While both cohesion and
While both cohesion and agriculture policies face cuts, the commission proposed to boost funding for the Erasmus student exchange program, digitalisation, research and development, and external border security. The Netherlands, Austria, Sweden and Denmark, all net contributors, argue that this is too much, while countries in eastern Europe which directly benefit from cohesion funds do not want to see further cuts in these two key policies of the EU - which account for about 70 percent of the total budget. PIVOTAL BATTLE That will be the pivotal battle between the two groups of countries. Central and eastern European states also feel targeted by the commission's proposal on other fronts. The allocation of EU cohesion funds, aimed at poorer regions, will this time tilt towards the southern counties, such as Italy, Greece, and Spain, which have gone through a deep financial and economic crisis, while central and eastern European economies have seen growth. The commission argues this proves the success of cohesion policies: that these largely former communist economies are catching up with the richer part of the EU. However, countries that are set to lose the most, such as Hungary and Poland accuse the EU executive of attempting to punish countries that have clashed with the EU executive over political and legal issues, such as the independence of the courts. These two countries have also been the loudest critics of the EU's migration policy. The EU commission says that GDP growth is still the main indicator when it comes to calculating allocations. But some central and eastern European member states have criticised the introduction of new criteria to determine the sum for member states, for example introducing measures on youth unemployment, climate change and the reception and integration of migrants. EU Commission president Jean-Claude Juncker said the cuts to cohesion and agriculture policies are 'no massacres' Photo: European Commission 10 — REGIONS & CITIES 2018
the EU to have the ability to tax independently, and those who want to keep the right to tax solely in member states competencies, is emerging again this time too. Copies of the EU budget in the European Parliament in 2005 Photo: European Parliament The commission is proposing that customs duties, contributions based on value-added tax, and revenues from the emission trading scheme (ETS) to be collected at EU level, not a national level, plus revenue from the European Central Bank issuing money. Over the summer, the commission outlined the details of its planned budget to EU diplomats - but as the European elections of May 2019 are approaching fast and the campaign intensifying, there is little chance for any significant debate until after the poll. Central and eastern European countries are also worried about a possible new mechanism the EU executive wants to introduce to discipline countries where the judiciary has been put under political pressure. The commission wants to be able to "suspend, reduce or restrict access to EU funding" in a proportionate manner to protect EU investments and European taxpayers' money. But plans for the new procedure, the so-called "conditionality" clause, are still vague. The new budget will then most probably be voted on by a new European Parliament - one that is expected to see a surge in populists, who have very different ideas about EU priorities. There is an ever-present debate between those who want the EU to have the ability to tax on its own, and those who want to keep the right to tax solely in the hands of member states Photo: European Parliament REBATE ROW? Another front where member states are expected to clash is the issue of rebates. The UK's controversial rebate, the partial refund for their payments into the EU budget first negotiated by Margaret Thatcher in the 1980s, will disappear with Brexit. In a complex mechanism, Germany, the Netherlands, Austria, and Sweden, who are also net contributors, pay only a share of the UK's rebate. The commission is arguing that with the UK rebate gone, all rebates should be gone. Yet the net contributor countries want to retain their own rebates, arguing that they need a correction mechanism so that their contribution does not inflate. The ever-present debate between those who want 11 — REGIONS & CITIES 2018
