On the mark of austerity

“A delicate balancing act combining austerity and growth boosting measures for 500 million Europeans”: that’s how Janusz Lewandowski, Budget and Financial Planning Commissioner, presented the draft EU budget for 2012 on 20 April, thus initiating the long process leading to the approval of next year’s budget. The green light must be given by the two budgetary authorities, namely the European Council and Parliament, after the usual negotiations, by December this year. Numbers and priorities. Recalling that a long tug of war between Council and parliament took place last year before the budget for 2011 could be adopted, the Commissioner invites the budgetary authorities to “concentrate on the numbers”, and prevent an inter-institutional political conflict from gaining the upper hand. The draft budget for 2012 adopted by the Executive represents payment allocations for a total of 132.7 billion euro (+ 4.9% over the figure for 2011); commitments amount to 147.4 billion euro (increase of 3.7%). “The key objective of the 2012 draft budget is to fully support the European economy and EU citizens”, explains the Polish Commissioner. The budget for next year – continues Lewandowski – “endeavours to be in tune with the current austerity climate at national level” of the 27 member states. “The Commission has made a particular effort and opted for a freeze of its administrative expenditure for 2012”, i.e. no increase of administrative costs over 2011. Necessary cuts. “Savings must include looking seriously at what we are doing and asking ourselves whether everything we do brings genuine benefit to the whole of Europe”. Commissioner Lewandowski insists on the need for cutbacks in under-performing programmes; and the same ought to be done – he implies – also in member states. For example the funding for the Galileo satellite system, for telecommunications and transport, will be reduced by almost 25 million. Yet, in spite of the cuts, the Commissioner adds, “the Commission must honour its legal commitments. EU funded programmes launched in 2007 are now running at full speed. That means that in 2012 we will have more bills to pay to reimburse regional authorities or small and medium enterprises (SMEs) that have invested in those programmes”. In particular, explains Lewandowski, “increased payment levels for the research programmes (+ 13.3% to 7.6 billion) and for the structural and cohesion funds (+ 8.4% to 45.1 billion are aimed at maximising the EU budget contribution to economic growth and cohesion”. Cohesion, territorial development. As a whole the draft budget indicates funds divided as follows (payment allocations): 57 billion euro for cohesion and competitiveness; the same figure for agriculture, environment and territorial management; 1.5 billion for citizenship, freedom, security and justice; 7 billion for foreign policy; 8 billion for administration costs. It should be pointed out that the allocations proposed by the Commission do not exceed 1.01% of the GDP of the EU. The overall budget figure in 2011 was 126 billion, i.e. 0.99% of EU GDP. “Some ask – explains the Commissioner – why we should increase the EU budget when member states face severe austerity measures at home; this is a legitimate question. The main reason for the increase is that we must pay the bills coming from projects from across Europe. Such projects that benefit local communities and businesses would probably never have been launched back in 2007 without the commitment of EU funding; to stop funding them is unthinkable. First, we could be sued for not respecting the terms of the contracts; secondly, this would harm member states’ budgets even more since they expect us to reimburse the EU share of the funding that they have already paid to beneficiaries; thirdly, stopping such projects half-way through would be detrimental to whole communities”. Citizens at the centre. Lewandowski then clarifies some aspects of the budget. The draft budget for 2012 envisages an allocation of 57.7 billion euro for “sustainable growth”, “to help member states to increase their investments”. It dedicates some 62.6 billion euro “to the Europe 2020 priorities, an increase of 5.1% over the previous year”. “Citizens – he insists – are at the centre of the European policy and their safety is a high priority for the EU. The 2012 draft budget foresees a 6.8% increase in the area of freedom, security and justice with actions focussing on the interests and needs of citizens. Furthermore, under the Europe 2020 initiatives actions for youth amount to 1.9 billion euro, which is 15% more than in 2011”. Lewandowski makes a point of underlining that “only 6% of the EU budget goes to the functioning of the EU institutions; therefore the remaining 94% goes back to Europe’s regions and towns, businesses, scientists and citizens”.