The European Commission presented its budget proposal for the 2024-2027 period on Tuesday, June 20th, asking to increase the annual contribution of member states by tens of millions to spend on Ukraine, migration and neighborhood policies, as well as technological subsidies to protect its global competitiveness.
During the first detailed presentation of the next Multi-annual Financial Framework (MFF), Johannes Hahn, the EU Commissioner for Budget and Administration, did not fiddle with empty arguments for long before telling reporters that the EU will need substantially more money in the next four years to finance its increased operating costs, geopolitical ventures, and unforeseeable challenges.
“If we want to be a serious political and economic player at a global level, we need more resources,” the commissioner said right away. Then he revealed that the exact price tag of global relevance was set at €65.8 billion, which, according to Hahn, is the minimum needed to get the EU back on track and actually reduce costs in the long term.
Hahn also provided a detailed breakdown of the fresh funds, although not every detail is crystal clear yet. What we know is that the bulk of the extra money will be spent on three key areas: Ukraine, migration, and innovation.
Ukraine: “Constant and Predictable Financing”
On the Ukrainian front, the Commission proposed €50 billion over the course of four years “to establish a constant and predictable financing of Ukraine’s most pressing needs.” This amount is aimed at helping both the war and the following reconstruction efforts, with three pillars in mind: technical assistance, long-term investments, and “financial support with loans and guns.”
The €50 billion meant for Ukraine also splits into two, with €17 billion direct financial assistance, and the remaining €33 billion (which is not included in the €65 billion final figure) to be given to Kyiv in the form of loans that it will eventually have to pay back.
Migration Management and Strategic Technologies
For addressing the needs of refugees and the external dimensions of migration, the extra budget foresees €15 billion. Around a third of that amount will be spent on general migration management, as in border control and asylum procedures, while the rest will be mainly used outside the EU to help Syrian refugees in the primary transit countries, strengthen the anti-smuggling and humanitarian infrastructures on the Western Balkans and Central Mediterranean routes, and create a “solidarity emergency aid reserve” of €2.5 billion.
The third element is the funding of innovation in key technological areas, such as semiconductors, biotechnology, advanced weaponry, or space technology. The total amount of these EU-level subsidies is proposed to be €10 billion, out of which the European Innovation Fund (IF) will get €5 billion, the InvestEU €3 billion, the European Defense Fund (EDF) €1.5 billion, and the European Innovation Council (EIC) €0.5 billion for further distribution.
Administrative Costs
Furthermore, another €19 billion was proposed for the debt management of expensive, long-term projects in possible danger of rising interest rates, an additional €3 billion for a so-called “flexibility instrument” to help out member states in sudden financial need, and a “modest” increase of €1.9 billion for the administration’s own operating budget, because—according to Hahn—while the member states can also profit from inflation, Brussels only suffers from it.
“Altogether we are asking for fresh money for the magnitude of 65.8 billion euros for the next four years,” Commissioner Hahn said, nonchalantly adding that these extra funds will help the EU catch up with the inflation losses and get back to normal 1% GDP that the EU member states are usually needed to contribute annually. It’s a ‘pay more now to pay less later’ type of situation, apparently.
Big-Picture Issues
The commissioner also stressed that this budget top-up is only meant to address the big-picture issues that the entire EU is equally interested in, and not things like agriculture or energy where each member state has its own separate needs. Moreover, it is also meant to give weight to the bloc’s geopolitical ambitions, like staying relevant (and possibly on par with China) in the Global South.
“We looked at this €65 billion figure very carefully. It is not the result of some sort of artificial calculation. It’s been a very careful identification of the real needs based on all the things the member states have been constantly calling us to do,” Hahn said, telling how EU members always want more geopolitical engagement but are reluctant to pay for it. “In the future, we’ll have to pay more on our global interests,” he added.
The commission hopes that after negotiating with all relevant institutions, the proposal will be adopted by the end of the month, during the upcoming European Council summit, or in July at the latest.
Summary of Proposed Budget Increases:
- €17B Ukraine
- €15B Migration & Neighborhoods
- €10B Technology & Investment
- €19B Debt Management
- €3B “Flexibility Instrument”
- €1,9B EU Operating Budget
