ELDR FocusYear2011 - Balancing the Budget

Focus Year 2011 REFINING THE EU BUDGET REFORMING EUROPE

The theme resolution presented in this booklet and on the ELDR website is the definitive reference for ELDR policy on the EU Budget.

The articles included in this booklet represent the views of the individual authors.

Focus Year 2011 REFINING THE EU BUDGET REFORMING EUROPE

Table of Contents

Preface by Sir Graham Watson MEP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Theme resolution : A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Rebalancing Europe by Pankaj Ghemawat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 We need to change the way the EU is financed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Europe deserves better – Gerben Jan Gerbrandy A “functional federal budget” to acknowledge Europe’s reality – Emma Bonino We need to spend our money wisely – on European added value . . . . . . . . . . . . . . . . . . . . . . . . . . 23 How to spend EU’s budget better – Andrus Ansip We need to get our priority areas right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Cohesion policy : the power to change lives – Flo Clucas Ensuring a strong and sustainable economy – Adrian O’Higgins

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Preface by the EU ? Do we need a direct EU tax ? Can the EU continue to give rebates on some Member States’ contributions ? These were some of the questions raised throughout the year.

The website fuelled discussion and ultimately culminated in the adoption of the Theme Resolutions at the ELDR congresses in Helsinki, Finland in October 2010 and in Palermo, Italy in November 2011.

In this brochure you will find a summary of our findings on the EU Budget focus, compromising both the Theme Resolution with concrete liberal policy recommendations and excerpts from the preceding debates and opinion pieces from academic sources at the forefront of the global debate on these issues. « Du choc des idées jaillit la Lumière - The clash of ideas breeds Enlightenment » this renowned quote from French philosopher Nicolas Boileau is frequently used as an illustration of the Age of the Enlightenment in Europe in the seventeenth century.

Liberals have a long tradition of debate and are fundamentally open to different ideas and perspectives. This is what lies behind the « Focus Year » initiative launched by the European Liberal Democrat and Reform Party in 2010.

I hope you will find this booklet interesting and rewarding,

Sir Graham Watson MEP, President European Liberal Democrat and Reform Party

Our aim is to offer a European platform for debate on how to tackle, from a liberal perspective, some of the crucial issues for Europe’s future. The debates took place primarily on a dedicated web portal www.eldrfocus.eu and comprised a number of contributions from the local, national and European level.

In 2010 the focus was on the challenges of demographic change in Europe and a rapidly ageing society. In 2011, refining the EU budget and the European Multiannual Financial Framework were at the heart of the debate. What should be the Member States’ contributions and what resources should be generated directly

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A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020 SUMMARY OF KEY LIBERAL DEMANDS 1. WE NEED TO CHANGE THE WAY THE EU IS FINANCED • Currently, contributions from Member States’ GNI are the main source of revenue for the EU. This leads to permanent bickering among the member states, with Finance Ministers calculating their respective net balances, and for the EU to have net contributors and net recipients.

• This system was only designed as an interim solution when it was set up in 1988. It doesn’t have to be in place today.

• European Liberal Democrats call for a reform of the way the EU is financed, with increased possibilities to collect its own resources, and an increased transparency in the process, which would see the end to all current rebates.

2. WE NEED TO SPEND OUR MONEY WISELY – ON EUROPEAN ADDED VALUE • The financial and economic times are harsh across Europe. Austerity measures are undertaken in most of the EU’s Member States. The EU needs to be smart about how it spends its money.

• While European Liberal Democrats are strong believers in Europe and the future potential of it, we believe European citizens money should be spent wisely.

• We should always make efforts to find the European added value in what we do. Things that have a high European added value should be led by the EU. Things that are not should be handled on regional or national level. Simple as that.

3. WE NEED TO GET OUR PRIORITY AREAS RIGHT • The lion’s share of the EU budget is still spent on agriculture and internal cohesion. While these are important areas, they neither create growth nor jobs for Europe’s citizens.

• Europe’s Liberal Democrats think that a modern society needs modern priorities. Europe needs to pick the right priorities to maintain its global competitiveness in the future. These include e.g. research and development (R&D), innovation and infrastructure development.

