Session XI

SCIENCESPO LILLE 2022

EU Politics and Institutions

Internal Challenges of the European Union

Dr Katarzyna CZERNICKA
(katarzyna.czernicka@sciencespo-lille.eu)

1. European Commission, EU Budget for the future, Regional

Development and Cohesion beyond 2020, the New Framework at
Internal Problems
glance, May 2018.
2. Brigid Laffan and Johannes Lindner, The Budget, Who Gets
What, When, and How?, in.Helen Wallace, Mark A –cohesion of the EU
Pollack,Christilla Roederer-Rynning and Alasdair R. Young,
Policy-Making in the European Union, Eighth Edition, Oxford –European political life
New York; Oxford University Press, 2020, pp. 208-216, 224-231.
3. Arnaud Leparmentier, Waiting for the European Washington, Le
Monde 06/10/2009. –The lack of political identity
4. Jacek Zakowski, No Europe without the Media,
www.cafebebel.com
5. Robert Lane Greene, Johnson: Just speak English?, The
Economist, 17/09/2013.
6. John McCormick, European Union Politics, Palgrave, Macmillan,
pp. 264-270.

Budget of the EU Budget of the EU

• General information : to pay for policies
carried out at European level (such as
agriculture, assistance to poorer
regions, trans-european networks,
research, some overseas development
aid) 95% and its administration 5%
• €864.3 billion for the period 2007–2013
representing 1.05% of the EU-27's
Gross National Income
• The annual budget is adopted by a
procedure involving a proposal from the
European Commission, which must be
adopted (usually after amendment) by
the European Parliament and the
Council.

