Budget dispute: EU is already preparing for “Night of the Long Knives”

The starting point for the budget debate is the EU Commission’s proposal, which amounts to around 2 trillion euros – almost double the current seven-year EU budget. For the group of net contributors, which includes Austria, this is not even a negotiable proposal. “The volume of this budget is much high,” Chancellor Stocker made clear to the press, “there must be a massive reduction.” Behind the scenes, representatives of large net contributor states are making it much clearer: “It won’t work like that.”

The EU states are now firmly divided into two camps. 16 states, including large ones like Italy, are pushing for the EU Commission’s plans, i.e. the massive budget increase, to be consistently pursued. They need more funds for their ambitious projects, especially in the areas of defense and economic development. Stocker is skeptical about this generosity: “You can’t solve problems by throwing money at them.”

New revenue is tricky

In order to add additional money to the budget, the EU Commission and the EU Parliament have already put forward numerous proposals for new revenue for the Union. There are, for example, the taxes on carbon dioxide emissions that industry and, in the future, households will also have to pay. These ETS payments were already due to increase significantly, but opposition from industry has already led the Commission to trim the plans. Other revenues, such as a tax on cryptocurrencies or online gambling, are ambitious, but in the opinion of negotiators they can only be implemented in the long term, if at all.

A representative of the net contributor countries is skeptical that this new revenue will not generate much. In the end it will be about more money that the states will have to pay into the EU budget. The plans already circulating in Brussels to take on new EU debt are also strictly rejected by Germany.

For the time being, the fronts in the budget dispute seem to have hardened. Experienced negotiators emphasize that EU budgets are often created this way, but point out that in times of tight budgets in the countries, the scope for maneuver is very narrow. A special EU summit in November should make a compromise possible by the end of the year, but for now many estimate the chances of this to be less than 50:50. In any case, one thing can be expected at the summit in November: “A night of long knives.”