September issue of the Czech Journal of International Relations is out!

6. 9. 2018

A brief look at the European Budget and its role in the EU integration

When economic problems flourish, they highlight any other already existing inner or outer problems of a country. In our current times, those problems damaged the EU cohesion and created some uncertainty among the member States. Do we have any solution?

Inner populisms and nationalisms are the current enemies of the EU. According to La Vanguardia, a Spanish newspaper, Hungary, Italy and Poland, among others, are the countries with the biggest number of votes for Eurosceptic parties.

These facts, quite notorious in the media with declarations such as Victor Orban’s, or the Italian rejection of an adrift ship of immigrants, make European further cohesion to seem more as an utopia rather than a reality. Those states are criticizing many European policies, especially the way the EU is dealing with the refugee crisis, shows an era where the belief of the Union is strongly questioned, while opinions of the EU members are strongly divided, while extreme movements are gaining adepts.

This scenario may seem optimistic for those international actors who want a weak but not completely decrepit EU, who is not able to interfere in the international agenda. Although many international scholars’ negativity, only the Brexit damaged the EU, while the critic parties in the Old Continent aside of words, they haven’t taken any real action of abandoning the European Union.

In this brief article I want to analyse the tools the EU had since its creation to face the separatist struggle. The Structural funds and the Cohesion funds were designed to implement the regional policy in order to palliate differences between richest and poorest regions and achieve a deeper integration. In times of financial crisis, they can be seen as a safety system against the risks of the rise of antiEU public opinion, since they are used as an economic incentive for being part of the European Union .
Those funds are mainly financed by custom duties on imports and levies on VAT and Gross National Income, fact which provoked some complaints from countries that were supposed to pay more than others, such us Sweden, Germany, Denmark, and obviously UK. Recent consequences can be observed in form of the Brexit, where the deficit with EU was used as one of the major arguments for leaving the Union.

Aids from these funds arrive in the form of agricultural subventions, aids to develop or to improve industry of less developed regions, funds for renewable energies, or academic exchanges such as the Erasmus program.

In the graphic below we can observe how the most Eurosceptic countries except Italy, are the ones who receive the biggest amount of EU funds in relation to their Gross Domestic Income, with European Commission data.

Source: own creation with European Comission data

In this other graphic we can observe the percentage of population who doesn’t feel attached to the European Union, according to European Public Opinion survey.

Source: own creation with European Comission data

It’s interesting to compare both graphics, although a precise analyse of the effect of the Cohesion policies would require a deeper study, at a first glance, we can observe that Italy, a country which an increasing deficit with EU, has suffered a notorious increase of population who doesn’t feel attached to the European Union. This fact and the migration pressure the country suffers since a long time, intensified the scepticism to Brussels.

On the other hand, we can find Poland, Hungary and the Czech Republic, countries which receive significant funds from the EU, but their governments openly declare themselves as Eurosceptics. Despite that fact and observing the charts, we can notice that especially in the Polish and Hungarian case, the population feeling is being more attached to Europe, which strengthen the point of many experts who perceive the Euroscepticism of those countries just as a threat to gain more representative power in the Union, while they gain economic advantages and allow them to approach to the most developed European states.

To sum up, we can find the Greek case, a country with constant surplus in financial aid, but also a high amount of population disappointed with EU, yet it’s slightly decreasing. This situation is the result of the deep financial crisis and also one of the countries which played a major role in the refugee crisis.

It is clear that the EU has to adapt to the new situation and face the facts in order to survive. The way of solving this problems will determine the future of the Union and its role as international actor. While some countries request a deeper union to face in a better way future issues, there’s also the fact of national sovereignty, mainly raised by some nationalist groups afraid of losing control of their country which can be a difficulty for a Fiscal Union, defended by France and Spain.

The Cohesion and Structural funds are playing an important role in redistribution of wealth and integration, that’s the main reason why the recently approved European Budget 2021-2027 reduces the agricultural and development aids in benefit of border control policy, youth programs and digital transformation. Some of the youth programs have their budget doubled while a new ones are created, which shows the intentions of the EU to bet for the new generations.

About the author: Kamil Zarzycki is a student of Economics at the University of Balearic Islands. He has a huge interest for International and European Economics. He was a Research Assistant Intern at the IIR.

Further reading on the topic in our library:

GÓRSKI, Grzegorz - Changes in the design of the EU budget after Brexit, the new financial outlook for 2021-2027 and consequences for local self-government - https://goo.gl/zkKhFW

HAGEMANN, Sara - Money and power - https://goo.gl/Xi4SCh

BUTI, Marco - Towards a European Budgetary System - https://goo.gl/9U6BwS

 

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