• In these economic times, we neither e.g. need a grand focus on agriculture when we’ve long since achieved self-sufficiency nor a Financial Transaction Tax that would drive away, rather than attract, global business to the EU. The following text is a condensed version of the ELDR Party Theme Resolution adopted in Palermo, Italy on 25 November 2011. The full resolution can be found on the ELDR Policy Centre policycentre.eldr.eu.

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A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020

INTRODUCTION The effects of the global economic and financial crisis that began in 2008 continue to be felt by the European Union (EU) and its member states. The crisis is not over and Europe’s response to it remains a matter of vital importance.

The crisis has highlighted how interconnected the world has become, and shown that no single country can overcome the consequences of such an upheaval in economic and financial markets on its own. European Liberal Democrats believe that it is only through coordinated action at the European level that member states of the Union will return to a path of growth, employment and prosperity. Therefore, it is essential that the EU budget for the seven-year period from 2014 to the end of 2020 is one that promotes and enables initiatives to be undertaken at European level, in order to meet these goals and to make a demonstrable difference to the lives of European citizens, whether at local, regional or national level.

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European Liberal Democrats are thus strong believers in the potential of Europe. The common area that currently holds around 500 million people will be needed to maintain and increase European competitiveness in an ever globalising world. This does however not mean that the EU needs to do all things centrally in Brussels. This does however not mean that the EU needs to do all things centrally.

On the contrary, we find it vital that the EU budget focuses on European added value, i.e. where synergies can be identified and the Union can deliver more than individual countries could do acting on their own.

A budget is made up of revenues and expenditures.

The European Union needs to be financed in order to be able to spend its money, ideally wisely.

Therefore, let us start by presenting European Liberal Democrat views on the future financing of the European Union, to then go on to what action it should be taking, to get us out of the current financial crisis and respond adequately to the challenges of tomorrow.

A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020

FINANCING THE EUROPEAN UNION The current system of financing the European Union, where Gross National Income (GNI) contributions from its member states constitute the main component of the EU budgetary resources, is not sustainable. When it was re-introduced in the EU financing system in 1988, it was only supposed to temporarily complement a decrease in own resources. Thus, it is not designed to be the major source it is today – and it is one of the main reasons the current budgetary negotiations are so difficult.

Member States Finance Ministers now tend to calculate their respective net balance, which is a consequence of a series of rebates, corrections, exemptions and compensations, which European Liberal Democrats find incomprehensible and unfortunate both for the EU and Europe’s citizens.

Europe’s Liberal Democrats would therefore welcome a reform of the EU’s revenues, which would instead lead to a greater emphasis on which measures could unleash the great potential of Europe to benefit its citizens.

Unfortunately, the current proposals from i.a. the European Commission stop short of addressing this. They make very little attempt at making the budget more transparent and understandable, and include proposals that would only make Europe less competitive, such as the Financial Transaction Tax. The European Liberal Democrats deplore this, and call for an immediate end to all rebates in order to make the budget more transparent and easy to understand. We also firmly maintain that we need to work towards reducing the share of GNI contributions by member states in favour of own resources for the EU. In today’s economic hardships and globalised world, we strongly call for an end to the internal bickering within Europe and the need to instead focus on increasing our competitiveness.

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A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020

SPENDING THE BUDGET – CREATING EUROPEAN ADDED VALUE Around today’s Europe, as a result of the economic and financial crisis, austerity measures are commonplace in order to reduce the public debt and maintain credit ratings and competitiveness.

To be successful in this strive, all will need to play their part – also the institutions of the European Union. This should naturally be taken into account in any discussion on the EU’s future expenditures.

While the European Liberal Democrats maintain a strong belief in the potential of the European Union, we are also the first ones to acknowledge the need for the EU to adopt a smart attitude towards its spending – in good economic times as well as bad.

There is very little reason for the EU to do things which could better be done on national or regional level – and vice versa.

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Today’s Europe holds an increasing amount of challenges that naturally contain cross-border elements. Areas such as quality R&D, innovation, foreign relations and infrastructure projects such as e.g. the Transeuropean Networks hold untapped European potential. In other words, in these areas and beyond, the European added value is significant. To mention but one example, this has been greatly highlighted for the Union’s foreign relations during the Arab Spring, with coordinated EU action in Libya, and ever greater calls for the EU’s border agency FRONTEX to take a more active role in addressing the increased streams of migration.

