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EU Budget 2017 Q&A: What's at stake?

As the European Parliament and EU Member States enter into conciliation talks over the 2017 budget, we outline what's at stake when it comes to development and humanitarian aid.

As conciliation talks get underway, Plan International is calling on Member States to defend EU aid.

How is the EU Budget drawn up?

Annual EU budgets are drafted by the European Commission (the Commission) based on the indicative expenditure ceilings identified and agreed by member states in the 7-year Multiannual Financial Framework (MFF). The current MFF runs from 2014 to 2020, with different categories of expenditure (headings) corresponding to different areas of EU activities:

  • Smart and Inclusive Growth
  • Sustainable Growth: Natural Resources
  • Security and citizenship.
  • Global Europe
  • Administration

Around 95% of the EU budget goes to concrete activities on the ground under the first four headings of the MFF. Heading iv, “Global Europe”, covers the EU’s external action, including development and humanitarian aid, and accounts for only 6% of the entire MFF.

Once the Commission has prepared the draft annual budget for a given year, it is submitted to the Council (EU Member States) and European Parliament (the Parliament) – the budgetary authority – who amend and adopt the final budget.

The total EU budget represents around 1% of EU gross national income (GNI), and just above 2 % of all public spending in the EU.

What did the Commission propose for 2017?

In June 2016, the Commission released its proposal for the EU’s 2017 budget, including for development assistance and humanitarian aid. The Commission proposed €157.7 billion in commitments (compared to €155.0 in 2016) and €134.9 billion in payments (down from €143.9 billion in 2016).

It reflects and supports the political priorities set by President Jean-Claude Juncker, in particular contributing to the greatest extent possible to jobs, growth and investment, and providing a European response to the challenges of:

  • migration management;
  • the fight against terrorism and organised crime;
  • protecting EU external borders;
  • fostering a coordinated partnership with neighbouring regions and other third countries.

What did the Commission propose for EU external spending?

Under Heading IV, Global Europe, the Commission proposed €9.4 billion for the EU’s external spending, 2.9% more than 2016 in commitments (CA). Payment appropriations (PA), however, decrease by -8.5 % to just under €9.3 billion.

The table below gives an overview of key budget lines under Heading IV, indicating how the 2017 proposal compares with the 2016 budget.

Heading (Figures in € millions) 

Budget 2016 

Draft budget 2017

Difference 2017/2016

 

CA

PA

CA

PA

CA

PA

Heading 4. Global Europe 

9.167

10.156

9.432

9.290

2.9%

- 8.5% 

European Neighbourhood Instrument (ENI)

2.187

2.329

2.187

2.294

0.0%

-1.5%

Development Cooperation Instrument (DCI) 

2.630 

2.729

2.711

2.658

3.1%

-2.6%

Partnership instrument for cooperation with third countries (PI)

126 

109

134

136

6.4%

24.6%

European Instrument for Democracy and Human Rights (EIDHR) 

186 

181

189

168

1.9%

-6.7%

Instrument contributing to Stability and Peace (IcSP) 

327

316

273

294

-16.3%

-7.0%

Humanitarian aid (HUMA) 

1.109

1.471

945

1.146

-14.7%

-22.1%

Common Foreign and Security Policy (CFSP)

327

299

334

297

2.0%

-0.5%

What’s the difference between commitments and payments?

Commitments are legal pledges to provide finance, while payments are the actual amounts transferred to the beneficiaries. Payment appropriations are usually lower than commitment appropriations.

What is Member States’ position?

The Council of the EU presented its (counter) proposal soon after the Commission released its draft budget in June. Member States are calling for a €105.2 million cut in commitments and a €70 million cut in payments under Heading IV, taken mainly from the Development Cooperation Instrument (DCI). Compared to the draft budget, this represents the biggest cut proportionally among all policy areas, accounting for 70% of all cuts within Heading IV.

By contrast, Member States are proposing significant increases to the Internal Security Fund, providing €738.6 million in commitments and €747.7 million in payments and increase of 14.4% and 89.3% respectively compared to 2016.

What is the European Parliament’s position?

The European Parliament has rejected the Council’s proposal, passing a resolution on 26 October reversing all the proposed cuts by 446 votes to 184, with 60 abstentions.

MEPs stressed that funding for the EU refugee deal with Turkey and other ad-hoc funds or instruments should not come at the expense of the bloc’s existing external action, including its development policy, and “strongly question” whether the funds for projects in third countries are sufficient, especially in view of the current refugee and migration crisis.

They therefore reversed all the Council’s cuts to Heading IV and reinstated the 2016 levels for the European Neighbourhood Instrument (ENI) and for humanitarian aid.

Why are the budget negotiations so important this year?

An ambitious external aid budget is critical to ensure the EU meets its existing commitments to poverty reduction, including those agreed only last year in the Sustainable Development Agenda, while maintaining its leadership and credibility in shaping sustainable development policy.

However, the cuts proposed by Member States completely contradict these commitments – including a renewed agreement to provide 0.7% of GNI on Official Development Assistance by 2030. 

In addition to the amount of aid, negotiations this year have seen a shift in emphasis on the purpose of aid, compromising its integrity as a tool dedicated to tackling poverty and inequality. Addressing the perceived refugee and migration crisis has been at the top of the Commission’s agenda for the past two years, and we have subsequently witnessed the wholescale reorientation of aid – money earmarked for traditional development cooperation and humanitarian aid is being diverted away to finance new initiatives aimed at border control and migration management.

As a result, there is a disproportionate focus on migration management and border control under both the DCI and the European Development Fund (EDF) – the primary sources of aid to developing countries. This not only compromises the integrity of development aid, which is meant to address poverty and inequality, it is also unclear whether such an approach will achieve the EU’s stated aims to “tackle the root causes of migration”. 

How has the Commission responded to the increased emphasis on security and migration management when preparing its draft 2017 budget?

The draft budget for 2017 includes €5.2 billion “to reinforce the external borders of the Union and address the refugee crisis and irregular migration by funding stronger tools to prevent migrant smuggling and address the long-term drivers of migration in cooperation with countries of origin and transit, stronger policies for legal migration, including resettlement for persons in need of protection, and instruments to support Member States with respect to the integration”.

On 17 October 2016, the Commission then released an Amending Letter to its original draft budget 2017. This proposes mobilising an additional €1 billion “to address the root causes of migration and promote the swift implementation of agreements with third countries under the new Partnership Framework process and for the creation of a European Fund for Sustainable Development (EFSD) with a new EFSD Guarantee Fund”. The majority of this increase will be financed by mobilising the EDF Contingency Margin.

Do we disagree with spending money on migration?

We are not against using EU funds to support initiatives aimed at addressing forced migration. However, new initiatives require new resources. It is imperative that funds earmarked for development and humanitarian aid are not appropriated for security and migration management. In amending its own budget proposal to take account of new initiatives related to migration management, the European Commission has acknowledged the need for new commitments to be backed by robust budget lines.

What happens now?

Following the Parliament’s vote on 26 October, three weeks of “conciliation” talks will begin with the Council, running until 17 November. The aim is to reach a deal between the institutions in time for next year's budget to be voted by Parliament and signed by its President in December.

If Parliament and the Council fail to agree on the 2017 budget by the end of the conciliation procedure, then the European Commission is required to table a new draft budget.