Let's not resign ourselves to a Europe that relies on weapons and cuts bread.
The presentation of the multiannual economic and financial framework, or rather the European Union's budget forecast for the next seven-year period from 2028 to 2034, is one of the most important political acts of this recently begun legislative session. It will be a process that will engage the European Parliament, the Council, and the Commission in lengthy negotiations over the next two years or so to outline the financial guidelines along which the European Union will develop in the coming years.
In his article, Gianluca Salvatori immediately highlighted how the highest price will fall in the form of cuts to Social Cohesion , but unfortunately the threat posed by this new approach to the Union's economic and financial planning has many other negative implications.
It's worth taking a step back and remembering how the European Union budget works. It is funded by contributions from member states, which contribute a share of just over 1.10% of GDP, which makes up the bulk of the budget. Added to this are customs duties on imports from non-EU countries, a small percentage of VAT collected by each EU country, and more recently a contribution based on the amount of non-recycled plastic packaging waste produced by each EU country. Then there are a portion of resources that come from participation in certain programs of other non-EU countries, and fines for violations. All these items, other than the contributions paid by member states, are defined as the EU's " own resources ."
The Union budget is a rigid budget, meaning it must be managed with a strict balance between expenditure and revenue, thus prohibiting public debt. It is based on multi-year planning based on seven-year cycles. We are currently in the final part of the 2021-2027 seven-year period.
However, the EU treaties give the European Commission the power to borrow on international capital markets on behalf of the European Union. This power was little used until 2020, when, in response to the pandemic, the Commission launched an extraordinary operation to raise funds on the capital markets to finance the NextGenerationEU recovery and resilience plan.
The rigidity of the Union budget underpins seven-year programming cycles, which requires the lengthy negotiations I mentioned above. Once the main figures and main programs have been defined, changes can be made through temporary revisions, but only within the major programs. For example, changes can be made to the CAP or the ESF, but resources cannot be moved from one program to another.
In the infographic below you can see how the MFF 2021-2027 is structured.
In this framework, Next Generation EU does not appear, which represented an interesting and important innovation in terms of resources, which however will not be resumed, and an innovation in the spending methodology, which also changed the relationship between the European Union and the Member States in the management of these common resources assigned to individual States in relation to the impact suffered as a result of the pandemic (this is the reason why Italy benefited from the largest share allocated by Next Generation EU ) to be spent on the basis of a work programme (the PNRR) agreed with the Commission and then paid out following the progress made.
The new Multiannual Financial Framework (MFF) amounts to nearly €2 trillion, corresponding to 1.26% of the EU's estimated GDP for the seven-year period from 2028 to 2034. It therefore confirms the volumes of the previous Multiannual Budget, and the increase in total volume is simply due to the update of current prices. Likewise, there is no recourse to market funding; indeed, the repayment quotas of NGEU will begin to be felt in the new MFF.
The operating mechanism of NGEU inspired the proposal presented to the European Parliament on July 16. Ursula von der Leyen radically changes the structure and proposes a strong consolidation of funds, creating a macro fund that, by merging the Common Agricultural Policy and Cohesion Funds, creates a single endowment, to be managed no longer on the basis of joint programs but by negotiating the areas of intervention with the member states , in the name of a declared greater flexibility. The European Social Fund has been spared from the consolidation for the time being, but in the drafts circulated in recent weeks, this fund too was intended by the inner circle that prepared the MFF to be included in the consolidation and simplification plan.
Flexibility and simplification are the key words supporting the rationale for pooling the funds. This is all accompanied by a wealth of reassurance regarding the strategy that will be implemented through simpler and more personalized national partnership plans, maximizing impact and a much more efficient use of European funding.
However, behind this narrative rhetoric, full of positive connotations, I fear many risks lurk. First and foremost , the emergence of a vision of the European Union as a coordination between states. This undermines the possibility of truly implementing a policy that leads to greater integration of the Union, while pursuing greater territorial and social cohesion.
We are facing a setback in the integration process, instead moving in the direction of a more intergovernmental and less cohesive Europe. Therefore, if there ever was a dream or desire for a United States of Europe, this budget proposal buries it for the next 10 years.
A second major concern is that with the consolidation of funds, we will no longer have the broad programming lines (CAP; ERDF; ESF; COSME, Investeu) from which hundreds of separate programs stemmed, but 27 corresponding macro-programs, each for each state. The state will spend the resources according to the new priorities drawn up this season, which prioritize defense, security, and competitiveness. In this new spending melting pot, it will be much easier to shuffle the cards and increase military spending, pursuing the fragmented rearmament plan with 27 different purchasing centers, which will delight arms dealers and manufacturers and the entire industry of death and destruction that goes along with it.
