National states lose power: Ursula von der Leyen initiates radical EU reform
Ursula von der Leyen will härtere Bedingungen für Zahlungen an Mitgliedsstaaten, mehr Zentralismus und mehr Spielraum für Militärausgaben.
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Ursula von der Leyen wants tougher conditions for payments to member states, more centralism and more leeway for military spending.
Penalties for non-EU-compliant behavior, such as those recently imposed on Hungary and Poland, are likely to become more frequent in the future. The President of the EU Commission, Ursula von der Leyen, wants to restructure the EU budget in order to be able to impose stricter conditions on the member states for the disbursement of EU funds. The plan amounts to greater centralization. Von der Leyen wants to “push member states to implement key economic reforms if they want access to the EU's €1.2 trillion pot of money for seven years”, reports the American magazine Politico. The magazine, which has seen the plan in question, writes that the states will have to overcome “increasing hurdles” to get their money in the next budget. The years in question are from 2028 to 2034.
The big idea, according to Politico, is that Brussels will impose “far stricter conditions than in previous budgets”. To this end, around 530 programs that currently exist for each EU country are to be combined into a single national pot of money, from which all spending from agricultural subsidies to social housing is to be made. The biggest change to the current rules is that countries will only receive the money if they implement the reforms demanded by Brussels. These reforms are usually implemented as austerity programs. Politico: “Overall, this model marks a dramatic departure from the EU's current practice of funding local regions or national governments with fewer conditions.” The conditions should include values such as gender equality or organic farming.
The regions that will no longer be supplied directly, but via the national route, are particularly affected. In a petition, 134 regions are opposing the plans. There is also some unrest in the EU Parliament. As Euractiv reports, MEPs want to question Raffaele Fitto, the candidate for Executive Vice-President of the EU Commission for Cohesion and Reform responsible for the reform, about the plans. Fitto had already sought similar centralization in Italy.
The master plan recently presented by former ECB President Mario Draghi, which according to Politico is the basis for the structural change, stipulates that the EU must become a stronger player on the financial markets in future. The EU is facing considerable new costs, which are to be financed through joint debt. According to Politico, the Commission's document indicates “that Ukraine's accession to the EU and the gradual repayment of more than 300 billion euros in debt after Covid” will require a reorganization of EU finances. The EU wants to set new priorities, including defense spending and the development of pan-European industrial champions.
According to Politico, “there are persistent fears that the Commission's budget restructuring is a diversionary tactic to cut existing programs and divert money to new priorities such as defense and industrial development”. For example, the Commission's budget framework proposes merging a dozen different pots of money for research, defense and innovation into a single “European Competitiveness Fund”.
Critics accuse von der Leyen of wanting to take on an excessive role in the distribution of money by the EU to the detriment of local authorities and other Commission departments.
In an “indication of centralization”, the document provides for an ad hoc steering group to handle the budget process, according to Politico. This group is to be made up of von der Leyen, the budget department and the General Secretariat, which is under the direct authority of the President. Vice Presidents and other departments can be involved as mere “guests”.
Von der Leyen has instructed the new EU Budget Commissioner Piotr Serafin to “develop a plan for each country that links important reforms with investments”.
German Finance Minister Christian Lindner (FDP) has expressed his openness in principle to a reorientation of the EU budget. “We need an EU budget that finances the future and not just preserves structures,” Lindner said on Monday in Luxembourg at a meeting of finance ministers from the eurozone countries, according to AFP. One of the conditions he set was a reduction in debt.
The payment obligations from the EU's multi-billion euro coronavirus aid fund must continue to be taken into account, Lindner emphasized. It was also “important to Germany that our national contributions remain calculable”.