Politics & Economics

A New Europe is Possible Only if the European Budget Becomes a Federal Budget

March 2024
By Gianni Pittella

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On March 5, the European Commission and the High Representative presented the first European Defence Industrial Strategy (EDIS) at the EU level, aiming to support the competitiveness and readiness of the European defence industry. This is a very important step because it brings the Commission into an area traditionally left to member states, intergovernmental bodies, and international alliances.

Strengthening defense is very important, even just to optimize spending on military means and instruments by member states. The 2024 edition of the report on the “cost of non-Europe”, in line with studies from previous years, shows how the average European citizen could save 380 euros a year if the EU were fully integrated in the defense sector. The comparison with the United States is clear: the USA has only one model of battle tank, while European countries have 17, four classes of frigates against the EU’s 29, 6 fighter jets against the EU’s 20 models. This generates inefficiencies and waste, multiplying the efforts required for training and supplying components and ammunition. Therefore, by spending less and in a coordinated manner, the European Union could achieve a defense capability far superior to that currently held by member states separately.

Beyond efficiency aspects, the European integration of defense underscores the need for a qualitative leap in the European institutional architecture. To finance the European Defence Industry Programme (EDIP), 1.5 billion euros from the EU budget will be mobilized for the period 2025-2027. Although this is a significant amount of resources, the debate around this expenditure has not been felt, at least in Italy. The reason for this lies in the aura of obscurity that still permeates the Multiannual Financial Framework (MFF) in terms of public opinion and national political classes. Furthermore, it is always important to remember that the main source of funding for the MFF is transfers from member states, not European own resources.

For these reasons – the legitimacy of European choices and the Union’s autonomy in finding resources to finance essential public goods such as defense – it is necessary to transform the current European budget into a federal budget, equipped with substantial own resources and characterized by the protagonism of the European Parliament. The time is therefore ripe, both in the defense sector and in economic governance, to give Europe a new face, more democratic and legitimate in the eyes of citizens.