Emmanuel De Groof and Meritxell Sayós Monràs, ECDPM blog, 27 April 2018.
Increasing the impact of EU external spending is high on the agenda. Commission President Juncker and High Representative/Vice President Mogherini have several reasons to push for a coherent yet flexible EU external action after 2020, when the next Multiannual Financial Framework (MFF) starts.
Across the globe, doing justice to the 2030 Agenda for sustainable development remains a considerable challenge, but other political priorities are increasingly framing EU spending. In the east, the EU deals with an increasingly assertive Russia. In the south, it is confronted to heightened tensions in the Middle East and to at least one conflict-affected state, Libya, in North Africa. In the west, the EU loses a significant diplomatic and developmental actor, the UK, and entertains a more fragile relation with the US administration. This is a good recipe for unforeseen events.
It remains a truism that sustainable development, migration, peace and security, economic transformation, and resilient institutions influence each other. Against this backdrop, the European Commission will propose “an increase of the current volume of financing for external instruments beyond €100 billion” despite Brexit, as well as the creation of a broad external instrument for the post-2020 budget, supposed to make European external action, neighbourhood policy and development cooperation more responsive and effective.
The proposed instrument would integrate no less than twelve external financing instruments (EFIs) and programmes (as announced in the annex to a recent letter by Juncker and EU budget Commissioner Oettinger) whereas some EFIs would not be integrated. It could cover approximately €85 billion – if one adds up the budget lines of the current EFIs, including the European Neighbourhood Instrument (ENI) and the off-budget European Development Fund (EDF), and allows moderate growth.
Crucially, according to the letter mentioned above, the external instrument might include a cross-cutting reserve of maximum 20% (but probably more likely between 10%-15%) for reacting to unexpected events and steering new initiatives. This reserve could still account for more than €10 billion.
Will the Commission’s proposal fly? There is one set of issues which, if left unaddressed, will make the proposal moribund from day one. Such macro-issues are already being fervently discussed in the corridors in Brussels and beyond. Let’s mention just two of them.
Can the Commission reassure those member states that care about how separate instruments (notably the €30,5 billion EDF and the €15,4 billion ENI) give political visibility – and, in their mind, better financial protection – to their policy priorities in the European Neighbourhood and Africa? And how should these concerns be seen against the larger dynamics and inevitable tradeoffs in the negotiations about the next MFF acknowledging that “budgets are not bookkeeping exercises – they are about priorities and ambition” (European Commission communication)?
Both questions reflect a crude political reality: inevitably, negotiating parties will try to preserve their chasses gardées, meaning their current, sometimes hard-fought-for geographic and thematic achievements. This relates, for instance, to the European Neighbourhood, Africa, least developed countries, development and climate. While pointing at new priorities here and there, the constituencies in Brussels and in the European capitals will compare the Commission’s proposal with the benefits and visibility of existing external financial instruments. Unavoidably, though, the political viability of this instrument depends on all stakeholders being comforted about ‘their baby’ being somehow preserved. There are two risks inherent to this approach.
Preserving either the European Neighbourhood Instrument or the European Development Fund outside the external instrument quickly undermines the logic of consolidation. On the other hand, with too much ringfencing within this instrument, you could also wonder to what extent negotiating parties are on track in delivering a simpler, more effective and priority-oriented external financing. Such an attitude could generate the replication of some overlaps, gaps and rigidities of current EFIs.
A discussion between influential member states will be decisive here. The depth and liveliness of this debate, in turn, depends on priorities and dynamics internal to each member state. Are foreign and finance Ministries on the same page? And with which level of energy are delegates expected to defend an internally reached consensus?
Then there is a set of other issues, seemingly more technical in nature, which will influence the buy-in of member states and the European Parliament to the Commission’s proposal on the assumption that the macro-issues were successfully calibrated. The political viability of the external instrument also depends on which procedures (for instance, for those who know the jargon, in relation to Comitology and delegated acts) the Commission proposes to convince EU member states and/or the Parliament. The proposal will, in any case, have to address legitimate concerns regarding appropriate oversight of EU funding for external action.
More generally, the external instrument must balance appropriate oversight whilst avoiding outdated co-management models, and sufficient flexibility. A sensitive issue to provide reassurance on in this regard is the management of the unallocated reserve. Of course, we should make a distinction between the decision to mobilise money from the reserve and the procedures to be followed once that decision is made. Both topics will impact the credibility of the Commission’s proposal, but let us now focus on the mobilisation of the unallocated reserve.
The reserve cannot be a blank check. Member states will certainly want to have a say on when and how it can be used. Its rationale is to move funds swiftly under unforeseen circumstances or to move forward on new initiatives, and simplified procedures will need to apply for that. There are several justifications in favour of more flexibility across the board. But who decides, and according to which criteria and procedures, about tapping into the reserve for specific (policy) priorities? At the strict minimum, three self-evident criteria should inform such decision.
First, due justification: any recourse to the reserve should be duly justified in light of its subsidiary nature. Second, there should be a form of marginal control, a cap on using the reserve for any single issue or initiative. Of course, it wouldn’t be conceivable that, overnight, a significant part of the reserve goes to one policy area at the expense of other domains. Third, in case the reserve is not – or only partly – spent, there should be a clear reallocation procedure.
While the scenario of an unspent reserve is unrealistic, the reallocation of funds, however small the amounts may be, should be organised in an orderly way, perhaps proportional to pre-defined priorities and actions, so as to avoid or at least guide political debates about ex-post redistribution.
Detailing these basic criteria from the outset is essential to justify and control how, when and why the EU can tap into the reserve.
Without this level of detail, the proposal, tributary to larger dynamics at its inception, risks losing the political sponsorship necessary to succeed along the way.
Here at ECDPM will continue to produce analysis and follow closely the MFF negotiations on the next EU budget. Take a look at our dossier.
The views are those of the authors and not necessarily those of ECDPM.