The European Budget Post-2013 and its Effects on EU-Turkey Relations
In the current financial period, the EU spends the bulk of its budget on sustainable growth (45.5%), financing mainly research and development as well as regional policy, and on the preservation and management of natural resources (41.3%)â€”i.e., common agricultural policy and environment protection measures. Only 6.2% is spent on foreign policy, including humanitarian aid, the European Neighborhood Policy, and the administrative costs related to enlargement. The amount spent on citizenship, peace, freedom and security is only marginal at 1.8%. Although the Lisbon Treaty provides that â€œ[w]ithout prejudice to other revenue, the budget shall be financed wholly from [its] own resourcesâ€? (article 311), such traditional resources, in the form of customs duties on imports from outside the EU and sugar levies, contribute only about 12.5% to the budget. Another 11.5% is levied from the value added tax revenue (VAT) of the member states. At 76%, the bulk of revenue comes from member state contributions based on their gross national income (GNI). As this system leads to imbalances regarding payments versus benefits, a number of corrective mechanisms and rebates have been introduced to compensate net payers. Unlike national budgets, the EU budget must show an equilibrium at the end of the year, that is revenues and expenditure must be in balance (art. 310 of the Lisbon Treaty). This means, on the one hand, that the EU may not go into debt; and considering the current crises in Greece, Portugal and Ireland, this requirement has proven essential. On the other hand, if the account balance is positive, the EU may not transfer funds to the next year or create a reserve for times of austerity; rather it has to refund the surplus to the Member States. When the European Parliament and the Council negotiate the concrete figures for different spending categories in the annual budget on the basis of a Commission proposal, they are bound by the ceilings set by the MFF for each different spending category. Currently, the figures are in place for the period of 2007-2013. Those ceilings importantly impact the flexibility to shift funds within the budget: if the need for additional funds emerges in one category, unused funds from another category may only be redeployed if a
Published on Feb 16, 2012
A Publication based on the International Conference organised at the European Parliament/Brussels by Dr. ELENI THEOCHAROUS, Member of the Eu...