The European Union is not planning a significant shift in the pace or scale of its Neighbourhood Policy in the next decade, at least when it comes to finance, but will streamline all external actions funding internally to create one commonn financial instrument for Neighbourhood, Development and Internal Cooperation (NDICI). The 7-year budget which will cover the European Union’s spending for 2021–2027, officially known as Multi-annual Financial Framework (MFF), prepared by the European Commission has been filed for approval to the European Parliament and the European member states and negotiations on it are expected to start in the new political season from September.
Being one of the seven main spending categories in the budget, the EU external action budget foresees a total of 123 billion Euro to be spend for EU’s engagements around the globe. 22 billion of the amount (18,7%) will be dedicated to the European Neighbourhood countries for the seven years covered by the financial framework. At this stage of the budget planning no calculations are made for the individual country packages, nor is the money yet divided between the Eastern and the Southern axes of the policy.
The bulk of the money in the external budget is bestowed to the Neighbourhood, Development and International Cooperation financial instrument worth 89.2 billion Euro. The rest of the money is to be used for pre-accession funds for the EU candidate countries – 14.5 billion Euro, humanitarian aid – 11 billion, Common Foreign and Security budget – 3 billion, the instrument for nuclear safety – 300 million and the Overseas countries nd territories – 500 million.
Despite the new title “Neighbourhood and the World” and the internal reshuffle of the external action financial instruments, both the share of the EU GNI (Gross National Income) for its global engagement, and the volume of the budget are to be preserved at approximately the same levels as in the current MFF.
The nominal increase of 26% in comparison to the 94,5 billion Euro for 2014-2020, comes mainly from the inclusion of the European Development Fund (EDF), so far outside of the EU budget, into it.
According to an analysis published by the European Parliament, the EU financial presence in the rest of the world will increase with 0,95% as share of MFF compared to the 2014-2020 budget. It will grow from 8,65% to 9,60% of the MFF for 2021-2027 period, mainly due to the consolidation of the EDF in the budget.
“Very little will change in the external action part of the next MFF. The goals and the scope of the EU programs regarding the neighbourhood policy will remain the same”, Zsolt Darvas, senior fellow at the economic think-tank Bruegel says in an interview for the OPEN Media Hub.
Bruegel’s estimations calculate an increase in real prices (adapted to the forecasted inflation) with no more than 12 to 13% for the 7-year period.
“This growth will not allow for a significant change in the EU policy towards its closest neighbours”, the economist says.
He notes more visible results from investing the EU money outside of the Union’s borders could be expected in the candidate countries of the Western Balkans where the EU’s pre-accession assistance can work as a stimulus to make significant progress in reforms.
For the countries without real perspective for an EU membership, the Union will try to keep good relations without going beyond the line drown by the current financial engagement, Darvas argues. The scholar expects that the EU will stick with its commitments to seek cooperation and assist reforms, related to strengthening of democracy and the rule of law in the Eastern Partnership countries, and will continue to finance measures managing migration in Northern Africa. However, these will remain at the current level unless the EU member states decide to increase spending on preventing illegal migration to the EU. Darvas describes it as the “major challenge” for the good relations between the EU and Southern Mediterranean countries and believes that increasing funds for the anti-migration efforts in the EU budget will at least be considered by the European governments who will have the last word on the final financial agreement for 2021-2027.
Darvas believes supporters of the idea could be found both among the net contributors to the budget from the Western member states and from the net beneficiaries in the Central and Eastern Europe:
Although the Eastern countries are strongly anti-migration, they are supportive of any measure, which can alleviate the migration pressure. I wouldn’t be surprised if there would be an increase for the external action funding in the final agreement”.
The moderate increase of the external action budget could be the main drive behind internal bargaining on the final figures. Considered the most difficult negotiations in the EU legislative process, the talks on the MFF are also believed to be the crème the la crème of the policy-making in Brussels, where various coalitions among the players could be made and broken on every part of the deal.
The increase in external action commitments is too timid. It’s good it is not reduced but I would suggest helping the Southern countries more because they have a major role in controlling the migration pressure to the EU, Zsolt Darvas from Bruegel says.
In its first evaluation of the MFF proposal the think-thank adds: “The EU has a responsibility for helping its less-fortunate neighbours and other parts of the world and has an interest in doing so if it wants to reduce the migration pressure in the long run. Instead of a relative decline, we propose a relative increase in external action commitments (with resources coming from the reduction of EU-financed direct transfers to farmers”.
The analyses of the European Parliament also express disappointment of the budget’s ambition “in the current context of growth (of the EU economy) and increasing external challenges” arguing the increase now is smaller in comparison to the one between to current MFF and the 2007-2013 EU budget.
When adjusted to inflation and with the EDF included, there is no real increase in the 2021-2027 budget, an initial comparison with the current financial framework released by the European Parliament shows. The revised figure is actually lower: from 1 138 billion for 2014-2020 to 1 135 billion for 2021-2027.
While this battle for the budget is expected to start after the summer, it is already clear that the European Commission is heading for a major internal restructuring in the international heading of the budget.
The New Model: All Instruments in One Box
The European Commission suggests an internal merger heading to create a new mega financial instrument for Neighbourhood, Development and Internal Cooperation (NDICI). With the idea to simplify the budget the new structure will centralise the seven currently existing formats: the EDF, the European Neighbourhood Instrument (ENI), the Development Cooperation Instrument (DCI), the European Instrument for Democracy and Human Rights (EIDHR), the Instrument contributing to Stability and Piece (IcSP), the Partnership Instrument for Cooperation with third countries (PI), and the Guarantee Fund for External Actions.
Having multiple instruments, with multiple sets of priorities, multiple management structures and multiple reporting procedures is not an effective approach”, the European Commission states in its proposal.
NDICI’s spending will be divided between geographic and thematic programs, with certain financial envelopes for emergencies and budgetary cushions. The Neighbourhood’s wallet of 22 billion Euro is the second largest after Sub-Saharan Africa’s 32 billion. The money will be safeguarded for the geographic region to which it is assigned, and it won’t be possible to move it to other geographic area programmes and projects.
The real start of the negotiations among the European institutions is expected this autumn with the view to be concluded before the European elections in May 2019. However, if this is not possible the decisive stage of the decision-making will be postponed until after the new European Commission is elected by the end of 2019. For a successful adoption of the next MFF except for the Parliament’s consent, an unanimity of the 27 EU states (the UK is set to leave the EU on 30 March 2019) is required.
Proposal for EU Budget for the Neighbourhood and the World for 2021-2027
Factsheet: EU Budget for the Neighbourhood and the World
Analysis by the European Parliament on the MFF Proposal
Bruegel’s article: The Commission’s proposal for the next MFF: A glass half-full