Europe’s Liberal Democrats call for the need to release this potential. Where there is European added value, we need to make it clear that the EU should take the lead. We need an immediate end to making ‘Brussels’ a scapegoat for things that may have been poorly handled by member states.

A Budget for Europe : Liberal Priorities for the EU Budget 2014-2020

But we also need to be smart about what priorities the EU should set for the coming six-year period during the Multiannual Financial Framework (MFF). We think that the EU still rests too firmly on past priorities, and advocate a shift towards areas which promote growth and jobs, and away from areas which mainly stay afloat thanks to European subsidies.

In this regard, the European Liberal Democrats call for a substantial reform of the Common Agricultural Policy (CAP) which would decrease price support and export subsidies and instead acknowledge the role farmers play as stewards of the environment and in combating climate change.

More broadly, European Liberal Democrats also find it important to point out that still today, CAP together with cohesion funds remain the lion’s share of the EU budget. We find this far from appropriate in a modern society, where we have long since ensured self-sufficiency in food production. The two sectors create few jobs and offer little potential for future economic growth and increased competitiveness.

Striking this balance will be key to achieving greater European competitiveness by the end of the presumptive MFF in 2020.

For the ELDR Party, a common, united Europe is integral to future prosperity.

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Rebalancing Europe Pankaj Ghemawat Relentless market gyrations provoked by the Eurocrisis have forced a focus on near-term stabilization, but even if policymakers get the immediate crisis under control, they will have only addressed the symptoms rather than the underlying disease.

Lurking below the surface is the more fundamental problem that Europe’s integration has been unbalanced in the sense that administrative/political measures have gotten ahead of cultural, geographic, and economic realities, making crucial ties brittle and crisis prone.

To illustrate why this is so important, consider a map where areas are sized according to their shares of the EU’s internal and external exports. This “rooted map” makes clear that it would be cataclysmic if already frayed connections between EU members 6

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EUROPEAN UNION

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U.S.A. 20% Switzerland 8% China 7% Russia 7% Turkey 4% Norway 3% Japan 3% India 3% U.A.E. 2% Brazil 2%

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European Union’s Share of Partner Imports 75%

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Rebalancing Europe by Pankaj Ghemawat

were to snap, sending intra-EU flows plummeting. Not only are more than 60% of EU members’ exports internal to the EU, roughly similar or even higher proportions of their foreign direct investment, tourism, and even phone calls remain within the EU. These data might seem to indicate that the EU has achieved a pretty high level of integration, but not only are such flows excessively prone to crisis-induced drops, their volumes also fall far short of what they potentially could be. Merchandise trade, for example, continues to be 5 to 15 times more intense within EU countries than across them, and EU trade in services (75% of EU GDP) is only 1/8th as intense as in merchandise (an even bigger gap than at the global level).

So, what is unbalanced integration and why is it so dangerous ?

Robust integration requires strength along all four dimensions of my CAGE Framework : Cultural, Administrative/Political, Geographic, and Economic. Woven together like a good rope they are hard to sever, but separated, the individual strands can be stretched up to or beyond their breaking points. The Euro is a prime example : policymakers pushed forward with the common currency, an administrative measure, in spite of objections about economic differences, and with barely any consideration at all of the other dimensions. Recent economic turmoil has exposed the brittleness of that administrative linkage.

Consider some examples of the weaker strands of EU integration.

Culturally, surveys suggest that almost half of Europeans trust citizens of their own country “a lot”, but only 20% have the same level of trust in Europeans from other countries. Geographically, most modes of transport cost much more within the EU than in the US, and preferences for national champions hobble coordinated infrastructure development. Economically, productivity varies 3 times as much among EU countries as among US states. For better or for worse, it is

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absurd to talk of the EU as even approaching something like a United States of Europe.

Policymakers naturally focus on the administrative dimension because that is what they control directly, but political leaders can also strengthen the other dimensions. Improving education, for example, contributes to greater trust. More broadly, what is required is a mind-set change. A focus on nurturing balanced integration must replace the notion that borders can be obliterated by administrative fiat. 1

Pankaj Ghemawat, Professor of Global Strategy IESE Business School, University of Navarra 1

For more on cultural integration, in particular, see my article, “Why Can’t Europeans Get Along ?” Fortune, December 7, 2011.