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 Budget - revenues
The EU obtains most of its revenue
indirectly by payments from treasuries of
Member states.
Traditional own resources are taxes
raised on behalf of the EU as a whole,
principally import duties on goods brought
into the EU.
These are collected by the state where
import occurs and passed on to the EU (14%)
Budget - revenues
Gross National Income based own
resources form the largest contribution to EU
funding. A simple multiplier is applied to the
calculated GNI for the country concerned. Thi
is the last recourse for raising funding for a
budget year, so the actual figure is adjusted
within predetermined limits to obtain the
budget total required. Revenue is currently
capped at 1.23%
Budget - expenditure
• Internal policies (training, youth, culture,
audiovisual, media, information, energy,
Euratom nuclear safeguards and
environment, consumer protection,
internal market, industry and Trans-
European networks, research and
technological development, other
internal policies) 8.5%
Budget - revenues
VAT based own resources are taxes on EU
citizens derived as a proportion of VAT levied
in each member country.
VAT rates and exemptions vary in different
countries, so a formula is used to create the
'harmonised tax base', upon which the EU
charge is levied. The starting point for
calculations is the total VAT raised in a country
(16%)
Budget - expenditure
• Common Agriculture Policy 46.7%
• Structural Funds 30.4% aims to reduce
regional disparities in terms of income,
wealth and opportunities
Budget - expenditure
• Administration, i.e. the actual running of
the EU institutions, including salaries
and property costs, accounted for
around 6.3%.
• External actions, i.e. EU's international
activities outside the EU (development
aid, peace keeping and security work,
election observers etc.) accounted for
4.9%
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 Budget of the EU – Net
contributors
• The four largest net contributors in
absolute terms are Germany, France,
Italy, UK
• The four largest net contributors in per
capita terms are Denmark, Finland,
Germany, Italy.
• The four largest net contributors as a
proportion of GDP are Denmark, Italy,
Germany, Finland.
The budget for 2021-2027
• The EU budget for the 2021–2027 period has
expenditures of €1,074.3 billion.
• It goes together with the Next Generation
recovery package of €750 billion in grants
and loans over the period 2021–2024 to meet
the unparalleled economic challenge of the
COVID-19 pandemic.
Budget of the EU – Net
recipients
• The four largest net recipients in
absolute terms are Poland, Greece,
Hungary, Portugal.
• The four largest net recipients in per
capita terms are Luxembourg,
Lithuania, Estonia, Greece
• The four largest net recipients as a
proportion of GDP are Lithuania,
Estonia, Luxembourg, Hungary.
The budget for 2014-2020
• EU leaders have agreed the first
spending cut in the history of the EU's
budget, following a wearing 25-hour
negotiating session in the European
Council
• a €34.4bn cut in the 27-member bloc's
multiannual financial framework for
2014-2020, limiting EU spending.
Cohesion of the EU
The EU – internal disparities between its regions are
important.
The aim of the Regional development policy is improving the
economic well-being of certain regions in the EU.
Solidarity - the policy aims to benefit citizens and regions
that are economically and socially deprived compared to EU
averages.
Cohesion there are positive benefits for all in narrowing the
gaps of income and wealth between the poorer countries and
regions and those which are better off.
Around one third of the EU's budget is devoted to this policy
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 Some Key Dates
1958 European Social Fund (ESF) and the
European Agricultural Guidance and
Guarantee Fund (EAGGF) are established
1975 Creation of the European Regional
Development Fund (ERDF)
1986 The Single European Act lays the basis
for a genuine cohesion policy designed to
offset the burden of the single market for the
southern countries and other less-favoured
regions.
Some Key Dates
1994-1999
The Edinburgh European Council
(December 1993) allocates almost 200
billion ECU, one third of the Community
budget, to cohesion policy.
A new Financial Instrument for Fisheries
Guidance (FIFG) is created.
Regional Policy and Enlargement
Economic and social disparities are twice as
great in EU-27, than in EU-15.
The new approach has been called Cohesion
Policy.
The aim is to promote growth-enhancing
conditions for the overall EU economy and to
focus on three objectives: convergence,
competitiveness and cooperation.
Some Key Dates
1992 the Treaty of the European Union
designates cohesion as one of the main
objectives of the Union, alongside
economic and monetary union and the
single market. It also establishes the
creation of the Cohesion Fund to
support projects in the fields of the
environment and transport.
Some Effects of This Policy
The case of Ireland
Its GDP, which was 64% of the EU average
when it joined in 1973, is now one of the
highest in the Union.
In 2000-2006 the biggest beneficiaries were
Greece, Spain, Portugal, Ireland, southern
Italy and the eastern part of Germany.
What is the future of the EU’s
Regional Policy?
• The 2014-2020 period: the reformed cohesion
• policy
• 28 countries, 274 level 2 regions
• Budget of 351 billion of euros
• Achieve the “Europe 2020 strategy” goals:
- Creating growth and jobs
- Tackling climate change and energy dependence
- Reducing poverty and social exclusion
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 What is the future of the EU’s What is the future of the EU’s
Regional Policy? Regional Policy?

The Prague region was already the 12th wealthiest in the EU

just after enlargement in 2005. But six years ago Bratislava
had a GDP per capita, PPS of €33,124 and was not even in
the EU top 15.

What is the future of the EU’s

Institutional Issues
Regional Policy?
• The process of ratification of the
2021-2027: the future of the EU cohesion policy - Smarter, Constitution stopped by the negative
Greener, more Social & more Connected Europe result of referenda in France and the
Netherlands

The new treaty of Lisbon – 2007 The new treaty of Lisbon – 2007

- the end of two-year crisis amended the current EU and EC treaties,

without replacing them
- the more modest treaty was not styled a
constitution and omitted any mention of an It provided the Union with the legal
anthem or flag framework