This is the real critical point: defense spending is celebrated by all as an indispensable act of responsibility, necessary to safeguard Western democracies from Putin's threats, which could have been more effective and credible if it had been achieved through a truly common European defense program.
Instead, they chose to open 27 supermarkets for arms dealers, using funds earmarked for social cohesion and agriculture. So, essentially, we have the choice of arms over bread. Arms over territorial and social cohesion, all disguised as the ability of states to manage their own spending with greater flexibility and autonomy .
The one who truly emerges victorious from this genetic mutation of the MFF is the so-called industrial-military complex, which is also preparing to intercept a large portion of the new European Competitiveness Fund , which will finance the development of cutting-edge technologies. Certainly, a portion will go to technologies for civilian and industrial use, but it will be more difficult to draw the line between spending on technologies and innovations for armaments and warfare and those geared toward progress and human growth.
As mentioned, the European Social Fund is currently safeguarded, but we see that it focuses primarily on the issue of skills and abilities and therefore has a strongly pro-labor orientation, which is certainly important and useful.
We all agree that we must be ready to face the challenges of competitiveness, so we need to train European citizens to be employable and ready for lifelong learning. The buzzwords are up-skilling and re-skilling , competitiveness, and performance for champion workers, but attention to vulnerability and the most disadvantaged is lacking, even though references to the health issue and the need to protect European citizens remain.
The impression is that there is obviously a push to leave everything related to the social protection of the most disadvantaged segments of the population— the poor, the elderly, minors, and families —in the hands of individual states . Of course, there could be states that spend on welfare instead of defense, but frankly, we know how these things have gone in many cases, and that essentially the power of influence of those who have managed to create this crazy climate of uncontrolled military spending, stirring up phantoms and creating oversized enemies, has deployed such firepower that we imagine it will be easy to replicate it on the lobbies at the individual state level; some of the signs are already visible .
Furthermore, in a few months, when negotiations become tense, it's highly likely that farmers, faced with the risk of losing the public administration's support, will once again march through Brussels with giant tractors capable of bringing the city to a standstill. And then we'll most likely see the Commission and Parliament once again turn their attention to the European Social Fund for resources.
Unfortunately, the poor, the elderly, children, families at risk of marginalization, and social economy organizations won't have the four-wheel drive to occupy the streets, and they'll be well-placed to direct their fears and protests toward migrants or Euro-bureaucracies.
Finally, let's look at revenue, which, as already mentioned, remains unchanged in terms of contributions from Member States. Having abandoned the possibility of new funding from the markets, the only scope for increasing availability can be found in own resources.
The prudence and lack of unity in reacting to Trump's aggressive tariffs leaves no room for imagining new revenues through tariffs. The only remaining taxes are VAT quotas and some new taxes, which he would also like to use to repay loans for NGEU.
Thus, the Commission presents five proposals in the MFF:
- EU Emissions Trading Tax (ETS).
- The carbon tax envisaged by the Carbon Border Adjustment Mechanism (CBAM)
- A tax on unrecycled electronic waste by applying a uniform rate to the weight of unsorted electronic waste.
- An excise duty on tobacco, based on the application of an additional rate to the Member State-specific excise duty levied on tobacco products.
- An additional tax on corporate turnover (Corporate Resource for Europe – Core), consisting of an annual flat-rate contribution from companies with an annual net turnover of at least 100 million euros.
I will focus on the latter, which is the real innovation but which almost sounds like a provocation , since the same European Commission that is unable to defeat the forms of internal tax competition within the EU, which has failed to impose a tax on financial transactions, which imposes minimum taxes on the giants of the digital economy, proposes to tax companies with a turnover of more than 100 million .
The potential paradoxical effect is that the large American digital multinationals , with their power and now the blackmail of Trump's tariffs, will continue to pay taxes agreed upon at homeopathic rates, while European companies with less negotiating power will have to contribute the extraordinary tax . I recall that €100 million in turnover is a figure now also reached by foundations operating in the healthcare sector , as well as many social economy companies, which could find themselves paying proportionally much more taxes than the European Union is able to collect from the quintet of digital Gafam.
In short, the negotiation season that began on July 16th is one that it will be important not to leave solely in the hands of politicians, nor to exhaust itself in the lengthy negotiations that will take place between Parliament, the Commission, and the Council.
Civil society, social economy organizations, local authorities, and social groups must roll up their sleeves and ensure that the many good things that remain of the European dream are truly saved.
In the opening image, the European Commission chaired by Ursula Von der Leyen
- Tags:
- weapons
- PNRR
- European Union
You read this article freely, without being stopped after the first few lines. Did you like it? Did you find it interesting and useful? VITA's online articles are largely accessible free of charge. We want it to remain this way forever, because information is everyone's right. And we can do this thanks to the support of our subscribers.
Vita.it
