Countries of the region should get involved with negotiations to shape the next EU budget round – or end up outside a framework they did not help to design.

Central Europeans could be forgiven for focusing their attention on last week’s elections in Poland and Hungary, but if they do not lift their eyes to the horizon, they may end up the poorer, according to experts trying to shape the new EU budget before it is built.

Yes, that vast bulk looming in the distance is the “Multiannual Financial Framework” for the years 2021-2027 – but given that there will potentially be a smaller budget without the UK’s contributions, it is in Central Europeans’ interests to be involved in designing the structure, to avoid funds being diverted elsewhere.

The most striking proposal already put forward for negotiation originated in Germany, but has since been supported by other member states – that of making EU funds conditional on adhering to the rule of law. Such funds are a strong driver of growth in less developed parts of the EU, such as eastern Poland or eastern Hungary, and yet rule of law is the very problem in both of those countries.

Inevitably, negotiations will also concern a shift towards a green economy, which is – again – something of a problem for Central Europe, which relies on coal-based power generation to a great extent, with 80 per cent of electricity in Poland generated from coal.

Negotiations are expected to pick up steam after the new European Commission is finally seated in November and reach a final form in 2020. With such potentially huge changes in the way the EU’s budget is allocated, some Central European experts have been looking at ways to pro-actively shape it.

Launched last week at a special conference in Brussels, their study with the hashtag European #Futures was produced by the Polish-based analytical platform Visegrad/Insight, in cooperation with a prestigious Brussels think tank, the Center for European Policy Studies.

The study covers four scenarios for Central European engagement over the seven years of the next budget cycle.

The first scenario sees “spending smart” as the answer to how funds should be allocated, in light of the EU’s potential budget shortfall after Brexit. “Setting a potential expiry date on cohesion funds for regions that are lagging behind would mobilize both the EU Commission and the member states to innovate and find new ways to help convergence,” said the report’s authors.

The second scenario, “Paving the green ways,” accepts “greening” of EU economies, but doing so through incentivisation and financial support of those actively transforming themselves – rather than by penalizing economies and businesses based on old industrial structures, primarily coal.

The EU should also take into account that Northern Europe produces more carbon emissions due to a longer, harsher winter, noted Piotr Arak, director of the Polish Economic Institute, arguing that these emissions could be offset by carbon “sinks” or negative emissions in Southern Europe.

Speaking at the European #Futures conference, Arak said, “This topic seems to be the most sensitive, especially for Poland, where the Green New Deal i – a question of national security.”

The third scenario calls for new research and development facilities to be built in the newer EU countries, in an effort to spread excellence and research more evenly around the whole EU, with national governments, in turn, accepting the possibility that “most of the personnel would come from abroad.”

Meanwhile, the security and defence scenario suggests the introduction of common military procurement within the EU, or at least common defence R&D, an area in which the four “Visegrad” countries lag substantially. Improving EU cyber-security is a field in which Central Europe could play an interesting role, thanks to companies like Avast and Eset, which are international players.

It is heartening to see the Visegrad Four producing some constructive arguments and alternatives within the wider EU policy arena, rather than simply negating offers put on the table, as in the migration debate. The European #Futures scenarios are not detailed policy prescriptions, but they are food for thought and could inspire the policymakers engaged in negotiating for our future prosperity.

 

 

First published by Transitions Online

Martin Ehl is the Chief Analyst at Hospodářské noviny (Economic daily)


Scenarios for cohesive growth

As of 2019 the negotiations about the next Multiannual Financial Framework (MFF) will enter a critical moment. In the face of an imminent Brexit and the fallout from global turmoil, the EU has to reflect on its guiding principles and take decisions to fulfil the promise of a united Europe.

Download the report in PDF

The Visegrad/Insight is the main platform of debate and analysis on Central Europe. This report has been developed in cooperation with the Centre for European Policy Studies (CEPS).

Launched on 1 October 2019 at the European #Futures Forum in Brussels.