The EU Budget Dilemma

In order to frame the current debate on the EU budget, I copy and paste below one of our Supranationalist Papers (N.2) on the EU Budget.

If you want to know more about Supranationalist Papers, please click here.


Concerning the European Budget

To the people of Europe:

The European Budget is very small (100 million euros annualy for 450 million citizens), and yet it raises so much controversy these days. The most simple explanation is that money is the meter of power relations in Europe. As far as money are concerned, there is little political compromise that can cover a defeat at the budgetary level: if you had 5 and you end up with 3, there is no clearer defeat.

Each member state thinks this way, thus it is particularly difficult to reach an agreeement. This is particularly the case when a conflict is taking place at the level of principles of organisation of a polity; to translate the conflict in economic terms is very easy, and it gives a neat impression as to who is the winner and who is the loser.

From the perspective of the Union, however, everyone is a loser if there is no agreement as to the repartition of the ressources for the sake of enhancing the progress of the whole. Hence, the conflict, be it between France and the UK, or between any other member state, is not a constructive tension; it can only point to a lack of a shared interest in the European project. Moreover, the European people fail to understand what are the principles of collection and expense of european money.

These tensions are bound to remain so long that the only actor in the creation of ressources of the Union are member states. By deciding alone what are the ressources to be attributed to the Union, they can only protect their national intersts, either by opposing any increase of ressources, or by allowing an increase only if this will be allocated to the benefit of national interests.

We are presently stuck with an anachronistic budget, which unduly favours States like France by heavily subsidizing agriculture.

A proper constitution should achieve two things. It should entrench the principle of no taxation without representation, and it should allow for a scope of innovation as far as expenses are concerned, since Europe is in a desperate need for the creation of new employments and not in the maintaning of archaic agricultural structures.

The first principle, no taxation without representation, create a link between european people and the creation of ressources at the european level. This way, the issue of money would not be a private question of national governments that decide those issues in the shadows, but it would be a open issue which concern the people and their representative ( at the European Parliament for instance).

The second principle, innovation in expenses, would carve out for the Union the power to allocate money where money are primarily needed. It is widely felt at the moment that, for example, european unemployment is plaguing citizens; it is, therefore, of very little advantage to know that agricultural expenses can be safeguarded at their very high level. Primacy should be given to more important issues, and where primacy lies should be, once again, decided by the representative of the people along with the representative of the executives of the states.

Hamilton, in the Federalist No. 30, said:

"Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish."

Being unable to reach an agreement concerning the budget, the Union declared its weakness vis-a-vis political crisis. Even if it did manage to reach a compromise, however, it is not evident whether the citizens will be the beneficiary of that agreement. This can only be safeguarded by creating a direct control of the people over the expenses of the Union, that is by empowering the representatives of the European people to decide the allocation of expenses.