Politics & Economics

EU Budget Revision 21-27: All the Knots of the Agreement

February 2024
By Gianni Pittella

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Today (February 1, 2024), the European Council will meet in an extraordinary session to discuss the mid-term revision of the EU’s long-term budget for 2021-2027. This is a proposal put forward by the European Commission already on June 20, 2023. During the European Council in October, the Heads of State and Government had called for an agreement to be reached by the end of the year.

The situation began to unlock during the European Council in December, which supported the review by asking Hungary, represented by President Orban, to abstain from voting. Last January 10, the Council had agreed on partial negotiation mandates regarding the instrument for Ukraine, namely an instrument that provides financial support to help Ukraine in its recovery and modernization, and STEP, which is a new platform for strategic technologies.

In particular, the instrument for Ukraine would constitute a single EU bilateral support tool and would provide financial support in the period 2024-2027, based on grants, loans, and guarantees. According to the European Commission, this instrument would ensure predictability, transparency, and accountability, thereby contributing to the sustainability of Ukraine’s finances and protecting the EU budget. Moreover, as a bilateral instrument, it would confirm a unified approach by the Union in its relationship with Ukraine, a politically very important fact to signal to the Russian Federation the European block’s unwillingness to cease its support for the invaded country. An agreement on Ukraine in this direction would be good news for the country, following the agreement among EU defense ministers reached yesterday (January 31, 2023), confirming the intention to deliver 1 million artillery shells to Ukraine, of which over 500,000 will be provided by the end of March.

From these events, a reflection must be drawn, starting from two considerations. The first is about the appropriateness of European governance. The intergovernmental system that characterizes most of the EU’s strategic choices risks jamming at every delicate juncture if even a single country, in this case, Hungary, unilaterally opposes the line of other countries. The overcoming of the deadlock that occurred in December is, in fact, a temporary victory, which could be nullified by similar attitudes repeated in the future. In this direction, among other things, is the statement of the former Polish Prime Minister of PiS, Mateusz Morawiecki, who agreed on the joining of Fidesz, the party of Hungarian Prime Minister Viktor Orban, to the European Conservatives and Reformists (ECR) group.

The second is about the international situation. The upcoming American elections on November 5 could again deliver the presidency to Donald Trump, who would most likely end American aid to Ukraine, splitting the Western world in two. Both the fragile European governance and the volatility of the international framework point towards the strengthening of Europe. It will be essential that in the new European Parliament a majority can be formed not only generally favorable to the European integration process but also to its ambitious reform in a federal sense, transforming its governance to be more suited to the difficult times we are living through.