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Can the new European Commission be truly geopolitical, innovative and flexible without the right amount of money?

25-11-2019

Andrew Sherriff and Mariella Di Ciommo, ECDPM blog, 25 November 2019

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The next Multiannual Financial Framework (MFF), the EU’s long-term budget for 2021-2027, will not be agreed any time soon. What we can expect shortly is more concrete numbers to negotiate against. Any day now, the Finnish EU Presidency will present the most hotly anticipated document in EU circles: the so-called ‘negotiating box with figures’. The document will be discussed by member state diplomats in the General Affairs Council before going to the European Council summit on 12 and 13 December.

The final size and framing of the proposed €123 billion for EU external action and international development will inevitably impact the EU’s ambitions. Finland will turn the draft negotiating box into one where there are actual numbers against budget headings, instruments and even potentially within the geographic and thematic categories of the Neighbourhood, Development and International Cooperation Instrument (NDICI), a new consolidated instrument for most of the EU’s external action.


An ambitious vision for external action that has to survive wider negotiations


Ursula Von der Leyen, president-designate of the EU Commission, has set an ambitious vision for the EU in the world and is aiming to give a higher profile to EU external action with the idea of a “geopolitical Commission“. Money doesn’t buy happiness and it also does not make politics. But, as the saying goes on, it helps. In other words, the fortunes of the EU budget negotiations will impact on the EU’s ability to live up to its own heightened ambitions.


What’s the landing zone overall?


The thankless task of the Finnish EU Presidency is to present a negotiating box with figures which most likely will make everyone ‘equally unhappy’. This is just the start of the negotiations and there is every expectation of a bitter fight ahead.

The Finnish presidency is trying to bridge member states’ positions on the EU budget size, proposing a middle ground between the size of the budget put forward by the European Commission (1.11% of EU-27 GNI, or gross national income) and the size of the budget sought by net contributor member states (1% of EU-27 GNI). The European Parliament demanded to increase the budget to 1.3% of GNI, but most likely the consolidated Council position will prevail. The Finnish proposal will likely be a compromise between 1.03% and 1.08% of GNI. A budget of 1.04% of GNI would amount to a cut of around €80 billion overall to the initial Commission proposals.

The budget size has huge implications for where cuts will fall. Some fear they would fall disproportionately on Heading 6 (Neighbourhood and the World) and the proposed €89.2 billion instrument (NDICI). Indeed, unless a robust defence can be mounted, Heading 6 will likely be caught in the storm between net contributors to the budget, wanting to restrict the overall size, and well-organised special interest groups for agriculture and cohesion, which lobby aggressively to protect these funding streams from cuts.

The historical precedents are not good for defending external and development spending, yet we live in different times now. External concerns – ranging from migration to security – are more than ever at the forefront of senior politicians’ concerns.

Figure: European Commission proposal for Heading 6 and the European Peace Facility

The task of reconciling member state positions will then move to Charles Michel, incoming president of the European Council. Michel is a skilled politician used to wheeling and dealing, but this task will likely fully stretch his ability to negotiate and seek compromises. Time will also be an issue. Some hope for a final overarching deal in the first semester of 2020, with legislation in place by the end of the year. Others think a deal is more likely to be agreed towards the end of 2020, which would mean a delay in financing and therefore in the implementation of EU programmes in 2021.


The NDICI is still on the table


There are other political issues on the table that will only be resolved at a later stage. For instance, the survival of the NDICI still depends on resisting pressures to split the European Development Fund (EDF) and the European Neighbourhood Instrument (ENI) out of this broad instrument. Concerns about resources for sub-Saharan Africa and visibility of the Neighbourhood policy, particularly in the East, linger.

Such an outcome would most likely mean a sudden death of the idea of a more consolidated financial framework for external action and development policy and a significant undermining of the credibility of the “geopolitical Commission”. Officials we spoke to are more confident than at any time in the past that a consolidated instrument will survive this time. Yet they acknowledge that the risk of splitting the instrument with the resultant havoc hasn’t gone away.


Without a strong constituency, Heading 6 will be vulnerable


The road to finalise an agreement on the MFF and on financing external action is still long. In parallel, the detailed negotiations on the exact wording of the NDICI regulations, the so-called trialogues involving the Council, Parliament and Commission, have also started. This is a topic ECDPM will return to in the coming weeks.

Many more detailed financial decisions will be taken during the actual external programming process. But unless a consolidated defence can be mounted on the same scale of the one that will be undertaken for cohesion or agriculture, it looks like cuts will come to Heading 6 and the NDICI. The only question is how much and for what envelopes.


Our dossier on the EU budget


See all our work on the Multiannual Financial Framework in our dossier.


The views are those of the authors and not necessarily those of ECDPM.

Photo courtesy of Etienne Ansotte – European Union 2019 via EC Audiovisual Service.

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European external affairsEuropean Commission (EC)