On January 21st, CENS in cooperation with the Hungarian Economic Association hosted a panel discussion entitled ‘The new EU budget and the new member states.’ The event was part of the ongoing project on “Preparing for the EU Council Presidencies of the Visegrad Countries”

The discussion was moderated and initiated by Tamás Szemlér, Senior Research Fellow of the Hungarian Institute for World Economics, who spoke in his introduction about the timeliness of such an event. He argued that with a view to the completion of the Lisbon Treaty process and the looming end of the financial crisis, practitioners and decision-makers in the EU will again have more time and opportunities to talk about the upcoming budget planning procedure for the time beyond 2013.

Sándor Richter, of The Vienna Institute for International Economic Studies, started of the panel by introducing his concept for a significant overhaul of EU budgetary planning both on the income and expenditure side. Dr. Richter argued that a streamlined system, whereby the budget was calculated following a defined formula would bring great benefits by abolishing the dominance of the selfish attitude that currently controls the process. His system would still follow the solidarity principle of the Union, but it would be based on – what he called – a ‘relative prosperity difference’.

 The following speakers introduced their respective Visegrad government’s current position on the EU budget adding their personal expert’s opinions to the panel. Elżbieta Kawecka-Wyrzykowska of the Warsaw School of Economics recounted that the Polish government is against any reduction of the EU budget, and aims to streamline its incentive structure and efficiency of spending. Professor Kawecka-Wyrzykowska also spoke about the conflicted position of Poland vis-à-vis the ‘rebates versus Common Agricultural Policy (CAP) spending’ that dominated the last round of budget negotiations.

Lukas Pachta of the Europeaum Institute of Prague spoke in his presentation about the difficulty of combining calls for reform with the continued need for solidarity. He also argued that the Czech position on the budget is not yet fully developed and that there are differing forces pulling Czech decision-makers toward a variety of opinions. Mr. Pachta advocated that the coming budget discussions should follow a fiscal-federalist line, that it introduces a bottom GNI percentage of contributions and seeks to interconnect the budget with overall EU strategies more than it is the case currently.

 Miklós Somai of the Hungarian Institute for World Economics talked about the difficulties of merging the needs for more flexibility and more stability, emphasizing that the Hungarian government is in favour of a policy driven budget. He also talked about the way in which new challenges (such as migration, climate politics and enlargement) might endanger the position of previous priorities (such as cohesion).

Radovan Geist reiterated the main points of contention in the upcoming budget negotiations. He then went into a detailed description of the Slovak position, which is defensive with regards to the solidarity principle and cohesion, but willing to support new directions as well. Mr Geist also explained that Slovakia is very skeptical about the introduction of an EU-wide tax.

Following the individual talks, the panel members reacted to each other’s presentations and later to questions asked by the active and interested audience. Comments and reactions concentrated much on Dr. Richter’s proposed budget reform, particularly about the right of countries to spend EU funds independently. Other questions focused on CAP and potential alliances with regards to its defense. The event was concluded by Tamás Szemlér with a brief summary and an encouragement for further debate.

You download the published study under the folllowing link: [Download]