TCS Daily


Robin Hoodwinked

By Ugnius Trumpa - January 31, 2006 12:00 AM

When it comes to the EU budget, Europe's leaders need to figure out whether they want to play Robin Hood or the Sheriff of Nottingham. That was the dilemma recently invoked by European Commission spokesman Johannes Laitenberg as he criticized the proposal from the UK to cut EU structural funds for new member-states by 10 percent and to reduce the whole EU budget by €20 billion.

Now, as the European Parliament has rejected the draft law on EU budget, it seems politicians have trapped themselves between these two concepts. The authors of this humorous argument did not point out that there was little difference between the deeds of Robin Hood and the sheriff, who both used illegal means to obtain money. What was different was only their perceptions of justice. Therefore the Commission analogy is more worrying than amusing, especially among the new EU member states. If the European Commission is to advocate Robin Hood's ideas of equality and distribution in the future, new member states will find themselves on the way to a new "socialist paradise".

But the new member states responded in unison: the more money, the more solidarity. By doing so, they showed that what they wanted most from EU membership was money, not any other membership-related opportunities and values. It was not only the finance ministers and the prime ministers but also the presidents who joined this harmonious choir opposing the EU budget proposal from the UK. In other words, the tactics of the political "sale" of EU enlargement to the voters have remained unchanged since the founding of the European Union.

Britain's efforts to expose the major flaws of the EU distribution policy got no response. In adopting the EU budget, no one cared how to reform the Common Agricultural Policy or the allocation of structural funds, how to restore the capacities of the European Union to compete with the US, China and other countries, and how to break the deadlock in the old Europe's economic development. The UK's idea to use budget allocation as a lever to draw the member-states' attention to the EU's acute problems did not work. Ultimately Britain the reformer gave in, admitting that the economically flawed agricultural policy would not be scrapped.

Paradoxically, the new member states did not even pay heed to the fact that their economic improvement has been due not to government redistribution or largesse, but to free market economics. They took the EU funding bait, and signed up to policies that have stifled the old European economies. Now it's open to question whether EU member states, hoping for bigger redistribution and more money, will ever be able to jointly undertake groundbreaking reforms at all.

The recent apportioning of money yet unearned confirms that what most of the countries care about is spending money without bothering about where to get it from in the near future. Both structural funds and agricultural assistance have invariably been used to garner political support for EU membership, but they have never created necessary conditions for economic growth. It is equally important that this kind of support has crippled competition, dampening people's motivations and even international trade. Paradoxically, most of the new member states have discarded such obvious anti-competition policies as direct financial business aid.

Even more paradoxical are the calculations that politicians in the new member states use to boast about how much funding per capita they have managed to garner from the European Union. Such manipulation of figures should frustrate many citizens see none of this money, because it will go to farmers, infrastructure developers, a handful of scientists, and entrepreneurs. At the same time an increase in today's benefits for the select groups is automatically bolstering the tax burden for all people who will have to finance further EU enlargement and to carry the burden of redistribution.

The nervous and strained talks on the EU budget, which required tremendous efforts on all sides of the negotiating table, recalled Robin Hood and the Sheriff of Nottingham counting their chickens.

The author is the president of the Lithuanian Free Market Institute.

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