- it incorporated the key reforms in the

constitution rejected in 2005

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 Key reforms
-EU leaders choose a president of the
European Council for 2-1/2 years renewable to
strengthen the current system of rotating
presidencies
-A new foreign policy chief
Key reforms
- After 2014 voting will be based on a
« double majority » system requiring 55
percent of member states representing 65
percent of the EU population.
- The treaty allows decision-making in more
policy areas by majority voting, notably in
justice and home affairs. Foreign policy, tax
matters and the EU budget and revenu
decisions will continue to require unanimity.
Question of democratic deficit
How to bridge the gap between EU institutions
and EU citizens and promote perceptions of
legitimacy of EU decisions among European
citizens?
• Direct democracy ?
Key reforms
- The Eurogroup of finance ministers of
countries that share the euro single
currency is formalised for the first time
and elects a chairman
- The number of seats in the European
Parliament increased to 751 from 736.
Key reforms
The Treaty of Lisbon placed the European Parliament
on an equal footing as lawmaker with the council
in areas where this has not been the case so far
(budget, agriculture policy, and justice and home
affairs).
Direct democracy
Current practice
mandatory referendums are triggered by a
constitutional or legal disposition, non-
mandatory are called at the discretion of the
government or collective citizen action.
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 Direct democracy - objections
• The lack of competence of the average
citizen to decide in referendums (critical vis-à-
vis European topics, because the knowledge
about the UE is very low)
• The impossibility to have Direct democracy in
large political units (it works in small
societies?!)
• The democratic bias towards interest groups
(rather to reduce the power of interest groups
in the UE)
• Referendum tends to favour expressive
voting
European public opinion
‘ The world ’s most important trans-national community,
interconnected with the network of political, institutional,
economical, cultural and social ties has no daily
newspaper of its own ’.
Jacek Zakowski
Interest Groups
Interest groups have benefited from two structural
problems within the EU decision-making system.
• Relative weakness of party activity in the EP
• The small size of Commission – need for expertise.
• The national delegations of the member states in
Brussels work also with interest groups.
• European Economic and Social Committee
(representation of different economic and social
actors).
Key reforms
Thanks to the Citizens’ Initiative,
one million citizens from a number
of Member states will have the
possibility to call on the Commission
to bring forward new policy
proposals.
Interest Groups
Definition
An organization that represents and promotes the
political, economic or social interests of its members,
which may be individuals, cultural or social groups,
professions, or industries.
They have been encouraged by European Commission,
which uses groups as a source of expertise. Some
interest groups are created by European Commission.
Lobbying organizations 50 in 1985 and 851 in 2006
Interest Groups
Some important business and labour groups
represented in Brussels
• Business Europe
• Eurochambers
• European Consumers Organisations
• European Trade Union Confederation
Lobbying – on of the core functions of most interest
groups, efforts made to influence the decisions made by
elected officials or bureaucrats on behalf of individuals,
groups, or organizations.
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Interest Groups
Think tank: an organization that conducts research into
a give area of policy with the goal of fostering public
debate and political change.
the “convergence criteria” in the Maastricht Treaty:
The country’s budget deficit cannot exceed 3 % of its gross
domestic product (GDP)
Public borrowing must not exceed 60 % of GDP

• The Centre for European Policy Studies
• The European Policy Centre
• The European Enterprise Institute
inflation rate must remain stable over a long period
long-term interest rates must remain stable
Exchange rates between currencies concerned must be stable

Adopting the euro in the new Member States

Prior to the euro's adoption, a country must be
a member of the Exchange Rate Mechanism (ERM II)
for a minimum of two years.

There is no pre-defined timetable for the adoption of the Seven of the ten new member states have already
euro by the EU's new member states although they are joined ERM II (Cyprus, Estonia, Latvia, Lithuania,
all obliged to adopt the common currency. Malta, Slovakia and Slovenia).

Only Slovenia adopted euro (2007), Cyprus, Malta

(2008), Slovakia (2009), Estonia (2011) Latvia (2014)
and recently Lithuania (2015)

Croatia should adopt euro in 2023

Population ageing Enlarged EU and life expectancy

• Demographic trends will change

dramatically during the period 2020-
2040

• Population ageing results from 3

cumulative factors : Increase of life-
expectancy, low fertility, shock of baby –
boomers,
• changes in the age-structure

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Change in certain age groups between
2000 – 2015 and 2015 – 2030 - EU 25
The effect of ageing
• On the labour force: less working people,,
preasure on the retirement system,…

• On potential growth: a slower development

- the question on the volume of employment
is crucial for Europe's future economic and
social prosperity

The European
employment strategy
• To extend working-life

• Implement lifelong-learning

• Address economic restructuring

• Increase the employment rate of women

• Promote mobility over the life-cycle