We need to change the way the EU is financed Gerben Jan Gerbrandy EUROPE DESERVES BETTER The debate on the new financial perspectives of the European Union has started. It is a unique opportunity to radically reform Europe’s budget and to make it relevant again. The Dutch social-liberal party D66 has formulated its vision on the budget reform in its recent publication “Europa Verdient Beter” (Europe Deserves Better), which recently was presented to the Dutch state secretary for European affairs, Mr. Ben Knapen.

What should be done ? First of all we need to regain the European added value of European expenditure. Therefore, it is necessary to focus much stronger on Europe’s priorities : innovation, sustainable development, energy, economic growth and a strong position in the world.

Since structural subsidies have perverse effects on any economic sector, we will have to gradually decrease the agricultural budget by half in 2020. High food prices, innovation and more efficient farming practices will make this a responsible decision. The other major European spending area, the regional funds, should focus on Europe’s priorities which lead to the European added value we wish to see.

Secondly, we need a direct financing of the budget. National contributions are now the dominant source of financing. As a result, the member states are only interested in getting as much subsidies back as possible from Brussels. European added value plays no role anymore. That has to change. Direct financing, for example through VAT, will also result in a more transparent and fairer system.

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We need to change the way the EU is financed

Thirdly, the budget itself and its system of subsidies should be more flexible and radically simplified. The EU has not been able to respond rapidly to the economic crisis because of the huge inflexibility of the budget.

In the fourth place we want national Finance Ministers to take political responsibility for the spending of EU money.

80% of EU funds are spent in the member states. There are too many irregularities because member states are not sufficiently interested in accountablity. We should not agree on a new multiannual budget unless the political responsibility of EU spending in the member states is secured.

With such an ambitious agenda Europe can be modernized and can invest in tomorrow’s economy. We should look at Europe’s budget as economists, not as accountants, in order to realize better returns on investments.

Gerben Jan Gerbrandy, Member of the European Parliament for D66, the Netherlands

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We need to change the way the EU is financed

The comments below were received on the ELDR Focus Year website www.eldrfocus.eu

“The Union needs to gather its forces and to show that it can do better than the national administrations for the provision of some public goods, in particular international public goods. This document is thought provoking and I share its determined optimism. We should be convinced that we live a systolic period in the history of Europe and that the current reluctance to acting together will only last a few years.

The only chance for the European nations not to become yes-men to all global powers and no-men to all global needs is to stand together. To be relevant in the difficult governance of a 7 billion people world we need a large Union.”

Vicenç, 02/07/2011 at 21:16

“This document states that Member States donate money to the EU, which they then try to reclaim as much as possible. For example, by construction cycle paths from EU subsidies. For me, Agriculture is important, it’s the founding stone of life. However, Europe has highly developed technology to produce food efficiently on a large scale.

Agriculture should be able to sustain itself and compete, just like any other market segment. I’d say use more European money for securing the borders as well as invest in research and development ; Science, technology and culture is what allows a civilization to flourish upon the world’s stage. Most influential developments, from binary to steam-engines, penicillin to the study of genetics and Shakespeare, come forth from European culture. And it would be a shame if other civilisations now take the lead on us, just because they happen to possess cheaper labour and unrefined oil.

Sid Lukassen, 26/04/2011 at 16:15 19

We need to change the way the EU is financed

Emma Bonino A “FUNCTIONAL FEDERAL BUDGET” TO ACKNOWLEDGE EUROPE’S REALITY In a climate of impending doom, EU finance ministers are preparing the European Council meeting scheduled for 16 December 2010, which will discuss a number of financial engineering proposals. All aim at the same outcome : to calm the markets. Will they work ? Will they get us out of trouble ?

If we try to observe ourselves from outside, we will find that the area where we live is not only one of the richest in the world, but also enjoys decent post-crisis growth. It distributes quite equally the income it creates, does not have huge debts that it is impossible to repay and maintains substantially balanced accounts with the rest of the world.

