Stefani Weiss and Friedrich Heinemann / Feb 2018
Negotiations on the next multi-annual EU Budget for the period 2021 until 2027 (MFF) will start this year on the basis of a proposal by the European Commission expected to be tabled in May. Everyone familiar with EU budget decision-making is already shivering at the thought of yet another fierce display of juste retour thinking and pork barrel politics by EU member states. It was never easy to get all members and the European Parliament to agree on the MFF. This time, with an ever growing clash of interests between new and old member states - and accordingly of political spending priorities - the challenge seems even greater. On top of this, the loss of roughly 14 billion Euros in net budget contributions by Brexit will further fuel the fight over the allocation and successive distribution of money.
But perhaps, these pessimistic thoughts will all be proven wrong, because we will see matured and courageous politicians negotiating the next MFF in the spirit of achieving the best for the whole of the EU while adhering to the principle of European added-value for every euro spend by the EU budget. This is, at least, what a new study of the Bertelsmann Stiftung and the Centre for European Economic (ZEW) would advise if European citizens shall be really convinced of an EU being able to provide for European public goods to the advantage of all.
The study “How Europe can deliver. Optimising the division of competences among the EU and its member states” gives evidence of a better-performing EU through an improved division of competences. It shows where more integration would lead to a better provision of public goods and thereby to – hopefully - greater acceptance by European citizens and where, in turn, member states would reach better results.
Eight specific policies from a wide range of fields were covered with respect to their preferable assignment. The testing applied the following criteria to judge the appropriate assignment: free riding of member states on public goods provided by others, economies of scale through European provision, preference heterogeneity of voters across member states, the merits of intra-jurisdictional competition, and the interplay of competence allocation with the functioning of the European internal market. The comprehensive, quantification-based assessments undertaken in the study indicate that it would be preferable to have responsibility for higher education and providing farmers with income support at the national level. Conversely, a shift of competences to the EU level would be advantageous when it comes to asylum policies, defence, corporate tax base setting, development aid and a (complementary) unemployment insurance scheme in the euro area. For one policy – railway freight transport – the findings were indeterminate.
Of special interest for the up-coming EU budget negotiations are the results arrived at regards the Common Agricultural Policy. The CAP is still consuming a whopping 38 per cent of the EU budget and a re-nationalisation of spending on direct payments to farmers advisable because the current system leads to free riding and massively excessive costs resulting from ill-targeted income support. According to our results, income protection through CAP exceeds the level defined by national minimum income support in 21 member states.
With this study the Bertelsmann Stiftung together with the ZEW is continuing the evidence-based research approach that was adopted in 2013 with our exploratory study on how to calculate the European added value of EU spending. Quite clearly, it will ultimately need both output and input legitimation if it is to win over the hearts and minds of EU citizens for the European integration project. But if the EU cannot provide outputs superior to those achieved at the member-state level, arguments in favour of the EU will ultimately be lost. Likewise, an EU that overreaches with its regulatory power and interferes with the policies that national and even subnational bodies are better equipped to deal with by themselves will eventually estrange its citizens.