Trillion Euros For What?
The Guardian, November 21, 2012
Edited by Andy Ross
The European Union quarter in Brussels is enjoying a building boom. An art
deco pile is being converted into a palace fit for a European president, at
a cost of €300 million. The European parliament is upgrading its environs
with a history theme park, at a cost of €100 million. Not long ago it made a
multimedia tribute to itself in the Parliamentarium, at a cost of €20
To be one of the 56,000 eurocrats is to escape the pain of
austerity. They work easy hours and take Friday afternoons off. Their
children are educated for free at high-quality private schools. They retire
at 63 on generous pensions and many retire early on full pensions. Staff not
living in their native country receive a salary top-up for being
expatriates. For all that, administration takes up less than 7% of the
overall EU budget.
The real money is all in the areas of agriculture
and so-called cohesion funds. These make up the tens of billions directed to
infrastructure development, public investment, and co-financing of thousands
of projects in the poorer parts of the union.
The Common Agricultural
Policy comprised over one third of total spending last year. This is low, a
far cry from butter mountain and wine lake scandals of 25 years ago when
French farmers and others got over twice that share of EU spending. The CAP
led to the equally infamous British rebate, calibrated to the level of farm
spending from which Britain is deemed to benefit less.
billions are shelled out to farmers every year, but national authorities
disburse the funds and then claim it back from Brussels. And national
inspectors are responsible for monitoring how the money is spent. Auditors
found that Britain ranked sixth of 27 in the list of offenders.
Cohesion funds took up over a quarter of the budget last year. They go
mainly to the poorer countries of eastern Europe. They represent social
democratic redistribution from the wealthy net contributors to the budget to
the more needy who get more back than they pay in. A check of 180
transactions from the cohesion funds found that three out of five were
Officials in Brussels admit that money has been sprayed
around indiscriminately: "We would ask two questions when we got an
application — was the form filled in correctly? Was it sent in on time?"
The commission issued a "Myth Buster" leaflet in 23 languages to try to
highlight the benefits of EU spending. It points to the example of building
and supplying medical centers in Guatemala, where 61 of the 65 objectives
were met and 130,000 people may have benefited. It is easy for critics to
find laughable or shocking examples of ridiculous EU-funded projects.
Institute for European Environmental Policy senior policy analyst Keti
Medarova-Bergstrom: "Appropriate EU action can be cost saving for member
states, rather than cost increasing. Therefore, possible administrative
costs should be seen as investment in improving the implementation and
result orientation of future spending."
Cuts And Perks
Financial Times, November 23, 2012
Edited by Andy Ross
Angela Merkel is determined not to isolate David Cameron in the EU budget
negotiations: "The positions are still quite far apart, and if we need a
second stage, then we will take the time for it."
Germans want a
unanimous agreement on a budget deal and want more concessions to trim the
package. They say it "would not be the end of the world" if there were no
agreement. They can try again in January.
Merkel thinks agreement on
the seven-year framework is a far better solution than falling back on
annual budgets. Germans calculate that only another few billion needs to be
trimmed to reach an overall cut of €50 billion, which would bring the UK on
Council president Van Rompuy hopes to break the stalemate by
restoring billions in funding for agriculture and poor regions to please
France and Italy. He proposes cutting money from funds aimed to spur growth
and pumping it to traditional EU fund suckers:
— The Common Agricultural
Policy gains €7.7 billion
— The "cohesion funds" gain €11 billion
fund to build cross-border infrastructure loses €5 billion
— A pot for
research and small businesses loses €8 billion
— A foreign aid fund loses
— A judicial affairs fund loses €1.6 billion
Administrative costs for salaries and benefits for eurocrats are intact for
now. Diplomats expect symbolic cuts there.
François Hollande: "I will
stand firm and require that everyone contributes."
Enzo Moavero: "It's
tough, let's see."
Mark Rutte: "We are really not there yet."
AR This certainly looks like a rich target
environment for a war of cost attrition.