On 22nd January 2020, Commissioner Johannes Hahn, responsible for the EU budget, for the first time addressed the European Parliament’s Budget Committee in his new role. The Austrian Commissioner and the MEPs agreed: the EU needs a strong Multiannual Financial Framework from to 2021, to enable it to fulfil its new and ambitious targets.
During his first official appearance before the EU Parliament’s Budget Committee, Johannes Hahn pointed out that his words from the Hearing on 3rd October 2019 would still apply: in view of Brexit and the priorities defined by the Commission, the EU would need a strong Multiannual Financial Framework (MFF) for the period 2021-2027. These targets could not be fulfilled with a budget that was lower than proposed by the Commission.
Johannes Hahn named the policy areas competitiveness, digital issues, migration, security, research and innovation, as well as the Green Deal for Europe as the new Commission’s targets and priorities. The latter had been submitted by the Commission a few days after the start of its work period; in January 2020 it had proposed the Mechanism for a Just Transition. Part of this mechanism is a Just Transition Fund, which is to support those regions, which would find it difficult to cope with the special challenges of the target to achieve a climate-neutral continent by 2050. The proposal of the Commission includes 7.5 billion in new funds, which have to be found in addition within the scope of the MFF.
Hahn also emphasised the significance of EU equity capital, hence, money, which flows directly into the EU budget and which does not come from the budgets of the Member States. The negotiations on a plastic tax as well as the expansion of the Emissions Trading System (EU ETS) had already made great progress. However, his reply to the question asked by MEPs what additional equity the Council had to discuss, remained vague. Brussels is currently discussing a Carbon Border Adjustment Tax, which includes stricter requirements compared to other continents; the Commission has announced a relevant bill for 2021.
Hahn didn’t mince his words regarding the proposal discussed within the Council, according to which the EU shall save 2 billion administration costs: the administration costs have been set at 75 billion; hence 6.7 % of the budgets. This percentage was very efficient compared to what Member States or companies would spend on their administration. “Show me one company whose administration costs are as low”, said Hahn.
Hahn appealed to the Member States to properly communicate the issue of funds for the EU to its citizens. He called it “ridiculous” that the Council on the one hand decides to expand Frontex, the European Border and Coast Guard Agency by additional 10,000 staff, only to propose cutting the funds by 30 % six months later.
Hardened fronts in the Council
Ever since the Commission submitted the proposal on the MFF in 2018, the Member States have been quarrelling about its level of funding. Whilst the Commission proposes 1.1 % of the Gross Domestic Product (GDP), Austria with Germany, the Netherlands, Denmark and Sweden is among those five states that demand a reduction of the budgets to exactly 1 %. Many other states are in favour of a significantly more extensive MFR, and the European Parliament in its report demands 1.3 %. In December 2019, the Finnish Presidency had unsuccessfully submitted a compromise of 1.067 % of the GNI. According to this, the conclusions of the EU Council from 13th December 2019 only stated the intention to continue the MFF negotiations. Commissioner Hahn too called this compromise insufficient.
Due to the deadlocked negotiations Council President Charles Michel has called a special summit of the heads of state and government for 20th February 202. In his invitation, he expects all states to show a willingness to compromise in order to reach agreement. Any further delays would mean that the EU runs the risk that that funding the current programmes would be jeopardized.