This area, where we live, is the eurozone. It is true that China and India are growing at a more steady pace. However, it still will take them a long time until their citizens’ standard of living will reach ours. There is no reason either to envy Japan, whose economy has been stagnating for almost 20 years and which has a public debt that exceeds its GDP, or even the USA, which suffers from tremendous imbalances internally (distribution of wealth) and externally (balance of payments).

If we succeed in seeing ourselves as just one thing, as a single entity, then our own self-perception, as inhabitants of the EU, and in particular of the eurozone, will be more serene.

Moreover, it would seem absurd that somebody could even doubt the survival of our single currency, the euro.

However, the problem is that we lack political unity, and the markets can see that quite well : they do not “calm” for exactly

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We need to change the way the EU is financed

that reason and not, as some think, because of the “too big” diversity that exists between the European countries.

If we consider the credit default swaps, we find that California and Illinois face a bigger risk of failure than Portugal or Spain.

Nonetheless, the accounts of California and Illinois do not threaten the monetary union to which they belong, while those of Portugal and Spain do. The reason for that paradoxical situation is entirely political : nobody will ever question the political unity of the USA, while the political unity of the eurozone and of the EU still does not exist.

Political unity means having – apart from a central bank, which we already have – a treasury (finance authority) that manages a federal budget, with dimensions sufficient enough to stabilise the system whenever it deems necessary. It could help states who have difficulties with a fiscal manoeuvre, an ordinary event to which nobody pays particular attention, unlike our continuous summits and our repetitive announcements of stabilisation manoeuvres which, as it seems, do not stabilize anything.

To really get out of this crisis, to really stabilize the euro, Europe should immediately start to convince the markets and the rest of the world that its political unity cannot be put into question.

The only way to do this is by moving quickly to reinforce it so as to make it more credible.

But how ? For instance by creating a functional federal budget that finances the supply of important public goods, like defence, diplomacy, big scientific research programmes, trans-European infrastructural networks, the security of the commercial traffics and of the movement of persons, just like the American home security model.

We are not talking about the monster that haunts the dreams of the British eurosceptic, the European Superstate. On the contrary, we are talking about a “federation light”, that does not absorb more than five per cent of European GDP with the purpose of assuming the functions of a government, against around 20 per cent of GDP that goes to the federal budget of the USA, and one per cent of the current EU budget, which currently only serves to distribute subsidies here and there.

Incidentally, five per cent of the European GDP corresponds to almost Ð650 billion, more or less the amount of the current rescue fund.

It is possible to imagine the federation light as the federation of Spinelli, Monnet and Adenauer adapted to the 21st Century, an approach that simply acknowledges the reality : that the existence of national armies in Europe does not make sense any more, as nobody threatens the territorial integrity ; that the infrastructure network already exists to support the internal market, though we finance it badly and hither and thither ; that the customs union is already an exclusive competence of the Union and it is ridiculous to leave it to 27 different and separated national organisations.

A federation, then, but a light one. If we have the courage to do it now, immediately, the markets and the entire world would have not only a clear and strong signal that our political unity is not in question, but they would also learn that we finally have a federal budget with sufficient dimensions to maintain, as an ordinary administrative action, the macroeconomic stability of Europe.

Right after the launch of Jacques Delors’ project on the single market, the Cecchini report referred to “the costs of a non-

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We need to change the way the EU is financed

Europe”, derived from the persistent fragmentation of the European market along national lines. And because the costs were really high, the idea of Delors received a big impulse.

Today, there is no need for experts’ reports. The costs of a nonEurope are obvious to everybody, and they are represented by the enormous sacrifices imposed on our citizens – an obstacle to the whole European economy – and by the useless coexistence of anxious doubts about the future of the euro and of the entire European project.

Getting rid of these doubts is not only urgent, but is also possible.

Emma Bonino, Vice-President of the Italian Senate and former European Commissioner.

This article first appeared in December 2010 on the website of the European Council of Foreign Relations

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We need to spend our money wisely – On european added value Andrus Ansip HOW TO SPEND EU’S BUDGET BETTER ?

