Europe Struggles with Multiple Crises as EU Budget Runs Dry: A Call for a More Flexible Spending Strategy

The war in Ukraine and the suspension of Russian gas. The first effects of climate change and the late effects of the pandemic. The pressure of migration and now rising interest costs: probably never before has Europe been hit by so many crises at once.

Europe is gripped by multiple crises, but the EU’s capacity to act is diminishing. With its current budget, it is unable to meet the challenges, writes Moritz Koch from Handelsblatt.

The war in Ukraine and the suspension of Russian gas. The first effects of climate change and the late effects of the pandemic. The pressure of migration and now rising interest costs: probably never before has Europe been hit by so many crises at once. There is little to suggest that this description of the situation will remain a snapshot. On the contrary. The numerous crises become permanent – and overburden the financial resources of the EU. The budget reserves of the Union are practically exhausted, and the remaining billions have long since been exhausted. The challenges facing European politics are increasing, but its capacity to act is decreasing.

In this way, a topic that probably only interests specialists outside Brussels is pushed to the center of the European political debate: the review of the EU budget. Johannes Hahn, the commissioner responsible, will first present the 2024 budget proposals on Tuesday and then, probably in the middle of the month, the mid-term review of the financial framework for the period 2021-2027.

But those expecting relief are likely to be disappointed. Willingness to inject additional funds is low, especially in Germany, which is the EU’s most important net payer. There is also resistance in member states to the European Parliament’s plans to give the Commission more of its own revenue.

Only at first glance, the amounts in the EU budget are impressive. The so-called multiannual financial framework includes more than one trillion euros. Added to it is the Corona Recovery Fund, which is worth 750 billion euros.

However, the costs are spread over seven years. And more: About 80% of the budget is firmly set aside, for example, for the common agricultural policy or the cohesion fund, which should equalize the economic power in Europe.

The EU has a lot of mandatory spending but little flexibility

That leaves less than €30 billion a year to support Ukraine, accelerate the energy transformation, strengthen the chip industry, boost domestic production of clean technologies, develop new sources of raw materials and counter China’s Silk Road initiative “.

Already this year, Khan will have to squeeze out the last reserves from the seven-year budget. No wonder the EU Commission has to resort to shell tricks and announcement politics.

Forced to cling to a rigid corset of mandatory spending, the EU cannot rise to a geopolitical power. With the current budget structure, Europe is unable to meet its challenges.

That is why the budget review must lead to a more flexible use of EU funds in the future – to deal with crises, to promote new research projects and, yes, with all due caution, for common industrial policy. An EU that can act is worth every euro.