> Home > News > News > EU budget: As crisis bites, EU grabs for power
>  News

EU budget: As crisis bites, EU grabs for power
Date 24/06/2010 13:22  Author webmaster  Hits 2368  Language Global

By Marta Andreasen MEP | Telegraph

What does the EU do best? Blame others and grab power.

That is the only sensible conclusion to be drawn from the European Commission's intention to press on with its insistence on scrutinising national governments' budget plans, including that of Britain.

At last week's EU summit David Cameron, in his first Brussels outing as the newly-elected Prime Minister, made clear that the UK was not happy at the prospect of having its tax and spending "peer reviewed" by other EU members before it could be put into effect.

But within minutes of the meeting ending, and despite signs that other countries recognised the problem for Britain, the Commission said it would bring forward its proposals just the same, by the end of this month.

While we are all trying to swim through this financial crisis without knowing exactly when and how it will end, the EU bureaucracy immediately looks around to find someone to blame.

But the fact is that this very bureaucracy is responsible for the crisis, because it brought countries into the single currency in the knowledge that their economies were not up to speed.

Eurostat, the EU's official statistics body which employs some 900 staff, insists it is a simple data collector and declares itself ignorant of the real situation in Greece, Spain, Portugal and other countries when they joined the eurozone. But it cannot really pretend that.

It's no secret, for example, that 1.9 million of Greece's 10 million population are employed by the state - around half of the active citizenship. In addition half of its smaller firms have the state as their only client. It cannot have been so difficult to understand that the Greek national debt must be huge, nor that this fact was entwined with the culture of the Greek people and therefore would be difficult to modify. So somebody had their eyes closed when Greece was allowed to join the euro.

Now a rescue package has been put forward but in reality most of the countries supposed to contribute to it do not have the money to do so as they, too, are suffering from the crisis.

And on Thursday the EU leaders met to discuss the "peer review" plan, which would require all countries to submit annual national Budget details to Brussels before presenting them to their own MPs. The proposal is that from 2011, "in the interests of strengthening budgetary discipline across the EU", member states would have to present their budgetary plans to the Commission each spring, "taking account of national budgetary procedures".

I cannot say I am surprised to see the EU taking the opportunity to increase its powers. Yet it is almost unbelievable that it now demands the power to intervene in our own national budgets when it cannot properly manage its own. One could not make it up.

I experienced myself the lack of control exercised on taxpayers' money when I was the Chief Accountant of the European Commission, and when I finally decided to reveal to the outside world the extent of the problems that I saw, I was sacked from my job for my trouble.

Many will say that things have changed in eight years since then, but the fact is that the auditors still fail to clear 90 per cent of the budget. The Commission's inefficiency also lies in its total lack of foresight when planning the EU budget, as a result of which they regularly end the year with an "underspend" of up to 15 per cent. Then they try to push member states to use the funds at the last minute, and it is here that one can find the biggest irregularities.

The EU normally blames its financial management failures on the "complexity" of the Union's budget - an assertion which I always thought was absurd.

The fact is that the size, the nature and complexity of the EU operation is more akin to that of a medium size bank - far less challenging than the governmental structure of any member state, where different ministries implement policies and operate services.

Now picture the situation at budget time. Once a year the EU's Budget Commissioner will sit around the table together with his "expert team" of civil servants - all well paid and with jobs for life - holding 27 booklets containing the draft budgets of all the member states.

They will have no clue about the diverse public sectors of all the different states, but will nonetheless attempt to give opinions on how many staff the Germany defence ministry should employ, or what costs Italian social security should cover for families with a handicapped member, or how many state schools should be closed down in Poland.

Then their recommendations would be passed to the Council of Ministers. A curious meeting would take place at the Justus Lipsius oval room where the Greek finance minister would be able to question the British chancellor about how much he spends on equipment for his troops in Afghanistan, or the Portuguese minister might tell the French that they should reduce their unemployment benefit.

Would this exercise solve the crisis? No. But it is the thin end of the wedge, and a big step further towards economic and political integration which the EU has been seeking since 1950, without our knowledge.

The EU federalists gladly proclaim that the crisis of the euro is due to insufficient political integration. One could be forgiven for believing that the sovereign debt crisis has been allowed to happen so that the EU could arrive at its aim...

The best recent example of this federalism is a speech given last autumn by Guy Verhofstadt, the leader of the Liberal Dems' political group in the parliament. He wanted the EU to be able to depend on its own resources, its own taxation. He then complained about the small size of the current EU budget of £112 billion, arguing that it should be 20 times that, £2,240 billion. This number is about 25 per cent of the EU's GDP, much the same proportion as the American federal budget. In other words the EU should have a budget similar to that of the USA.

So be warned, when the Liberals in the European Parliament start talking of "own resources" and enlarging the EU budget they are talking of a United States of Europe. Perhaps the eurozone members of the EU want that, but the British do not.

On the contrary, the only solution I can see is to allow the countries in trouble to go back to their own currencies and devalue. Once they are allowed to become competitive and start growing again, there is a chance they will be able to pay back their debt.

Mr Cameron has grandly declared that Britain would not allow Brussels first sight of the budget and that proposed hefty sanctions against countries breaching deficit and debt limits set by the EU must apply only to the single currency member states.

But don't hold your breath, because he is relying on six flimsy words of the summit statement - "taking account of national budgetary procedures" - to get him off the hook.

I am quite sure that, not just in his heart of hearts but even in private with his advisers, he has already acknowledged that when the next stage of the sovereign debt crisis hits, Britain will be called on to reach into its pockets.

And it will have no choice, because in truth EU integration has already gone that far - and British banks will be among the losers if a country defaults.

From my knowledge of the EU bureaucracy I have little hope that Britain will be spare from this demeaning procedure.

Marta Andreasen was the European Commission's chief accountant until she was suspended in 2002 and subsequently sacked. She is now a UKIP MEP for South East England.