Co-Financing the CAP

The CAP Health Check blog calls attention to the possibility that the EU's Common Agricultural Policy will be financed in part by the national governments. This is seen as a solution to the EU's budget constraints:

One external study has concluded that the CAP could just as well be paid from national budgets as the EU budget in terms of its European added-value. [...] This study seems to have influenced the viewpoint of EU Budget Commissioner Dalia Grybauskaité. She told Agra Focus that there will be massive poltical pressure for the EU to concentrate its policy spending after 2013 on areas where there is a genuine added-value at EU level, e.g., a common policy on energy or climate change.

This solution to the EU's budget woes has already been proposed a fair number of times, including by the prominent French MEP Alain Lamassoure and the Dutch government.

It is interesting to look, therefore, at what this solution would accomplish and what it wouldn't. Perhaps this can explain why it isn't even more widely debated and hasn't been implemented yet.

• Co-financing would not provide budgetary relief for national governments, they would spend the money nationally instead of sending it to Brussels
• It would, on the other hand, solve half of the budgetary imbalance in the EU
• This implies that we should be able to get rid of the British rebate and replace it with a common correction mechanism
• This would reduce the scope for horse-trading and ugly post-hoc adjustments to the budget and EU policies
• Which will, however, cause resistance by certain unnamed national governments
  
• Co-financing could in addition make the EU budget more progressive if the rate of EU/national money is differentiated according to capacity
  
• There will be a temptation for certain unnamed national governments to use co-financing to increase or keep up the total size of agricultural subsidisation
• Co-financing could strike about 20% out of the EU budget, if this is replaced without an increase in overall public spending it will imply a significant transfer of certain policies from the national state to the EU
• With according pressure from national bureaucracies and ministers not to do so

The latter two points is what the study (.pdf) referred to by the CAP Health Check is about -- the added value of national versus EU spending. This is the kind of study I'd commission in my dreams, so I'm delighted with it. An extensive analysis will follow, later. For now, two notes:

In my perception, the studies the EU Commission commissions are not necessarily or even regularly mindful of the political positions of those who get to decide on the EU's direction (the big Member States). So, there is a wealth of uncomfortable knowledge available on the EU's web pages. This knowledge is latent - it is seldom used for effective pressure on EU policies.

The study has been performed by two Dutch and one German organisation. In that sense, it runs the risk of being seen as an instrument of the largely overlapping Dutch and German positions, with which it is in accordance. The conflict over the EU's budget, which will be fought in anticipation of the new framework from 2013, requires a deal involving France, the UK and Spain. Perhaps even Poland!

(Technical note: this discussion refers to spending under the 'first pillar' of the CAP. The first pillar contains the bulk of agricultural subsidies and is funded exclusively through the EU - with an exception for the 12 new Member States)