Title: Negotiations on the New EU Financial Framework 2014–2020: Theory, Realpolitik and the Polish Perspective
Abstract: IntroductionNegotiations of funding periods in the European Union (EU) are characterised by a constant cycle, repeating every seven years. Although the EU general budget covers only about 1% of Gross National Income (GNI) across the EU, its size, revenue structure, and expenditures produce great tension and attract much public opinion in Member States. Individual governments are trying at all costs to defend their net position, which forms a deadlock, preventing any more rational discussion about reform of EU finances.The current context of the negotiations is far more difficult than the previous one. The crisis in the euro area not only brought austerity pressure, but also contributed to the weakening of EU institutions and strengthening of the intergovernmental factor. It does not create a good climate for talks on common interests. Therefore, negotiations on the new EU Multiannual Financial Framework 2014-2020 (MFF) are likely to lean towards a rotten compromise, with the core question concerning the sacred net positions, accompanied by disputes concerning the total size and amount of own resources along with a dogfight amongst Member States concerning agriculture and cohesion policies. One of the most active countries in the negotiations will be Poland, currently the largest net beneficiary, which will try to gather around itself a coalition of other countries. Nevertheless, the difficult context of the negotiations will require that Poland place itself in a defensive position.In the first section of the article, the authors conduct a general literature review concerning questions strictly linked to the EU budget, such as the functions of common finances, key spending areas or the sizes of EU finances. The second part concerns the course of the EU Multiannual Financial Framework negotiations and broadly describes the Commission's proposal, which became the base for negotiations. In the third section, the authors show the key coalitions of interest and the negotiations process, including the interactions between the Member States and EU institutions. The fourth section contains original ownestimations showing that the Commission's proposal is the most advantageous solution for Poland, and explaining why the net payers' claims on specific items only worsen Poland's balance towards the EU budget.Finances and European IntegrationThe development of the EU's finances is inextricably linked with the history of European integration, and the various stages correspond to a gradual strengthening of cooperation between European countries. Brigid Laffan, in her fundamental book on EU finances, listed the major factors that have contributed to the development of community budgets.1 She claimed that the creation of common policies, growth in independence of institutions, search for stability in the budgetary process, and successive enlargements were the major driving forces of development of EU finances. This illustrates well that the development of the own system of finances was one of the most important processes since the beginning of European integration. The present stagnation in the discussions about the EU's budget can be interpreted as one of the symptoms of a crisis of European integration in general.Alongside successive budgetary battles between Member States with increasing participation of the institutions, numerous researchers have been examining these problems from a theoretical angle. They have tried to explain the optimal shape for EC/EU finances using the theory of fiscal federalism developed by Wallace E. Oates, which concerned the most effective assignment of fiscal competences to various levels of public authority.2 Fiscal federalism was developed on the example of existing federations, especially the United States, which does not fully correspond to the complex, hybrid structure of the European Union. Nevertheless it gave some insight into how classical functions of public finance should be optimally positioned. …
Publication Year: 2012
Publication Date: 2012-04-01
Language: en
Type: article
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