The 2005 budget” “

The areas of commitment of the Union that emerge from the 2005 budget are many and wide-ranging. An examination of them is useful for understanding in what sectors the Twenty-Five are investing. Meanwhile the debate, already begun by the Commission to define the EU financial prospects for the period 2007-2013, continues. THE TWO “BUDGETARY AUTHORITIES”. The budgetary authorities in the EU are the Parliament and the Council. The EP in Strasbourg approved the 2005 budget, after a long internal process of examination, on 16 December 2004. It is the Commission’s job to draw up a “preliminary project” for the budget. It then passes to the Council and then to the EP, which make the necessary adjustment to it. Final approval is up to the Parliament. It is, it goes without saying, a document of fundamental importance, which authorizes every EU intervention and policy. The budget just approved was prepared by the previous Commission headed by Romano Prodi. Within the new Barroso Commission the portfolio for financial and budgetary planning is held by the Lithuanian Dalia Grybauskaité. THE PRINCIPLE OF BALANCE. The financial autonomy that the European Union now enjoys vis-à-vis its member states dates back to 1970, when the current system of the EU’s “own resources” was inaugurated. That system was modified in the 1990s and by Agenda 2000. These resources are of four types: agricultural duties, customs duties, revenues based on VAT (value added tax) and, lastly, the so-called “fourth resource”, the most substantial of all, consisting of the revenues paid into the EU by the member states proportioned to their gross domestic product. Beginning in 1988 each annual budget has had to respond to a plurennial scheme called Financial Prospects: the one in force concerns the period 2000-2006. The essential principle on which the EU accounts are based is that of balance: in other words, in each financial year income and expenditure must balance each other out, since the EU is not permitted to contract loans to finance any deficit. The implementation of the budget is entrusted to the Commission. An auditing system also exists within the UE to control the regularity of the expenditures, which are also subjected to the vigilance of the Audit Court. An anti-fraud Office (OLAF) was created as a further control mechanism in 1999; it carries out investigations of administrative and accounting type. The responsible Commissioner is the Estonian Siim Kallas. SUPPORT FOR AGRICULTURE AND SOCIAL COHESION. As far as the 2005 budget is concerned, it involves an overall sum of 116.5 billion euros (technically “committed appropriations”). The national governments are asked to contribute 1.004% of their GDP to EU coffers: a figure a good deal lower than the 1.27% that represents the maximum that may be requested from member states by Brussels. The greater part of the expenditures is allocated to the agricultural sector, which absorbs 49.6 billion euros, i.e. over 40% of the budget (though in the past this percentage was far higher). The EU works to support both crop production and animal husbandry; to stabilize markets and the prices of foodstuffs; and, not least, to improve the life of the rural populations. The second largest slice of the cake, 42.4 billion euros, goes to structural actions. In this case the interventions are aimed at improving economic and social cohesion in the EU. This it does by pursuing three main objectives: “objective 1” is aimed at the development of backward regions and their economic structures; “objective 2” supports the re-conversion of industrial or agricultural regions once flourishing but now in crisis; and “objective 3” is aimed at modernizing structures and services for education, professional training and employment. This latter objective also has the task of re-directing EU funds to the new member countries. INTERNAL POLICIES; HUMANITARIAN AID. A sum of 9 million euros is allocated to the other internal policies of the Union, comprising various areas: transport, energy, trans-European networks, environment, fishing, regional policy, research, competition, protection of health and of consumers, security and justice, culture and education, and communication. To the whole sector of external actions is allocated, in turn, a sum of 5.2 billion euros, which the EU spends on foreign policy, relations with third countries in terms of cooperation in development and humanitarian aid. The EU is in fact the leading organization in the world in terms of allocations for combating poverty, famine, disease and emergency interventions in natural disasters (as in the case of the recent tsunami in south-East Asia). Next come the budgetary items of administrative expenses and personnel (6.3 billion euros, a rather modest quota) and allocations for pre-membership strategy, aimed at Romania, Bulgaria, Turkey and, for the first time, Croatia.