The piggy bank will run out. The unforeseen events that have hit the European economy, fundamentally stemming from the war in Ukraine, are going to open an intense debate within the EU. The European Commission proposed to review the Multiannual Financial Framework (MFF) it drew up in 2020 for the period 2021-2027, in which it asks member states for an emergency injection of 66,000 million euros to boost public finances, amounting to 1,074 billion euros plus 750,000 million from recovery funds.
The preparation of the MFF, when the EU was going through the first phase of the coronavirus pandemic, did not take into account some of the blows that the European economy would receive, such as the Russian invasion of Ukraine and its consequences: a significant injection of funds. In this country, rising inflation or rising interest rates have affected borrowing costs. This situation forced Brussels to request an additional risk of resources on 27, of which Spain would correspond to about 10% (about 6,600 million euros).
“This world of various crises is also reflected in our budget. We have used this budget more than ever to be a solution to these crises that we have seen. We have used all the flexibility, all the redistribution possibilities,” defended Community Government President Ursula von der Leyen after a meeting of the College of Commissioners this Tuesday.
What will the EU allocate to these emergency funds? In Ukraine, to improve migration management and competitiveness.
Ukraine follows the priority of the community executive, which estimates that it will have to provide 50,000 million in subsidies, loans and guarantees in the coming years. So far, EUR 30,000 million in aid from the EU to Ukraine comes directly from the European budget.
“The reserve will create perspective and predictability for our partners in Ukraine. And it should also encourage other donors to come forward. This financial reserve will allow us to realistically evaluate our financial support according to the evolution of the situation on the ground. Because we all know that war requires maximum flexibility on our part,” explained von der Leyen about the 50,000 million he has included in the planning until 2027.
Brussels believes the migration pact, which is in full negotiations – and hopes to see the light of day at the end of 2023 after years of consolidation – will lead to new obligations for European partners. It thus calculates that managing migration would mean an additional €15,000 million: €2,000 of which would go to controlling the EU’s external borders; 10,500 million will be allocated for cooperation with third countries – of origin or transit, which control migration flows; And another 2,500 will remain in support of national crises and disasters under the Solidarity Fund and Emergency Reserve umbrella.
“We need an additional budget for Syrian refugees in Syria, Lebanon, Jordan and Turkey, for the southern migration route, for the Western Balkans and for partners around the world,” the German leader explained.
The third phase, for which Brussels is asking for more funds, is competitiveness at a time when the trade battle with China is at the epicenter of the community’s strategy. “It is essential for Europe to have a technological edge for tomorrow’s world,” von der Leyen said. In addition to legislation dealing with the trade war unleashed by the US or the proposal for a strategic stockpile of critical raw materials, the European Commission is now proposing a European Strategic Technology Platform (STEP). The extraordinary amount that the European Commission wants to allocate to this challenge is 10,000 million, with which it aims to generate 160,000 investments.
The revision of the MFP must now be negotiated with the 27 governments, which have already shown inconsistencies – Germany wants to limit additional resources to Ukraine and other challenges to remove them from the already existing funds, while Spain has already warned that they cannot be touched like the CAP – and the European Parliament with the aim of having it ready to enter into force in January 2024.
As part of this commercial battle, the Community government has also presented a new economic security strategy, with which it intends to control European investments in countries such as China or Russia. The proposal includes “not only the control of exported goods, but also the introduction of certain outbound investments to avoid the risk of leakage of technology and knowledge as part of this investment.”
Source: El Diario