The EU ‘Green Deal’ was due to cost €620 billion. It was all agreed. However, as Eurointelligence reports, the deal now is almost wholly unfunded -- because of ‘lavish’ Ukraine aid. The Commission has a ‘mere’ €82.5 billion allocated. Peanuts! So the Green Agenda is set to fade from political view.
Last week, President Macron (reflecting the economic realities) started to walk back Green measures: Europe he said, “had gone far enough”. This week, the European People’s Party was reported to be considering withdrawing its support for the European Commission’s Green Deal, which includes, for example, an EU-wide target for eliminating net carbon emissions by 2050.
Yet, as recently as 2020, the EU was agreed on a seven-year budget of 1.1 trillion euros. Two years later, this sum has already been allocated five years too early. “Just 2 years after the 7-year budget, Brussels is running out of money”, Prime Minister Viktor Orbán pointed out: “How can this happen? What happened to the economy? Where is the money?”
It seems the Commission has already also spent all of its reserve funds allotted for the EU’s seven-year budget too (an amount totaling 30 billion euros of reserves) that was intended to last through 2027. This means that EU finance ministers will have to make fresh contributions to the community budget, Commission President Von der Leyen said.
Where did the money go? (Orbán, of course, well knows the answer): “as long as this war [Ukraine] rages, we have taken from the EU budget the 30 billion euro [i.e. all the reserve] to support Ukraine financially … These [reserves] are now depleted".
Now, as Von der Leyen made clear, EU states must make additional contributions, totalling a further 66 billion euros, to the EU budget -- just to pass through 2023. Yet, out of the additional 66 billion euros, 50 billion euros already have been earmarked for loans and grants for Ukraine (beyond the €72 billion already given to Kiev, since Russia’s military operation in Ukraine began last February), and 15 billion euros for migrant and refugee programs. Only 1 billion euros is set aside for improving the EU's competitiveness.
And that is the ‘half of it’ -- for the next big issue, Von der Leyen says, is how to support Ukraine through 2027. Budget Commissioner Johannes Hahn has already been on a begging tour of capitals, asking for more money now – and lots more for 2024-2027. Madam President wants a further €72 billion (at €18 billion per year) in additional contributions to fund Ukraine's budget and infrastructure needs from 2024, through 2027.
This call for funds represents the first time that the EU Commission is forced to start pleading with EU states for additional funding after a mere two years into a seven-year budget. The EU spending framework is confirmed every seven years, most recently in July 2020. Changes to the EU budget are ‘supposed to be’ approved by a unanimous decision of all member states. Hungary, for one, wonders whether unanimity will be respected.
German Finance Minister Christian Lindner told the Die Welt newspaper on 16 June that Germany cannot afford to pay more money into the EU budget: “In view of the necessary cuts in our national budget, we are currently unable to make any additional contributions to the budget of the European Union”, Linder told reporters in Brussels, adding that other member states have come to the same realization.
At the end of May, Lindner introduced strict saving targets for the German ministries to close the existing financial gap of €20 billion. Since then, Lindner has somewhat softened his austerity approach. The cuts are controversial - and discussions on additional EU budget funding are not over, Chancellor Olaf Scholz’s office later underlined.
Lindner explained that the EU has maxed out its long-term budget through 2027, largely as a result of the bloc’s lavish aid packages to Ukraine.
Lindner explained that though Germany traditionally has been the bloc’s largest contributor, it has been forced to make cutbacks, as its economy contracts. After a decade of spending increases, the German government adopted plans to cut its budget for next year by €30.6 billion, affecting areas from health to childcare and public transport -- sparking fierce political battles within the governing coalition and across the political divide.
Ballooning public debt from the coronavirus pandemic and the energy crisis triggered by Russia's war in Ukraine meant that drastic cuts were now unavoidable, Finance Minister Lindner said. He insisted the country would return to stricter fiscal policies that respect the country's constitutionally enshrined debt brake that limits spending.
As always, it is war spending that finally implodes empires! How many EU citizens, one may ponder, are fully aware of the scale of Von der Leyen’s spending on Ukraine? They ultimately, will be the ones to bear the costs, of course.