EU Commission President Vonder Leyen proposes drastic changes to the EU financial plan.
The European Commission is planning to hugey revamp the EU's annual budget of around 140 billion euros, as suggested in a report based on an internal presentation. The two major expenditures, agricultural subsidies and regional development aid, could potentially be axed, according to the report published by "Frankfurter Allgemeine Zeitung." Currently, these two items account for a third of the total budget.
Instead, the bulk of the funds, including agricultural and regional aid, would be allocated to EU member states as a sort of financial aid to boost their national budgets. In return, the member states would be required to implement specific political reforms, as indicated in the FAZ report. This approach is inspired by the Corona Recovery Fund, launched by the EU in 2021 to tackle the economic impact of the pandemic.
The proposed change would lead to a less bureaucratic budget with fewer programs to manage. For instance, instead of the 530 programs currently in place for structural funding, there would only be 27 – one for each member state, making it easier for members to distribute and utilize the funds more efficiently and swiftly in response to significant events.
However, the changes have sparked controversy. The FAZ reports criticism from the Committee of the Regions, which fears that emphasis on equitable living conditions within the EU could be compromised if the Commission negotiates with individual members on their national programs. The president of the committee, Portuguese Vasco Alves Cordeiro, suggests that the regions could be sidelined in politics as a result. The European Court of Auditors has also raised concerns over the strategy employed in the Corona Fund in the past.
Simultaneously, the EU aims to establish a European Fund for Competitiveness, incorporating all existing funds, such as the space program, research program Horizon, and European Defense Fund. This is part of the proposed multiannual EU budget for the period from 2028 to 2034.
In July, during her second term announcement, EU Commission President Ursula von der Leyen unveiled the idea of the European Fund for Competitiveness but without providing further details. She also pledged a more straightforward and focused budget. The Commission has declined to comment on the report, and there's no agreed position on the matter, as stated by the authority. The proposal for the 2028 to 2034 budget is scheduled to be submitted by mid-next year.
The European Commission, as outlined in the proposal, intends to shift a significant portion of funds from agricultural subsidies and regional development aid to financial aid for EU member states. This change would necessitate the implementation of specific political reforms by the member states, as suggested in the report.
The Committee of the Regions has expressed concern that the proposed changes could potentially sideline regions in politics, leading to a potential compromise in maintaining equitable living conditions within the EU.