The question “how to spend it ?” is ever more relevant with a debate starting over the European Union’s next multiannual financial framework. But whereas the Financial Times devotes a glossy supplement to advising its readers “how to spend it” in meaningful and pleasant ways, the process of putting together the EU budget is a little different. The goal of the budget negotiations is to figure out how best to spend common EU funds at a time of significant pressure on public finances throughout the European Union.

Tempting though it might be at a time of fiscal austerity, approaching the next multiannual financial framework from the point of view of a balance-sheet or with the aim of juste retour would in my view be foolish. We should not limit from the outset the ambition of future EU budgets without any substantial discussion on their content. As both the European Council and the European Commission have stressed, spending at the European level should provide added value. Indeed, we need to figure out how and where to spend EU money so that we get the best bang for our buck or – to be exact – an earnest effect for every euro.

I believe that in order to achieve the best value for money on the spending side, we need to re-think the concept of member states’ so-called ‘national envelopes’ and introduce more ‘European’ or ‘macro-regional’ envelopes. The bottlenecks that have kept us from creating a smart, sustainable and inclusive economy in Europe are mostly cross-border in their character.

That means that they simply cannot be properly addressed by a budget that divides spending mainly into national blocks.

It is my conviction therefore that in order to maximise the competitiveness of the EU, the greatest value that we can

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We need to spend our money wisely – on european added value

add is to overcome the cross-border impediments to growth and the proper functioning of the internal market, including those linked to infrastructure (such as energy, transport, telecommunication, innovation). For greater competitiveness, we also need to make sure that infrastructure investments are accompanied by investments in human capital and innovation.

Indeed, meeting the EU 2020 target of spending 3% of gross domestic product on research and development and innovation is crucial.

At the same time, we also took steps nationally to liberalise our markets further.

I believe that earmarking specific amounts in the EU budget’s so-called ‘national envelopes’ for use in cross-border projects would help induce some of these changes. These ring-fenced funds should include EU infrastructure and convergence funds (again covering also ‘national envelopes’).

The European Union has all the institutional, regulative and financial means to create a smart, sustainable and inclusive economy. Old and new EU policies outlined in the Treaty of Lisbon obviously need to be prioritised, suitably equipped and adequately financed. But better use must also be made of the EU budget. Indeed, in the impending discussions on the EU budget, the link between spending at the macro-regional and European level should be strengthened, so that every euro spent has a greater impact.

I also believe that instead of capping the funds that are available nationally, under-utilised funds should be invested in cross-border projects and should act as seed capital for launching priority projects. The experience from the European Economic Recovery Plan has been overwhelmingly positive.

In the Baltic Sea region, we used under-utilised funds to build strategically important energy links, such as Estlink-2.

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EU macro-regional strategies and policy initiatives, such as the Baltic Sea Strategy and the Baltic Energy Market Interconnection Plan (BEMIP), are excellent tools, which can be used as a basis for collaborative partnerships and priority-setting with the aim of integrating the internal market and enhancing growth and jobs through concrete projects.

Andrus Ansip, Prime Minister of Estonia, Leader of the Reform Party

We need to get our priority areas right : Flo Clucas COHESION POLICY : THE POWER TO CHANGE LIVES ‘O for a Muse of fire, that would ascend The brightest heaven of invention, A kingdom for a stage, princes to act And monarchs to behold the swelling scene!’

Shakespeare’s words still ring in the heart, though it may seem strange to quote this quintessentially English playwright in an article about Cohesion Policy! He calls for ‘a muse of fire’, a way of painting a picture that will capture the hearts of his audience.

At this moment in time, dealing with the future of Cohesion Policy and its funding, a ‘muse of fire ‘ is just what is needed!

So, let me try ; try to paint a picture of how this single policy has the power to change lives, communities and even the future of Europe itself.

There are many who would argue that Cohesion policy should be renationalised, save for the poorest member states. In effect that Eastern Europe should be the focus for any such policy. There is a logic to the argument. Richer member states would then look after their own poorer cities and regions. Much simpler, much easier, much better than moving all this money around Europe.

That’s right, isn’t it ?

If that was all that Cohesion Policy represented, then the argument would be valid, but Cohesion Policy is about much more. For Cohesion Policy is what brings together citizens from across the union ; what gives every citizen a place at the table ; and is a visible sign of Europe’s presence in our communities.

