50 Europe The EconomistOctober 26th 2019
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alter bagehot wrote that a constitution needed both
“dignified” (ceremonial and reverential) and “efficient”
(straightforward and rule-based) parts. The Victorian writer and
editor of The Economistwould have discerned little of either in the
European Union’s seven-yearly “multi-annual financial frame-
work” (mff). That process is hardly dignified: nothing can be far-
ther from the grand world of European symbols and high-minded
post-nationalism than the unseemly squabble over resources be-
tween member states. Nor is it terribly efficient. Rather than ask-
ing first what the money should be spent on, the process begins
with battles over the size of the budget and retrofits onto it policy
priorities for the best part of the next decade.
Yet the negotiation does have a sort of constitutional impor-
tance to the eu. The negotiations every seven years are a ritual, the
sight of leaders trooping in and out of airless rooms in Brussels as
integral to the union’s ceremonial calendar as the Queen’s Speech
is to Britain or the State of the Union to America. It is where the
emotional and the practical parts of the institution meet, where
the line between national interest and identity mingles with the
more bloodless, but not entirely ideals-free, realm of European co-
operation. It shapes the club’s activities, acts as a clearing-house
for political differences and is thus a map of them. As dreary as it
can seem, it reveals something of the eu’s soul.
What, then, does the latest round show? Negotiations for the
next period, from 2021 to 2027, have been grinding on for 20
months. A European Council summit earlier this month saw na-
tional leaders dig in their heels and defer the matter to their next
meeting in December, but the final deal may only emerge in the
second half of next year. Several problems are holding up progress.
The first is the overall size of the budget. The current one is set
at 1.02% of the union’s gdp, or just over one trillion euros ($1.11tr),
including €165.8bn for this year. Germany and others in a frugal
block of northern contributor states want its successor to go no
higher than 1%. The European Commission, backed by recipient
countries in the eu’s south and east, has proposed around 1.1% and
the European Parliament, the most federalist of the institutions,
wants 1.3%. A much smaller increase is likely.
The second is who should pay what into it. The northerners areparticularly hawkish as Britain’s exit leaves an annual gap of
around €10bn to be plugged, probably primarily from their pock-
ets. They are fighting to maintain the system of rebates returning
some money to high net contributors who do not get as much back
in things like agricultural and regional development funds;
France, by contrast, argues that Britain’s departure and the need
for a more ambitious eu mean the rebate system should be
ditched. The commission has also floated a union-wide tax on
plastics (others suggest one on financial transactions) by which
the eucould raise part of its income directly.
Then there is the battle over what the money should go on. The
long-term trend of the mffhas seen spending on the Common Ag-
ricultural Policy of farm subsidies fall from over half of the total in
the early 1990s to under a quarter today, spending on regional de-
velopment rise with the accession of poorer southern and eastern
states and then fall as they started to catch up with the rest, and
spending on competitiveness (research and development, mea-
sures to knit together the single market) and foreign and security
policy increase as those priorities have arisen. This “modernisa-
tion” of the budget, as it is known in Brussels-speak, will continue
into the next period, but member states disagree on the extent,
with easterners and southerners in particular defending old prior-
ities like agriculture and regional aid and northerners pushing to
redirect more of that spending into science and environmental
measures. The east-west cleavage is also heightened by the sugges-
tion that some payments be made conditional on member states’
adherence to rule-of-law standards; a threat especially to Poland
and Hungary, net recipients whose turn towards authoritarianism
in recent years has angered their European colleagues.
All of which reveals an eubetween two worlds. On the one side,
yesterday’s union, a smaller and more homogeneous club whose
task was the technocratic knitting-together of the continent
through rules and subsidies after the traumas of the mid and late
20th century. On the other side, today’s and tomorrow’s union, a
larger, more diverse and more political bloc facing greater pres-
sures from the outside requiring common action, and that there-
fore is at once more fractious and more ambitious. The achingly
slow talks on the next mffmight be considered the painful transi-
tion between the old world and the new one.Follow the money
Something will have to change. The eu’s budgetary rituals need
more dignity. They need to do more to command the loyalty of or-
dinary citizens above and beyond the narrow-minded calculation
of national net contributions and receipts. The language and pro-
cesses of the budget should become less technocratic and concen-
trate more on the shared interests and preferences of the voters
whose governments pay the bill. Consultative assemblies of Euro-
pean citizens might be involved in the decision-making process,
for example.
And the mff needs to be more efficient. A multi-year dip-
lomatic negotiation covering seven years, a period over which no-
one can say with precision what is needed, and in which national
pride takes precedence over actual needs, is no way for a modern
institution to work. New mechanisms for adjusting and updating
the budget more frequently are needed; perhaps through some fo-
rum of national ministers and members of the European Parlia-
ment, or through direct eutaxes giving the union greater flexibili-
ty. The euis not a state and does not need the paraphernalia of one.
But a dose of Bagehot’s timeless formula would do it good. 7Charlemagne Neither dignified nor efficient
Squabbles over the eubudget are a map of the club’s divisions