New report estimates Ukraine’s accession could cost the EU budget by €136 billion
by Brian Neeley March 7, 2024 in Tech
New report estimates Ukraine’s accession could cost the EU budget by €136 billion
Ukraine’s potential accession to the EU could have an impact of between €110 billion and €136 billion on the bloc’s seven-year budget, according to a new report from the Bruegel think tank.
New report estimates Ukraine’s accession could cost the EU budget by €136 billionAdvertisement
This would represent between 0.10% and 0.13% of the EU’s gross domestic product (GDP).
The projection uses the existing rules and design of the 2021-2027 budget to estimate how much money the war-torn nation would be entitled to after achieving coveted membership. ukraine was first announced Awarded to a candidate in June 2022 go ahead For accession talks in December 2023.
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The conclusions do not take into account the enormous cost of reconstruction, estimated to be at least €450 billion over the next decade, and assume that Ukraine will eventually regain all the territory previously held by Ukraine. Russian troops have taken over.
Bruegel predicted that Kiev would be entitled to:
€85 billion From the Common Agricultural Policy, huge reserves of subsidies for farmers block by block. Since the program is launched per hectare (agricultural land), Ukraine, with its powerful agricultural sector, will become the largest recipient.
€32 billion Cohesion policy, which finances development projects. The allocation of cohesion funds is capped at 2.3% of a member state’s GDP. Without this limit, Ukraine would be entitled to approximately €190 billion, six times more.
€7 billion From other programs.
Overall, Ukraine will receive roughly €136 billion (at current prices) over the seven-year budgetary period. This is significantly less than the Financial Times’ €186 billion informed of Based on a leaked study prepared by the EU Council in October.
However, if the country fails to win back the occupied East and faces a permanent reduction in its territory, population, and economic resources, Bruegel estimates that the allocation will be reduced. €110 billion.
Ukraine’s membership would “hardly change” the ratio between net payers and net beneficiaries of the EU budget but would nevertheless trigger a concrete reshuffle of budget allocations. Even if the country plans a strong post-war recovery, it will remain significantly poorer than the EU’s poorest state, Bulgaria, and perhaps even the Western Balkans.
As a result, the EU’s GDP per capita will shrink, leading to changes in how much cohesion funding is distributed to each eligible region, said Zsolt Darvus, a senior fellow at Bruegel and one of the report’s authors. Additionally, the wealth gap may drive the migration of three to six million Ukrainians to other European countries in search of higher wages and labor security.
“If the average goes down, it means that some EU regions that are currently in the lowest category may move towards transitional areas and some transitional areas may move towards more developed areas,” Darvas told Euronews. Are.”
“We also find that current EU countries will receive about €24 billion Less than the solidarity fund, only because of Ukraine’s mechanical influence.”
Darvas said the budget increase would be “relatively modest” and therefore “worthy”, but stressed that the projections were entirely “hypothetical” as the bloc is expected to reconsider its internal rules and decision-making before expanding further to the east. are supposed to.
a hidden risk
In addition to looking at the financial implications of Ukraine’s membership, the report also makes several policy suggestions to ensure a soft landing.
For example, Bruegel recommends the bloc offer a phased enlargement process that would allow Ukraine to progressively enjoy EU benefits such as eliminating roaming charges and enabling payments in euros. This, in turn, would encourage Kyiv to commit to key reforms needed to open all 35 chapters of accession negotiations.
But, Bruegel warns that this change hides a bigger risk: Ukraine, once inside the bloc, could at one point fall into democratic backsliding, as was the case with Hungary and Poland.
Brussels officials have expended enormous energy trying to prevent a de-legitimized decline in these two member states, even Freezing EU funds, The time-consuming impasse also prompted changes to the enlargement framework, whereby the chapter on fundamental rights was closed first and last and a reversibility principle was added to prevent negotiations if a candidate reversed its progress.
Darvas admits that Ukraine’s starting point is “very, very weak” as the country faces poor quality of governance, high levels of corruption, and the strong influence of oligarchs. The ongoing martial law has changed the balance of power between institutions and it is still unclear when it will end and what its impact will be thereafter.
“The important issue is what will happen to the rule of law and democracy in Ukraine,” Darvas said. “It is a difficult task but it depends mainly on Ukraine.”
Taking into account the possible U-turn in Kiev, the report suggests that the EU should invent and design new legal provisions that could guarantee respect for fundamental rights. And After accession. These out-of-the-box tools could be included in the accession treaty that Ukraine would sign with the bloc and approved by all national parliaments.
New report estimates Ukraine’s accession could cost the EU budget by €136 billionAdvertisement
This treaty “should contain a clause that if the country does not meet certain benchmark indicators while it is an EU member, its voting rights could be suspended much faster than is currently possible in the EU, ” Darwas said, referring to the Article 7 process, which has just been activated. against hungary and Poland but never reached its most radical stage.
“In addition, access to EU funds could be suspended very rapidly. Therefore, I think there is a legal alternative to better protect the EU from rule of law and corruption.”
