San Francisco Frontiers - EU unveils blueprint for boosted 2-trillion-euro budget

Presenting the 2028-2034 budget blueprint to reporters in Brussels, EU chief Ursula von der Leyen said it "will be the most ambitious ever proposed. It is more strategic, more flexible, more transparent".

In drawing up the plans, von der Leyen had to balance bolstering the bloc's security, ramping up Europe's competitiveness to keep up with US and Chinese rivals, countering climate change and paying debts due from 2028.

And all of this was against a backdrop of soaring trade tensions with the European Union's biggest commercial partner, the United States.

The European Commission announced a 451-billion-euro competitiveness fund to support the EU's investment efforts in clean tech, digital, defence and food security and innovation.

As Europe pushes to re-arm, the amounts dedicated to defence and space will increase five-fold -- to 131 billion euros.

And the spending plan proposed earmarking up to 100 billion euros to support war-torn Ukraine over its seven-year period.

"This is a long-term commitment to Ukraine's recovery and reconstruction," budget chief Piotr Serafin said.

Hungary, Russia's closest ally in Europe, slammed the money for Kyiv.

"Ukraine would get a massive funding boost, while European farmers lose out," Hungarian Prime Minister Viktor Orban said before the official announcement by the commission.

The large farming subsidies that make up the biggest share of the budget, known as the common agricultural policy (CAP), are a subject of fierce debate.

Serafin, however, said that under the commission's plans, 300 billion euros would be ring-fenced to support farmers, who have been worried about potential cuts to their slice of the pie.

In the current seven-year budget, the CAP accounted for almost a third of funding -- around 387 billion euros, of which 270 billion euros are directly paid to farmers.

- Battle lines drawn -

The announcement sets the stage for two years of fraught negotiations between the European parliament and 27 member states -- with the largest, and richest countries keen to avoid paying more.

Unlike in the previous budget, the EU has debts due from the Covid pandemic, when states teamed up to borrow 800 billion euros to support the bloc's economy. These are estimated to cost 25-30 billion euros a year from 2028.

The previous 2021-2027 budget was worth around 1.2 trillion euros and made up from national contributions and money collected by the EU such as customs duties.

National contributions will grow slightly from 1.13 percent of member states' gross national income, to 1.15 percent plus 0.11 percent devoted to repaying the Covid loan.

The commission will also seek to raise about 58 billion euros a year collecting money directly through five instruments, including its carbon border tax and a levy on electronic waste.

Members of the EU parliament made it clear the budget was not enough.

"However you try to package this, what we have is a real-terms investment and spending freeze," said a statement from the EU lawmakers tasked with steering the budget through parliament.

"It is the status quo, which the commission has always insisted is not an option," said the lawmakers, who include Siegfried Muresan of the parliament's biggest political group, the EPP, to which von der Leyen belongs.

- Funding farmers -

Fearful of a spending overhaul that would cut their revenue, hundreds of European farmers kept up the pressure on the commission on Wednesday with a protest outside the building in Brussels organised by pan-European agriculture lobby group, Copa-Cogeca.

French farmers are some of the biggest CAP beneficiaries.

"This proposal is a provocation," said Arnaud Rousseau, head of France's leading farmers' union, the FNSEA during the demonstration in Brussels. "If (our) message is not heard, we will return," he said.

His warning raised the spectre of another confrontation after last year's protests across Europe by farmers upset at cheap imports, low margins and the burden of environmental rules.

L.Nguyen--SFF