions on the final volume and the priorities of the European budget for the next seven years. Parliament also fought for guarantees that European citizens do not pay for the repayment of the new European recovery fund of 750 billion euros. Only Hungarian Prime Minister Viktor Orban and his Polish colleague can throw a spanner in the works.
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Johan Van Overtveldt (N-VA), who led the negotiations with the EU member states, emphasizes that parliament correct the impact on major programs. Resources for health will triple from just EUR 1.7 billion to EUR 5.1 billion. The Horizon program to help Europe make the digital and green transition will receive an extra EUR 4 billion.
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‘We raised 16 billion euros more for crucial programs where Europe has added value. Nobody expected that, ‘says Van Overtveldt. Yet the global envelope remains what it already was: EUR 1.074 billion for the next seven years. Most of the extra cents are fines collected by Europe, for example in competition cases. Normally that money flows back to the member states, now it is counted as European money.
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We raised EUR 16 billion more for crucial programs where Europe adds value. Nobody expected that.
Johan Van Overtveldt
Chief negotiator of the EU Parliament
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It has been ten weeks of tough negotiations. ‘We really had to fight for what we got. But we did this in the interest of the European citizen, in the short and long term, emphasizes the former Belgian Minister of Finance. “This shift is absolutely necessary for our growth, job creation and competitiveness.”
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Manufacturing funds
In addition to the budget for the next seven years, the European Parliament will have a say in the new European Recovery Fund. The European Parliament was given pledges for a binding calendar for proposing and voting on new European own resources – another word for European taxes. ‘These new own resources must guarantee the repayment of the debt of 750 billion euros without sacrificing the programs,’ emphasizes Van Overtveldt.
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Last week, the European Parliament already won an important asset: an agreement on a mechanism to financially punish countries that violate the principles of the rule of law and democracy. In July, EU leaders opted for a minimalist process that, above all, could only sanction if the Union’s financial interests were at stake. Parliament succeeded in broadening its focus to undermining the independence of the judiciary, tax fraud or curtailing civil liberties.
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In addition, a strict procedure has been established to determine whether a country is financially punished. The European Commission has six months to investigate whether shit is on the ball and propose a sanction. The EU countries decide by weighted majority, in principle within one month. However, the targeted country can step on the emergency brake and be given a three-month grace period from the penalty.
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Orbans veto
Hungarian Prime Minister Viktor Orban and his Polish colleague Mateusz Morawiecki have been vehemently opposed to linking EU subsidies to respect for the rule of law for months. The tightening up of the text last week is therefore not well received by them.
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Viktor Orban threatened in writing on Monday with a veto against both the European multi-year budget and the recovery fund. Orban can put sticks in the wheels perfectly. Before the Commission can raise the EUR 750 billion on the market, each national parliament must agree to the increase of the European own resources ceiling.
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But it is unclear whether Orban wants to keep this bluff poker to the end and frustrate all member states by denying it much-needed recovery money. There is also a lot at stake financially for Hungary and Poland. Hungary would receive EUR 6.25 billion from the European Recovery Fund, or more than 4% of GDP; Poland can count on 23 billion euros.
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I hope everyone understands the gravity of the situation and will help clear the way for the budget and the recovery package.
