hms iron duke

hms iron duke

Monday, 25 February 2013

How Much Does EU Solidarity Cost?

Alphen, Netherlands. 25 February.  Italy has gone to the polls and Greece and Spain are facing continuing anti-austerity demonstrations.  Here in the Netherlands EU Council President Herman van Rompuy yesterday appeared on Dutch TV to tell the ever more sceptical Dutch that the Netherlands could not survive without the EU.  Last week I highlighted the concerns of my Dutch neighbours that ‘Brussels’ does nothing for them and they are tired of being lectured by Eurocrats and southern and eastern European politicians about the need for ‘solidarity’.  Since that blog I have been inundated with comments from varying degrees of Europhilia and fanaticism berating my neighbours for their lack of aforesaid ‘solidarity’.   So, how much does EU ‘solidarity’ cost? 
The International Monetary Fund (IMF) estimated the size of the EU economy (gross domestic product or GDP) in 2012 at €12,629 trillion ($17,578 trillion).  The 8 February agreement by EU heads of state and government set the budget limit at 1% of the EU's GDP for the 2014-2020 EU Budget or €1.26 trillion ($1.76 trillion). According to Open Europe this year the biggest net contributors to the EU Budget will be Germany €14 billion ($18.6 billion), France €9 billion ($12 billion), UK €9 billion ($12 billion), Italy €6 billion ($8 billion) and the Netherlands €5 billion ($6.6 billion). 
Official Dutch figures set the size of the Dutch population in 2011 at 16,696,000.  Therefore, the cost of the EU Budget to each Dutch citizen is roughly €299 ($396) this year.  The cost of the EU Budget per annum to my Dutch neighbour’s family of five is thus around €1500 ($1988) per year IF the Budget is confirmed.  However, if the EU Parliament carries out its threat to veto the Budget then this year’s planned spending will be rolled over at 2% of Europe’s GDP, which will cost my by no means wealthy, ordinary Dutch neighbours about €3000 per annum.  There is a lot they could do with €3000 ($3977) to ease their very real worries.  No wonder EU Parliament leader Martin Schulz wants a secret vote so he can again hide the truth from my Dutch neighbours.  So much for democratic transparency!
However, that is not the true cost of solidarity.  One must also add the cost of the various bail outs to southern European countries and the debasing of the Euro due to the printing of money by the European Central Bank (ECB).  It is hard to get accurate figures for this mainly because governments, the European Commission and the ECB are determined to keep the true cost of the Eurozone crisis from my Dutch neighbours.  However, estimates vary between €10,000 ($13,200) and €15,000 ($20,000) per annum, per head (and possibly as high as €20,000 ($26,500)).
There are also additional hidden costs.  The Dutch Vice-President of the European Commission Neelie Kroes said yesterday that as much as 4% of the so-called Cohesion and Structural Fund is lost to national corruption or “silly projects”   She highlighted a new EU-funded (i.e. funded by my Dutch neighbour) Polish highway between Warsaw and Poznan that is sound-proofed even though it passes through empty fields.   Therefore, my Dutch neighbours and their fellows are seeing €13 billion ($17.2 billion) of their money effectively stolen or misappropriated each year.
The madness does not stop there.  Some hailed the EU Budget as a victory because for the first time it was cut.  However, what the Budget also reveals is that far from trying to invest out of the crisis by modernising Europe’s economy most member-states and the European Commission simply want to preserve vested interests.  In other words the EU is investing in the past. 
According to the BBC the snappily-named Multi-Annual Financial Framework (MAFF) or EU Budget is to be spent in 2013 as follows: Cohesion and Structural Funds €325 billion ($450 billion), Competition and Growth €125.6 billion ($166.5 billion), the Common Agricultural Fund €278 billion ($368.6 billion) (even though agriculture represents only 2% of the EU GDP), “EU as a Global Player” (aid) €59 billion ($78.2 billion), Security and Citizenship €15.7 billion ($20.7 billion), Rural Development €95 billion ($126 billion) and the worryingly entitled “off-budget spending” €37 billion ($49 billion). 
In other words only 13% of the EU Budget is being invested on preparing European for the hyper-competitive twenty-first century global economy.  The rest is being spent on propping up failure.  It also means that when Italians, Greeks and Spaniards protest about austerity they are really asking my modest Dutch neighbours to go on indefinitely funding a way of life they cannot afford.   In effect, they want the EU to become a mutual impoverishment pact.
Now, like me my Dutch neighbours are prepared to pay so much for ‘solidarity’ as they genuinely feel for the suffering of their fellow Europeans.  However, what they want to see above all is an end to this crisis.  For them that means modernising southern European economies (and others) in return for their ‘aid’.  However, there seems to be little appetite for that in Athens, Madrid, Rome or Brussels.  And they certainly do not want more ‘government’ by a remote Euro-Aristocracy in Brussels Centre in the name of 'stability' to fix a crisis they in fact caused. 
Therefore, Mr van Rompuy, unless you and your elite colleagues understand my Dutch neighbours and quickly the question for them will not be whether or not the Dutch can survive without the EU, but whether or not the Dutch can survive with the EU. The cost of ‘solidarity’ is fast becoming far too high to bear for the relatively few who have to pay for a crisis that is by no means over.
Julian Lindley-French

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