This Blog will feature opinions on European affairs by members of the Centre for European Politics. Comments are welcome in English.

EU Budget deadlock: where now for economic innovation?

Earlier today [click here], I wrote that public goods had been neglected in the budget debate. These are policies that are not redistributive and are most effective to deliver at a European level than at national level. They include research, infrastructure, and investment in the green economy. Very likely the budget will be cut overall but with agricultural funding largely protected. The part of the budget to take the hit will be public goods. This is ironic for the UK which benefits disproportionately from EU R&D funding.

In our book on budget reform [click here], Charles Blankart and Gerrit Koester propose a new way to deliver public goods investment and to escape budget deadlock. They propose using enhanced cooperation to establish a parallel budget for public goods. This would be financed only by the member states that opt in. Every few years, programmes would require unanimous re-approval by the participating states, thereby avoiding irreversible lock-in of the kind that happened with the CAP in the 1960s.

Posted on Friday, November 23, 2012 at 03:54PM by Registered CommenterDr Giacomo Benedetto | CommentsPost a Comment

Public Goods and the Multiannual Budget 2014-20

The Council to agree (or not agree) the next budgetary package for the EU has gone onto a second day. Our book [click here] predicted that there could be stalemate since failure to agree would result in roll over of the old budget maximums. Those who wish for a cut but would settle for a freeze rather than an increase have an incentive to block agreement. Those who wish for an increase but prefer a freeze over a cut could also block agreement.

The issue should not be about cuts or increases but about what sort of Europe (if any) people want. Is it desirable to subsidise agriculture? What are the consequences of not subsidsing agriculture? Could it be cheaper to prolong the CAP than to get rid of it? Is it cheaper for the 27 EU states to prolong the existing CAP rather than to replace it with 27 national agricultural policies?

What about innovation, infrastructure, research and other investment that could trigger economic growth? These are known as public goods and are defined as areas of added value, which, unlike the CAP, are not redistributive but which could be provided more efficiently and with greater cost effectiveness at a transnational level. Let's take cancer research as an example. The UK, France and other countries in northern Europe have thriving centres for cancer research but should they be competing against each other and duplicating tasks within national frameworks? An EU level strategy for cancer research is an example of such a public good. Sadly, developing public goods has not been part of the debate and has not featured in media coverage.

 

Posted on Friday, November 23, 2012 at 10:44AM by Registered CommenterDr Giacomo Benedetto | Comments1 Comment

EU annual budget for 2013 vetoed

It seems that the Council and the European Parliament have failed to agree by today's deadline. A blocking minority of net contributors on the Council wanted reductions and were blocking a supplementary budget for extra expenditure backdated for 2012. This afternoon before the final meeting of the Council-Parliament conciliation committee, Martin Schulz, the President of Parliament, announced that negotiations had failed [click here].

Since the ratification of the Lisbon Treaty that was supposed to empower the Parliament, this is the second time that agreement has broken down. It happened for the 2011 budget as well. In the eventual budgets for 2011 and 2012, the final figures agreed were far closer to the preferences of the Council and further away from the preferences of the Parliament than had been the case before the passage of the Lisbon Treaty. It seems that Lisbon has resulted in budgetary deflation and greater negotiating power not for the Council as a whole but for a minority of national governments large enough to block the formation of a qualified majority that could have made an agreement with the Parliament.

 

Posted on Tuesday, November 13, 2012 at 08:21PM by Registered CommenterDr Giacomo Benedetto | CommentsPost a Comment

The Greek Electoral System: Stable or Unstable?

Back in May, I wrote on this blog (click here) how the Greek electoral system created further instability in Greece. Although Greek elections are proportional, the largest party is awarded a top-up of 50 seats out of 300. Usually this would guarantee the largest party a majority on its own but in May 2012 it made the situation even more unstable. Without it, two coalitions could have formed (either a left wing government including Socialists and Communists - or an anti-austerity government, including Communists and Conservatives in ANEL but excluding the Socialists), whereas no government was possible so new elections were held.

What was the effect of the 50-seat top-up in June 2012? It allowed New Democracy to form a government with the Socialists (total 162 seats out of 300). To this was added Democratic Left (DIMAR), a small anti-austerity party. Without the top-up, an alternative left-wing government, including the Socialists, DIMAR, Syriza and the Communists would have been the only possibility. So maybe the 50-seat top-up creates stability after all, even if this was not the case in May 2012. An important feature of the top-up is that it attracts tactical voting to the detriment of smaller parties, making it all the more difficult for the Socialists to recover. Between May and June 2012, it became obvious that two contenders for power were New Democracy and Syriza. Their vote increased substantially at the expense of most of the other parties.

 

Table: Greek election results of 2012 compared



June 2012 elections

May 2012 elections

Party

Party type

% vote

Seats

% vote

seats

KKE

Communist

4.5

12

8.5

26

Syriza

Radical Left

26.9

71

16.6

52

Dimar

Radical Left

6.3

17

6.1

19

PASOK

Socialist

12.3

33

13.2

41

ND

Centre-Right

29.7

79+50

18.9

58+50

ANEL

Right

7.5

20

10.6

33







XA

Neo-Nazi

6.9

18

7.0

21

 

Posted on Monday, November 12, 2012 at 10:04PM by Registered CommenterDr Giacomo Benedetto | CommentsPost a Comment

Labour's anti-EU vote

...was non-sensical according to George Irvin. Read more here.

Posted on Saturday, November 10, 2012 at 05:54PM by Registered CommenterDr Giacomo Benedetto | CommentsPost a Comment