European Commission Wants Additional Contribution from EU Countries

Politics - September 18, 2023

The European Commission recently announced the Union’s draft budget for 2024, a generous €189.3 billion, slightly up on 2023. Hungary does not agree that EU countries should increase their contributions to the EU budget as the European Commission is demanding. 

Hungarian Prime Minister Viktor Orban calls the EC’s request “unacceptable” as long as there is no control over the money to be given as aid to Ukraine from these additional contributions. 

“It is unacceptable for Brussels to offer Ukraine another €50 billion in aid when we know nothing about the use of EU funds sent since the beginning of the war,” Orban wrote on Facebook following video conference talks on the subject with European Council President Charles Michel and the prime ministers of Belgium, Croatia, Luxembourg, Slovakia and Sweden.

In mid-June, the European Commission asked the EU countries for an additional contribution of €65.8 billion to the bloc’s multiannual budget by 2027. The purpose of this request from the EC was in particular to finance financial aid to Ukraine, but also to manage migration.

It is well known that Brussels is still blocking funding for Hungary and Poland in the European pandemic recovery plan. At the same time, Hungary is also being blocked from EU funds. Led by conservative governments, these two countries (Poland and Hungary) are accused by EU officials of violating the rule of law by restricting the rights of the LGBT community, challenging the primacy of EU law and EU court decisions over national law such as judicial reforms. 

The idea proposed by Brussels to increase the contribution of EU countries was also rejected by Austrian Chancellor Karl Nehammer. He called for the money already available to be used.  Karl Nehammer argued that money allocated to budget chapters such as cohesion funds or the European resilience mechanism (European pandemic recovery plan) is not being fully used.  The Austrian chancellor also underlined that there was scope for savings in EU administration spending.

The additional EU multi-annual budget for 2021-2027 will require unanimous approval by EU member states. It is quite hard to believe that this multi-annual budget will pass without the votes of the two “sanctioned” states, Hungary and Poland. 

However, as has been the case with budgets in recent years, spending on the transition to a green Europe and digitisation will also be a priority in 2024. In the context of presenting the main lines of the project, the European Commission also announced that it “will continue to stand by Ukraine as long as needed”, saying that financial support for the country will come “in the context of the forthcoming review of its long-term budget for 2021-2027”.

The proposed budget for 2024 is 1.4% higher than this year’s total commitments of 186.6 billion and up 2.4% on 2022.

“The EU has faced exceptional challenges in recent years, including a rapid rise in inflation, which has put considerable pressure on the budget’s ability to continue to respond to new developments. However, the draft budget for 2024 continues to provide essential funding for EU policy priorities as planned. Spending on the green and digital transition will continue to be a priority so that Europe becomes more resilient and future-proof,” says a European Commission press release.

The draft budget for 2024 directs funds to where they can have the greatest impact, according to the most important recovery needs of EU Member States and partners around the world. 

The funds will contribute to modernising and strengthening the Union, encouraging the green and digital transition, creating jobs and strengthening Europe’s role in the world, the official document says.

According to the draft budget, the following amounts are foreseen for the different priorities of the Union: €53.8 billion for the Common Agricultural Policy and €1.1 billion for the European Maritime and Fisheries Fund, €47.9 billion for regional development and cohesion, €13.6 billion for research and innovation, €4.6 billion for European strategic investments, €2.1 billion for space spending, €10.3 billion for human capital, social cohesion and values, €2.4 billion for environment and climate policy, €2.2 billion for border protection, €1.7 billion for migration spending, €1.6 billion for addressing defence challenges, €726 million for security.

The draft budget for 2024 is part of the Union’s long-term budget as adopted at the end of 2020, including subsequent technical adjustments, and aims to translate its priorities into concrete annual results. The budget remains within the parameters for allocating 30% of the long-term budget and the NextGenerationEU recovery instrument to the fight against climate change.

The draft EU budget for 2024 includes expenditure covered by appropriations under the long-term budget ceilings, financed from own resources. This is complemented by NextGenerationEU expenditure financed by borrowing from the capital markets. As for the budget itself, two amounts are proposed in the draft budget for each programme – commitments and payments. “Commitments” refers to the funds that can be contractually agreed in the course of a year, and “payments” refers to the amounts actually paid out.

According to the Commission, the 2024 EU budget will be supplemented by an estimated €113 billion in grant payments under NextGenerationEU, the EU’s post-pandemic recovery instrument.

With a budget of up to €807 billion in current prices, NextGenerationEU contributes to repairing the immediate economic and social damage caused by the COVID-19 pandemic and preparing the EU for the future. This instrument contributes to building a greener, more digital, more resilient and better prepared EU in the aftermath of the COVID-19 pandemic crisis to face current and future challenges. The central pillar of the NextGenerationEU instrument is the Recovery and Resilience Mechanism (RRM) – a grant and loan instrument to support reforms and investments in EU Member States. Contracts/commitments under the NextGenerationEU instrument can be concluded until the end of 2023, with loan disbursements to be made by the end of 2026.

The European Commission will continue to stand by Ukraine as long as needed. Following Russia’s war of aggression against the country, the EU budget has been fully mobilised to support Ukraine and EU Member States receiving refugees, but its resources have been exhausted. The Commission will consider future support to Ukraine in the context of the forthcoming review of its long-term budget for 2021-2027.

Last year, the European Parliament obtained, following negotiations with the Council of the European Union, an additional €1.048 billion over and above the budget proposed by the Commission.

The money was requested in order to “reduce energy prices, to help our allies in Ukraine and Moldova and to stand on our own feet”, said the EP’s chief negotiator at the time, Romanian MEP Nicu Ștefănuță. Of the more than €1 billion, €210 million has been earmarked to support Ukraine and Moldova, while another €150 million for humanitarian aid. 

The EU’s annual budget sets out all the European Union’s expenditure and revenue for a year. It provides for the financing of EU policies and programmes in line with the EU’s political priorities and legal obligations. The EU usually sets its annual budget at a lower level, to be able to meet unforeseen expenditure if necessary. The annual budgets, must be within the spending limits (‘ceilings’) set in the Multiannual Financial Framework (MFF), the EU’s long-term budget.

The financial contribution of each EU Member State to the Union budget is calculated in a fair way. The larger a country’s economy, the higher the contribution. The EU budget is not meant to redistribute wealth, but to meet the needs of all citizens living in the Union. 

As a matter of fact, from the date of accession (1 January 2007) until 31 January 2022, Romania has received €69.94 billion from the European Union. At the same time, Romania has contributed €24.20 billion to the EU budget. 15 years after joining the European Union, Romania has a positive balance of €45.74 billion, i.e. European funds received in excess of the money it has contributed to the EU budget. 

Of the total €69.94 billion received by Romania since accession, €36.68 billion was received under the 2007-2013 multiannual financial framework and €33.16 billion was received under the 2014-2020 multiannual budget.  At the same time, Romania’s contribution to the EU budget has increased to 1.4% of Gross National Income from 1.2% (2020) as of 1 January 2021, thus amounting to €2.357 billion, as a consequence of the European Commission’s European Resilience and Recovery Mechanism, as a result of which each state will contribute more to the EU budget.