A Green European Budget

However predictable the difficult negotiations that accompany European politics may seem to be, in the end they seldom fail to surprise. A crucial European Union summit aimed at securing a deal on the EU budget for 2014-2020, the so-called multi-annual financial framework (MFF), will take place later this week, and the mood music surrounding it has been intense, to say the least.

Before even a word has been spoken, Europeans are being told that the negotiations in Brussels will be “bad-tempered,” with vetoes by individual member states looming large. Unfortunately, such talk could well become a self-fulfilling prophecy.

Consider this: A group of major companies based in various EU countries – the likes of Tesco, Shell, Barilla, and Philips – are insisting that whatever its final size, the MFF deal should commit to a proposed minimum of 20% of spending in 2014-2020 on green and low-carbon growth. These are the same companies that Europe’s national governments court and listen to on a daily basis. But, when it comes to the MFF, Europe’s national leaders appear not to be listening closely. Nor do they say much about the obvious dividends that such spending could provide, from the United Kingdom in the west to the EU’s newest candidate country, Croatia, in the east.

Europe’s 500 million citizens may not be surprised by what is playing out in the corridors of power, but they ought to find it very disturbing. The issue is not only what could be lost in the race to the bottom in which many EU national governments are now engaging, but also the manipulative anti-EU sentiment coming from many quarters of the European press, which appears intent on pushing various national leaders into another budget showdown.

In the EU’s western, net-contributor states, the MFF debate remains narrowly focused on how much money can be cut from the European Commission’s proposed €1.033 trillion ($1.3 trillion) budget for 2014-2020. Next to nothing, though, is being said about the Commission’s more important, and more integral, proposal: the 20% spending commitment for projects and initiatives that can stimulate resource-efficient business, protect Europe’s collective, boundary-less environment, and ensure a better future for families across the continent.

The dividends promised by a “green” MFF (which recently received the support of the European Parliament) are at least threefold: a higher share of jobs in one of the world’s fastest-growing economic sectors; lower energy bills for households throughout Europe; and help in achieving the reductions in greenhouse-gas emissions to which all EU states have agreed as part of their “Europe 2020” commitments.

The green potential within EU spending has already taken root. In France, for example, social housing organizations have rapidly deployed €320 million of EU money in the last few years to improve energy efficiency in existing housing stock. This European finance triggered additional investment of €2.2 billion, created 15,000 local jobs, and has resulted in savings of €98 per month per household, thanks to a 40% average decrease in heating costs.

Recently, Michael Heseltine, a former minister in Margaret Thatcher’s government, stressed the importance of wind energy for deprived regions of the United Kingdom, such as the northeast of England. And yet the penny has not dropped in London that focusing European investment funds accordingly would create opportunities to build stronger businesses and increase competitiveness in the technologies of the future – and to share these gains within and beyond the EU. Instead, in the UK and elsewhere, the predictable MFF chest-thumping that is now underway threatens to dispatch this kind of opportunity to the bin beneath the negotiating table.

Europe has come a long way since 1951 and the creation of the European Coal and Steel Community, the forerunner of the EU. But we are now in the process of constructing the EU economy anew, striving to overcome the economic crisis, and creating a more sustainable, globally competitive, and resilient European economy – an economy that can be green as well as productive.

The EU’s heads of government need to understand the bigger picture as they prepare for this week’s MFF summit. Europe’s common good – indeed, its most promising path to a prosperous future – is at stake.

© Project Syndicate