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We need to get our priority areas right

And if Europe is the stage, then its citizens are the actors and Cohesion Policy the script. It is what makes sense of the whole, of the movement ; of the presence on the stage.

It is the coherent, vibrant, active heart of the European Union.

But such a policy needs to be clear in its objectives ; in its aims.

It needs to be imaginative, innovative, creative in its application.

It should enable, not confine and be responsive to the needs of communities. It should have the active involvement of those whom it is there to serve and of local and regional authorities within its area. They must be able to shape what is needed to regenerate and invigorate local economies, and rebuild for the long term, rather than the quick fix.

But all of this takes money and time. A short time period will not enable long term decisions about investment to be made and the difference realised. Resources have therefore to be enough to meet the demands of the policy. That will require some hard negotiation and some member states will be reluctant, to say the least, to see that happen.

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It is often said that a picture is worth a thousand words. With the scepticism about the role and future of the EU increasing, citizens need to see how Europe acts in their cities and regions.

The importance of having an EU wide policy cannot therefore be overstated. Europe needs Cohesion Policy. It is what makes Europe relevant to our communities. Within them, it needs to be effective, efficient and enabling. If it is, it will carry the hopes of citizens with it.

If the European Union is to be more than a show for bankers, bureaucrats and businessmen, it must become a Union of the people ; of the citizen ; of the participant ; of the actor on the stage, rather than the onlooker. Cohesion Policy allows that to happen in a way no other EU policy does. We should remember that in all of our deliberations. It is ‘our muse of fire’ if we allow it to be so.

We need to get our priority areas right

Adrian O’Higgins Flo Clucas, Leader of the ALDE Group in the Committee of the Regions of the European Union

ENSURING A STRONG AND SUSTAINABLE ECONOMY There is an unprecedented need now for the European Union budget to focus on spending that will result in a stronger economic growth rate for the Union as a whole in the decades to come. This is necessary to ensure a comprehensive and sustainable recovery in employment levels across the EU. Agricultural spending in the form of the Common Agricultural Policy (CAP) is important to guarantee food security and safety however the high percentage of expenditure on CAP is holding back the Union from investing in the industries that will drive growth in the future. Higher investment in research and development in our university sectors based on areas which have high potential growth such as green energy, transport technology, and information technology are vital to secure the EU’s position as an economic innovator in the future. Europe needs to produce products in a manner which is more efficient with high quality and yet less costly than its global competitors to be able to compete on the international economic stage. Investing in new ways of doing what Europe does best in producing quality goods that people want will lock in strong economic growth for the Union.

The European Union must also ensure that its budget reflects the need to upgrade the Union’s infrastructure to ensure the benefits of the single market can flow to every region of the EU. Connecting the member states with better road, rail, internet and energy infrastructure is vital to the good health and progress of the internal market. The Union must begin to capture the imagination of the ordinary citizen by committing its resources to large projects of public works which will not only bring about immense social and economic benefits but also become a symbol of a strong united Europe in an ‘ever closer union’.

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We need to get our priority areas right

Finally, in order for the EU to be taken seriously on its own foreign policy the Union needs to invest in establishing a properly run foreign service to complement its foreign aid and development fund. As the EU has a credible reputation in the area of development aid it is important that the political backing is there to ensure the deliverance of its foreign policy goals in a complete and correct manner. The deliverance of foreign policy goals through increased development aid funding and a stronger political backing through a well-funded foreign service is vital in protecting EU interests abroad.

Therefore the European Union’s budget needs to focus its spending on the needs of today conscious of the challenges of the future. Budget spending ensuring a strong and sustainable economy, a more integrated infrastructure and a foreign policy that is deliverable and durable is how I would spend the budget of the European Union.

Adrian O’Higgins, Participant of the Liberal Academy 2011

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THE EU BUDGET – it’s more than peanuts!

Don’t miss the video 2011.eldrfocus.eu

European Liberal Democrat and Reform Party, aisbl Rue Montoyerstraat 31 B-1000 Brussel – Bruxelles +32 2 2370140 Publisher : Secretariat of the European Liberal Democrat and Reform party – Didrik de Schaetzen, Head of the Communication unit Design : Trinome.be Published with the support of the European Parliament Printed on recycled paper