Economy |  The debate on how our joint resources are best spent is heating up as EU comes closer to the inevitable moment of truth on the common budget. A line is drawn between those who claim a cut in CAP expenditures will be necessary to cope with modern and urgent challenges, and those who wish to see this policy area preserved for the sake of food security and ensuring descent income for farmers.

In 2011, the Commission is due to present its draft proposal of the next long term budget and before that, an official report on the outcome of the budget review is expected. With the new Commission and Parliament installed and the Lisbon Treaty in place, there are no longer any excuses for the EU institutions not to show their true colors in this sensitive matter.

Consequently, the Swedish Society for Politics and Business organised a seminar on 2 February to discuss CAP and the EU Budget – expectations and reality. The seminar gathered 120 MEPs, Commission representatives, business and NGOs.

No free lunch
Patrick Messerlin, Director of Groupe d´Economie Mondiale, started off by stating that there is no such thing as a free lunch.

“Within a country, protecting a sector is to the detriment of the non-protected rest of the economy, for instance manufacturing, services but also forestry, fishing, and non-supported agriculture”.

Not only is the overall price tag in terms of efficiency losses for the European economy high (the proportion of GDP loss, tensions are also created between winners and losers among member states. As opposed to common believes in Messerlin´s home country – France - it does not come out as a winner. In fact, French farmers would gain more from free trade due to a successful Doha Round than what they acquire in subsidies.

A restructuring of public resources imperative
Jorge Núnez Ferrer, independent analyst and associated research fellow at CEPS, also made the point that EU is inefficiently using its aggregate public resources and those are often incoherent with objectives. He made a comparison of the expenditure on social protection of the EU with Canada and Switzerland. As it turns out, EU spends twice as much in relative terms on social protection than these two “social” countries (41,4%; 20,8% and 20,7% respectively) that have more or less the same social standards and expectations as the EU.

“We need to ask ourselves whether we are using the resources efficiently. A more efficient spending on social protection in countries like Canada and Switzerland leaves room for investing in competitiveness instead”.

He also pushed for a greater coherence of climate change objectives in the EU budget, as well as co-financing of CAP.

“CAP and the overall budget can free themselves from their present policy straightjacket”.

Who gets what from the EU budget?
Jack Thurston, Executive Director of EU Transparency, described how access to data has made it possible to follow the money of the CAP budget. Since the data is accessible on individual recipient level, head lines have been spotted all across Europe on the fact that it is far from the poorest farmers that are the most beneficial recipients.

All though it is remarkable that the Queen of England and the Duke of Westminister are found among these, he emphasized that the value in accessing this data lies predominantly in the aggregated level, making it possible to demonstrate effects on member state level.

According to Mr Thurston, the question is not if there will be cuts in the next long term budget, but where. Likewise, he argued that it is no longer a matter of if co-financing will be introduced in CAP, but how.

Nothing will stay as it is today…
MEP Reimer Böge of the Committee on Budgets claimed that whatever happens in the budget negotiations, nothing will stay at it is today. He emphasized the important part to be played by the Parliament and stated that it should be able to send strong signals to member states to take steps towards political agreement. The Council is stubborn, he concluded. “Will it be able to face new challenges? Whereas the EU is accused not to spend the joint resources wisely, one should remember that it is in fact the member states that have established the current priorities of the EU budget”.

Finally, he warned that if the Commission is not ready to take the financial challenge of the Lisbon Treaty in to account, the Parliament will remind them:

“I am looking forward to the report of the Commission”.