The EU budget, between combating the effect of the war in Ukraine and energy independence from Russia

Politics - December 21, 2022

EU countries will have a joint budget of over €180 billion at their disposal in 2023, complemented by grants worth an estimated €113.9 billion from the NextGenerationEU instrument. 

This generous budget will also benefit the two candidate countries – Ukraine and the Republic of Moldova, which will receive, directly or indirectly, significant amounts from the EU budget. Support for Ukraine and the Republic of Moldova is one of the main destinations – along with tackling the energy crisis and the still-felt effects of the Covid-19 pandemic – of the extra money obtained by the European Parliament from the EU budget following negotiations with the Council.

In the initial draft, the European Commission proposed an annual EU budget of €185.6 billion for 2023, complemented by grants worth an estimated €113.9 billion from the NextGenerationEU instrument. According to the draft, the EU budget was constructed in such a way as to further mobilise significant investments aimed at strengthening Europe’s strategic autonomy, boosting ongoing economic recovery, safeguarding sustainability and creating jobs. 

Priority areas for the Commission are investments in the green and information technology sectors, while responding to the urgent needs generated by the recent and current crises.

“We continue to propose extraordinary amounts to support Europe’s recovery and to meet current and future challenges. The budget remains an important tool for the Union to deliver clear added value to citizens’ lives. The budget helps Europe shape a changing world where we work together for peace, prosperity and our European values” – Commissioner Johannes Hahn, responsible for the EU budget.

At the same time, to help poorer , the European Commission has proposed redirecting €40 billion from regional grant funds to energy subsidies. According to the European Commission, the Western Balkan states and the Eastern candidate countries Ukraine and Moldova should also be included in the procurement community and solidarity. The agreement between the European Parliament and the Council of the European Union, based on proposals from the European Commission, covers commitments of €186.6 billion and payments of €168.7 billion. Following the vote on the draft budget on 23rd of November after negotiations with the European Council, MEPs secured over €1 billion (€1,048.7 million) to fund programmes and policies addressing the consequences of the war in Ukraine, the energy crisis, migration, education, the environment, digitalisation, health and the fight against corruption. The money will also help European economies recover from the pandemic and strengthen efforts towards the green and digital transition.

MEPs voted to reverse almost all of the cuts made to the Commission’s draft budget by the Council and even added extra money to some chapters. The money is thus earmarked for increasing the EU’s energy independence and supporting European economies to combat the effects of the Covid pandemic, as well as helping Ukraine and Moldova, countries in vulnerable situations in the current political context.

MEPs called for an extra €530 million for measures to increase the EU’s energy independence and support citizens and SMEs facing high energy bills, while supporting green transition and biodiversity.

“One of the most important achievements of the European Parliament in the negotiations with the European Council is the €155.5 million increase in funding for measures to combat high energy prices, from investments in increasing production and improving infrastructure to energy efficiency projects. (…). We also obtained an increase of €10 million for the SME programme”, announced Romanian MEP Victor Negrescu after the negotiations with the Council.

At the same time, the European Parliament managed to regain the €200 million cut by the Council for the European health programme EU4Health and obtained, in addition, another €7.5 million, considering that the COVID-19 pandemic is not yet over and national health systems still need help to become more resilient.

A further €210 million has been secured to support Ukraine and Moldova.

“Over a billion extra euros to cut energy prices, to help our allies in Ukraine and Moldova and to stand on our own two feet – that’s what we fought for and that’s what we got. Citizens do not want institutional games, they expect results now”, said Romanian MEP Nicu Ștefănuță, quoted by Agerpres.

Speaking about the importance of the outcome of the negotiations, he stressed that the EU’s survival depends on how it responds to these and other challenges.

”It is about the very survival of the European Union, because if the EU is unable or incapable of responding, citizens will turn away from this project and that would be a great, great pity. I think that the Council is aware of this too”, said the Romanian MEP.

To combat the effects of the war in Ukraine, the following additional funds have been obtained: Erasmus+, which receives €120 million to support students and teachers in Ukraine; Humanitarian Aid, which receives an additional €150 million; Asylum, Migration and Integration Fund, which receives an additional €35 million; Border Management and Visa Instrument, which will receive an additional €10 million; Military Mobility, which receives an additional €58.8 million. These amounts are in addition to the 210 million allocated to support the Eastern Neighbourhood countries, including Moldova and Ukraine. The money could be used to invest in modernisation, schools, hospitals and crisis management following Russia’s invasion of Ukraine. 

On the energy and climate chapter, extra money has also been allocated to the Horizon Europe research programme, the Connecting Europe Facility – which funds the construction of high-quality trans-European transport and energy networks – and the LIFE programme for environment and climate action. Additional funding was also provided to the EU Civil Protection Mechanism (UCPM), the Creative Europe Programme, the Digital Europe Programme and the European Public Prosecutor’s Office headed by Laura Codruța Kovesi, which was increased by 20 posts.

For Romania, “among the most important increases are the €10 million increase in funds for border protection with a view to Romania’s accession to the Schengen area, the €210 million increase in resources for the Eastern Partnership, including the Republic of Moldova, and the addition of more than €155 million to European measures to combat high energy prices”, explained Victor Negrescu.

In total, the amounts allocated to the main chapters are:

  • 14.1 billion euro to support our neighbours and for development and international cooperation. The agreement includes specific increases for the Neighbourhood, Development Cooperation and International Cooperation Instrument (NDCI) – Global Europe (€12.3 billion), with a focus on Ukraine and Moldova, for migration in the Southern Neighbourhood, and for the humanitarian aid programme (€1.8 billion) to address crisis situations around the world;
  • 1.5 billion euro for the Asylum, Migration and Integration Fund and 956.8 million euro for the Integrated Border Management Fund to accelerate cooperation on external border management and to strengthen migration and asylum policy, including support to Member States receiving refugees from Ukraine;
  • 3.0 billion euro for the Connecting Europe Facility for upgraded and high-performance transport infrastructure to facilitate cross-border connections, [with a particular focus on strengthening the EU-Ukraine solidarity corridors and the energy component in response to the energy crisis, complementing the EUR 20 billion REPowerEU proposal;
  • 295.2 million euro for military mobility to improve civilian and military mobility;
  • 3.7 billion euro for Erasmus+ to invest in young people, including pupils and students fleeing Ukraine, and 332.8 million euro for the cultural and creative sectors through the Creative Europe programme;
  • 62.9 billion euro will be commitments to support the ongoing recovery, boosting investment in economic, social and territorial cohesion;
  • 53.6 billion euro for the Common Agricultural Policy and1.1 billion euro for the European Maritime and Fisheries Fund, for Europe’s farmers and fishermen, but also to strengthen the resilience of the agri-food and fisheries sectors and to ensure the necessary scale of crisis management measures;
  • 12.4 billion euro will be allocated to the Horizon Europe programme, 602.8 million euro to the Single Market Programme to support small and medium-sized enterprises across the Union and 739.3 million euro to the EU Health Programme;
  • 1.5 billion euro will go into the Just Transition Fund to ensure that the transition to climate neutrality is beneficial for all;
  •  755.5 million euro under the LIFE programme to support environment and climate policies; 
  •  309.9 million euro will be allocated to the Internal Security Fund; 
  • 945.7 million euro for the European Defence Fund to support strategic autonomy and European security;
  • 157 million euro for the Act on the strengthening of the European defence industry through joint procurement.