Cohesion Policy as a Function of the EU Budget. A Perspective from CEE Member States

A wiiw study by Mojmir Mrak, Sandor Richter and Tamás Szemlér analyses CEE expert opinions on the optimal size and targets of the EU budget.

The study analyses the key patterns of cohesion policy within the overall framework of the EU budget, viewed from the perspective of the new Member States of Central and Eastern Europe. It furthermore discusses alternative options for cohesion policy within the framework of the EU budget in the post-2020 period.

Within this study, an expert survey was undertaken among public officials involved in the implementation of cohesion policy and among academics from educational and research institutes dealing with the EU budget and/or cohesion policy.

The respondents were asked, among others, what would be, in their opinion, the optimal size of the EU budget; how they see the desirable proportions between main EU budget expenditure chapters cohesion, agriculture and competitiveness; what share of the expenditures from the EU budget should be devoted to real cross-member state redistribution and what would be the appropriate way to address excessive net financial positions of individual member states vis-à-vis the EU budget.

Majority of CEE experts sees the optimal EU budget within the existing framework

To the question ‘In your view, what would be the optimal size of the EU budget in terms of percentage share of EU GNI?’ altogether two thirds of the respondents imagine an optimal EU budget in the currently existing framework. 14% of the respondents were satisfied with roughly the current size of the EU budget amounting to 1% of the EU GNI. Close to one third of the respondents would like to have an EU budget which is larger than the 1% but would not surpass the current official upper limit of 1.24% of the EU GNI. One fifth of the respondents would support an EU budget between 1.25 and 1.5% of the EU GNI, a relatively small expansion from the current levels, which would however enable the financing of nearly all goals the Commission envisioned about a modernized, interconnected, socially inclusive and environment friendly Europe in the last decade. This stepped up redistribution would most probably not break into pieces the current framework of the EU budget yet, although the treatment of the net financial position of individual MS would become a highly critical issue.

More than one third of CEE experts would move towards a stronger EU fiscal competence

Altogether one third of the respondents have been favouring a resolute departure from the current state of affairs and moving towards a stronger fiscal competency of the European Union over the individual Member States. One quarter of the respondents opted for an EU budget size between 2 and 10% of the EU GNI, which indicates already a departure from the current practice and an adoption of new functions. These may range from a fiscal capacity to address business cycles in individual Member States, to adaption of selected (and limited) fiscal competencies, delegating them from the national budgets to the EU level. Finally, 10% of the respondents must have had a European federal state in mind, either with relatively limited tasks (from 10% to 20% of the EU GNI) to a highly centralised state from 33% to 50% European redistribution.

Cohesion and competitiveness enjoy significantly higher priority among CEE experts than agriculture

Replying to the question ‘What would be your proposed split between the main EU budget headings cohesion, agriculture and competitiveness under your optimal EU budget?’ CEE experts would like to see a position for agricultural expenditures by a third leaner than it is currently. Competitiveness should gain in importance; its share should practically be doubled. Cohesion expenditures also should gain importance, but the difference between the CEE expert consensus and the current situation was surprisingly small. This shows a clear preference of the CEE experts for increasing relevance of modernisation and European value added among the potential spending targets of the EU budget. This result is important, as competitiveness is not the expenditure position where CEE Member States gain the most from the EU budget; that segment is cohesion policy expenditures.

Conclusions

The analysis of the responses testifies that the new Member States’ administrative and academic experts, despite their strong and explicit interest in securing ample resources from cohesion policy funds for their countries, cannot be seen as a stumbling block in the way towards reforms for a modernised and more rule-based EU budget. The majority of NMS experts inquired in this survey is supporting a resolute shift towards increased EU budgetary support for projects with more European value added and stronger future orientation than today, coupled with a fair and transparent distribution of net financial positions. Implicitly this means that a move of the EU toward these targets will be far more determined by the outcome of multifaceted interest reconciliation among the ‘major players’ of the ‘old’ EU-15 than by the NMS.

 

The study Cohesion Policy as a Function of the EU Budget. A Perspective from CEE Member States was undertaken jointly by Mojmir Mrak from the Faculty of Economics at the University of Ljubljana, by Tamás Szemlér from the College of International Management and Business at the Budapest Business School and by wiiw Economist Sándor Richter. It is based upon research within the international research project GRINCOH, which was funded by the EU 7th Framework Programme under the grant agreement no. 290657.

 


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