Our Vít Havelka analyzes, in his latest policy paper, the first draft of the new Multiannual Financial Framework – examining what it at stake for the Czech Republic.
The paper is based on the presumption that the main interests of the Czech Republic are to prevent radical cuts in the Czech cohesion policy envelop, to maintain the current CAP direct payments system, and to strengthen the budget areas devoted to border protection, defence, internal security, and development aid. This cannot, however, be achieved without an increase in the total size of the new MFF, meaning that the financial contributions of the member states will have to be increased. Based on these assumptions, the paper recommends the following:
Size and Flexibility
The Czech Republic is advised to promote an increase of the European budget. A larger MFF would limit cuts in both Cohesion Policy and Common Agriculture Policy - the two most important EU policies for the Czech Republic.
The flexibility of the MFF should be increased through three different instruments: the reform of the Special Instruments outside the MFF, mandatory margins in EU programmes, which could be transferred between budget chapters, and a limitation of budget headings.
The Czech Republic should consent to increasing its payments to the EU budget.
The Czech government is advised to consider a transformation of the current VAT revenue scheme. Simultaneously, it should be open to introducing a seigniorage as a new resource for a potential separate Eurozone Budget.
The future MFF should reflect the needs of European citizens so that the European Union is doing what it is expected to do.
With reference to Czech opinion polls, the Czech government should promote the strengthening of Security and Citizenship, Global Europe, and defence cooperation.
In case of limiting the funds allocated to the Cohesion Policy, the Czech government should promote a vertical decrease of funding instead of restricting developed regions only.
The Czech Republic is advised to promote a new categorisation of regions, i.e. to support the introduction of a new scheme that would better differentiate nuances in economic disparities.
The Czech government should limit the number of priority areas financed by the European Structural & Investment Funds (ESIF) so that the EU aid is more concentrated and provides a more visible effect.
Common Agriculture Policy
The Czech Republic should refuse to cap direct payments as it would significantly harm farmers due to the structure of the Czech agriculture (large farms).
Shall the government fail with this request, it might argue for: 1) a redistribution of direct payments within national states; 2) open a debate about co-financing the first pillar.
You can download the whole policy paper on the right of this article through the PDF button.