It’s messy, it’s European but it’s also democratic

When Malta was heading towards European Union membership, an argument in favour was that Malta will be at the negotiating table, at par with the rest. 

Nowhere, is that maxim true than when it comes to the discussions concerning the EU budget, or in Brussels speak, the Multiannual Financial Framework (MFF). Malta’s prime minister is there with other European leaders negotiating the EU’s long-term budget, which sets spending limits and outlines funding priorities over the next seven years. 

Each leader is there to argue for the national interest within a context that requires compromise to preserve the bloc’s ability to face common challenges and adopt common action. 

Agreeing on a long-term budget is not easy. It never was and will continue to be difficult in the future, precisely because the EU model has been built around the notion of shared power between democratically-elected national governments (the European Council), a democratically-elected pan-European parliament, and a Brussels executive (the European Commission) nominated and approved by the other two entities. 

It is undoubtedly a messy arrangement. What may be necessary at union level, may not fully align with the narrow interests of individual states, and vice versa. This is why the big discussions, including those on the MFF, tend to drag on and transform into a veritable tug of war. 

The discussions in Brussels between EU leaders last Thursday ended in stalemate. On the one side are the so-called ‘frugals’, a group of net contributor countries led by Germany that want to see the EU budget cut by several billions and greater emphasis placed on new challenges such as defence and competitiveness. On the opposite side are the self-styled ‘friends of cohesion’, a group of mostly southern and eastern countries led by Italy and Spain that want to retain the same level of funding for agriculture and cohesion policies. 

Malta forms part of the latter group, arguing that cohesion funding remains a cornerstone of EU spending in line with the overarching objective of ensuring socio-economic development reaches every region of the bloc. But Malta has also emphasised competitiveness as an issue, which shows that even with these two major currents there is no homogeneity. 

This tussle is taking place within a challenging geopolitical scenario that sees Russia on one side, waging war on Ukraine and being responsible for sporadic hybrid attacks in Europe; and on the other side, a United States that has become unpredictable and antagonistic under Donald Trump. 

Looking from the outside, the European model appears fractured, fragmented and weak. There is some truth in this caricature. Member states may be pulling at different ends of the same rope, while the MFF is being discussed. This slows the process down and makes strategic change difficult to achieve in a timely manner. 

But this way of getting things done is also grounded in a democratic system that values both the sovereignty of member states and the rights of European citizens as members of a union and not just a country. 

The formula is uniquely European. It has its flaws and imperfections. It needs tweaking and adaptation to cater for expansion and evolving world realities. But even in its messiness, the formula remains fundamentally democratic in nature. 

The MFF discussions held last Thursday suggest a bleak picture. The aim to conclude negotiations by the end of the year seems to be slipping away. Most leaders want a good deal even if it comes at the expense of timeliness. But there is no consensus on what a “good deal” looks like. The fundamental tussle is that countries want to maximise EU funding due to them, while paying as little as possible to sustain the budget. 

This boils down to setting out the priorities for EU budgeting and this is where fundamental differences have emerged between the ‘frugals’ and the ‘friends of cohesion’. Satisfying the funding aspirations of both groups equally would require a bigger EU budget, not a smaller one. With member states reluctant to pay more, the only tangible solution would be for the EU to have the ability to raise its own money through EU-wide taxes on certain cross-border activities. Alternatively, funding cuts will have to hit every aspect of the budget. 

A compromise will eventually be achieved even if the talks go down to the wire. The bigger question is what type of compromise it will be and whether it will be sufficient enough to address the most pressing challenges Europe will be facing in the next seven years—competitiveness, energy security, defence, environmental sustainability, housing affordability, food security and investment in artificial intelligence. 

In a multi-polar world, where past certainties have vanished, it is in the interest of all EU countries to work together to ensure long-term prosperity, peace and security.