How big is too big for the EU?
Last week, the EU commissioner for budget and human resources, Guenther Hermann Oettinger, unveiled the first post-Brexit multiyear EU budget. It will run from 2021 to 2027, and now needs to pass the gauntlet of approvals by the European Parliament and the 27 member countries (by 2021, the EU will only have 27 members as the UK will have left by then). The commission hopes to receive these approvals before May 2019, when EU citizens will head to the polls to elect the next EU Parliament.
The union’s population will have shrunk by 13 percent, and its budget will have increased by 1.1 percent to €1.279 trillion ($1.53 trillion). This has enraged some of the fiscally more prudent countries such as Austria, Sweden, Denmark and the Netherlands, as they are asked to pay more but will no longer receive all the rebates they have become used to.
The budget will cut some agricultural and cohesion funding (the latter are monies former Eastern bloc countries receive to bridge the gap vis-a-vis Western European economies). Climate change expenditure is ring-fenced to the tune of 25 percent. Security and border protection will nearly triple.
The EU is a values-based organization in which democracy and the rule of law are inalienable conditions. This will make it very hard for Turkey to join in the foreseeable future, as long as press freedom, other democratic principles and the rule of law are not guaranteed.
Cornelia Meyer
There is a provision to withhold funds from countries that do not adhere to values and democratic principles as stipulated by the EU. This will doubtless enrage the governments of Hungary and Poland, which the commission considers to be the main culprits in that category.
Over the coming 12 months, we can expect parliaments and politicians in EU member countries to debate and squabble over the budget. Budgets put numbers behind the values and aspirations of nations and other entities. The proposed budget is therefore as good a time as any to have a look at which countries want to join, and if their accession plans stand a chance of success.
The EU’s rules stipulate that countries need to satisfy the “Copenhagen criteria” to be eligible for membership. They include a free-market economy that can withstand competitive pressures from within the EU, a stable democracy and the rule of law. Potential new member states are Serbia, Montenegro, Albania, Macedonia and Turkey, which are all in the process of incorporating EU laws. Bosnia-Herzegovina and Kosovo are further potential candidates.
The EU is a values-based organization in which democracy and the rule of law are inalienable conditions. This will make it very hard for Turkey to join in the foreseeable future, as long as press freedom, other democratic principles and the rule of law are not guaranteed.
At a recent high-level meeting in Bulgaria, Turkish President Recep Tayyip Erdogan and his EU counterpart Jean-Claude Juncker fudged the terminology and acknowledged Turkey’s desire to join the union. But it was clear to all that the time horizon for membership was distant and the accession potential fuzzy, to say the least.
For the countries of the western Balkans, economic prospects are less than clear. At the recent Sarajevo Business Forum, Slovenian President Borut Pahor admonished the regional laggards (Slovenia and Croatia are EU members) to speed up reforms and join the bloc in order to guarantee economic cohesion in the region. The EU ambassador to Bosnia-Herzegovina sung from the same hymn sheet.
The question for the EU is twofold: How much can it afford, and how important is economic prosperity and stability on its borders? Western Balkan countries would initially be a further drain on the budget. The EU still experiences sufficient problems with the economies on its southern rim.
Transfer payments to its southern hemisphere do not meet with the approval of taxpayers in the northern countries, particularly Germany, which has to foot a large part of the bill. Hence the debate about further economic integration and the banking union is fierce and shows a clear north-south divide.
Several countries would also need to shore up their border controls to qualify if not for Schengen then for the free movement of people. In the wake of the refugee crisis, migration has become a big topic in EU member states.
On one hand, these are the issues rendering accession difficult. On the other, the nations in the western Balkans and Turkey are the EU’s near neighbors. East of Turkey and south of Cyprus, we enter politically and economically more treacherous territories with the odd totalitarian regime, war and some failed states.
So the question is how the EU can ensure stability in its near neighborhood while adhering to the principles of fiscal prudence, democratic values and the rule of law. Squaring that circle will not be easy.
• Cornelia Meyer is a business consultant, macroeconomist and energy expert. Twitter: @MeyerResources
