November 26, 2012
The case for cutting the European Union budget is obviously strong. It is argued that while all of the 27 member governments are squeezing their citizenry in order to cut public spending, there is no reason why the EU’s €140+ billion a year budget should not be cut too. It has been said that there is ample scope for cuts, but there is no clear view on where should they fall. It is argued in some quarters that the Brussels fund is a budget designed for the 1950s, rather than the second decade of the 21st century.
This is only partially true. The modern and justifiable part of the budget is spent on badly needed restructuring schemes, the ‘Cohesion funds’, which are making a valuable contribution to the rebuilding of the central and eastern European member country economies, only recently rescued from their command economies.
As Poland’s Foreign Ministers Radoslav Sikorski put it in a recent article in the Guardian,“in many countries the EU cohesion policy contributed to more than half of all public investment. In Poland, 52 per cent of all public investment comes from the EU budget. Most beneficiaries of the budget are in central Europe. This is our very own late “Marshall plan”, thanks to which we may at last catch up and right the wrong that we suffered at the 1945 Yalta conference” .
The Council and Commission should therefore beware of ‘throwing out the baby with the bathwater’. The part of the budget which is still lost deep in the political philosophies of the 1950s is the pattern of agricultural subsidies. Or at least in their aftermath.
The common agricultural policy was set up to achieve two objectives: to ensure post war European food security and to ensure the income of a countryside still worked and populated by millions of small farmers. Neither of these conditions is any longer relevant. Indeed, they were barely relevant when first enshrined in the holy tenets of the CAP established in the late 1950s and early 60s.
Europe’s agriculture now feeds its own 500+ million people and a large part of the rest of the world. The small number of large farmers responsible for 80per cent of this production are among the most efficient in the world. They do not need subsidies. Therefore a substantial cut in the €50 billion a year EU farm budget would easily provide the reduction in the overall budget which a minority of member governments are now seeking. As I advocate in my latest book, ‘How to Slash the EU Budget by a Quarter – a Radical Guide to CAP Reform’, by eliminating subsidies to the elite 20 per cent and concentrating assistance on landholders with an income of less than €10,000 a year some 75 per cent of the current agricultural budget could be removed. This would cut the overall Community budget in the 2014-20 period by close to a quarter. <26/11/2012>