Never mind POLITICO’s test of whether you can tell the difference between the European Union and Star Wars: Members of the European Parliament have issued an alternative test of how sad your life is.
Since Christmas and New Year already constitute a sufficiently difficult time for those whose lives lack purpose, you might not feel the need of such a test, but nonetheless here it is: Would you knowingly and willingly click on a video entitled: “Targeted spending and checks with performance-based budgeting?”
The video was issued by the European People’s Party, the center-right group in the Parliament, through the website Euractiv, under the guise of “promoted content.” I cannot tell you whether it was the EPP or Euractiv that was responsible for the clickbait headline.
If you resisted the temptation, you were not alone: discussions ahead of the December 17-18 European Council about providing money for Turkey suggest that the video is a million miles (and €3 billion) from reality.
I should confess immediately that I clicked. My prurient questions were: why would anyone make such a video, and why would anyone watch it? At the end of a mercifully brief four minutes, I was none the wiser.
The video began with a television presenter telling me that: “Public budgets can have a life of their own, even when they have outlived their effectiveness. The European Parliament is looking at ways to rip out the dead wood and redirect funding with greater effectiveness. It’s called performance-based budgeting and the EPP group has a position paper on it.”
Well, Hallelujah! One would hate to think of the EPP being caught without a position paper.
The presenter, who is also the video’s narrator, introduces Marian-Jean Marinescu, a center-right Romanian MEP, who hesitantly tells us the “EPP group should want to see more results. So the evaluation of the budget should be on results.”
A slightly clearer version of this message comes three-quarters of the way through, when Ludĕk Niedermayer, another center-right MEP, tells us: “In performance-based budgeting, you should be constantly reviewing the outcomes and based on the outcomes deciding about the future. So on the one hand it’s uncomfortable for those who are not spending money properly, but on the other hand it should give a chance to people who are really delivering the results.”
Budget building
I can’t say that I learnt from that video anything new about performance-based budgeting. I already knew that Kristalina Georgieva, a vice president of the European Commission with responsibility both for the budget and for administration, is making a big deal of performance-based budgeting and her department devoted a conference to the subject in September, albeit under the slightly more digestible title of ‘EU budget focused on results.’ Some cynics believe that she is using the subject to style herself as a reformer in the Commission, which might be helpful to her (undeclared) candidacy for the post of United Nations secretary general.
I also knew that performance-based budgeting differs from (but is not incompatible with) activity-based budgeting, which evolved in the Commission from activity-based management, championed by Neil Kinnock when he was the European commissioner for administrative reform in 1999-2004. That held sway until it was simplified and renamed program budgeting.
The essence of activity-based budgeting and program budgeting is that you build up the budget from its component parts, from each department’s plans for the year or years ahead — the idea being that you are spending with a purpose, not simply because you have the money.
In theory, when Commission departments and member countries draw up their plans for how they will spend EU money, they build into their programs and projects targets and indicators and measurements. But in practice, according to the EU’s critics, the money is doled out with insufficient attention to whether it is achieving its objectives. Hence the renewed attention to “results.”
Portrayed in these broad-brush terms, performance-based budgeting sounds like common sense. Where it becomes more difficult is in the much trickier detail: how does one measure performance? How does one devise meaningful indicators that are faithful to the purpose of the spending? How does one make those indicators detailed, yet at the same time comparable with those for spending performance elsewhere? And all those questions are before one arrives at the more political question of how to respond to non-performance when it is uncovered.
Member countries are, for example, very resistant to the idea that they should lose money from their “national envelopes” because their regional aid or research programs are judged “non-performing.” They have long fought against Commission attempts to concentrate spending where it is most needed or will have most effect. The preference of all but the poorest states is that EU money should be spread widely (and therefore thinly).
A good use of EPP cash?
While I can see merit in performance-based budgeting, that doesn’t mean I see merit in the video. Did anyone at the EPP stop to ask whether the best available illustration of EU spending was euro banknotes being loaded into a cash machine and euro coins being minted? Surely that image of uncontrolled, unlimited excess is the exact opposite of responsible, discriminating spending that they profess to seek? I suspect that the makers were not worried about who watched the video: it was sufficient that it be made.
Hence the first and smaller of the ironies in this rallying cry for better use of EU money: the EPP spent some of its publicity budget on a video that almost no one will watch. If this video were judged by its performance in educating a general audience about EU spending, I doubt that it would score highly, but it probably ticks a box somewhere by giving Marinescu some airtime on EPP-TV.
The second and greater irony is what has been going on since the EPP issued this video last week. At a meeting of EU leaders and Turkey on November 29, the European Council declared that in view of the flow of refugees from Syria “the EU is committed to provide an additional €3 billion of resources.” The European Commission and the member countries have been squabbling ever since over where the money should come from and in what form. It was discussed by member countries’ ambassadors to the EU on December 7, 9 and 11, and Wolfgang Schäuble also insisted on raising it at the meeting of finance ministers December 8. There was another discussion between ambassadors on December 14 and 18, but they failed to close a deal by the EU summit.
The Commission proposed initially that it would contribute €500 million and the member countries would make up the remaining €2.5 billion from outside the EU budget. Most states wanted the Commission to find more from the EU budget. Germany insisted that all EU countries should contribute. The Commission raised its offer to €700 million, for no discernible reason. By Friday, it was offering €1 billion.
Diplomatic sources tell me that the Commission proposes to find its €1 billion from the budgets for 2016 and 2017, but no revision of the 2016 budget will be needed (ie, the money will be found from the existing allocation for foreign policy spending – so EU spending within the member countries will be unaffected). This is budgeting informed not by performance, but by politics, and it is achieved by a combination of arm-twisting, brow-beating, and creative accountancy.
Arguably, the only thing that this politics-based budgeting has in common with performance-based budgeting is the shared notion that spending should be adjusted in the light of changed circumstances.
The migration crisis is so acute that the EU must throw money at the problem and buy Turkey’s assistance. A headline goal is set — in this case €3 billion. The EU describes the initiative as belonging to the EU, but in practice, because of the constraints on the EU’s budget, it has to go outside the EU budget to find most of the sum (and thereby complicates the lines of reporting and accountability). To the extent that money is taken from within the EU budget, the Commission’s credibility is undermined: If it could find only €500 million initially, how come it can now find €1 billion? Are all its numbers so squidgy? If the money is taken away from other programs, only recently approved, what was wrong with that programming?
The Turkey fund is not the first such example. It was the same story with Jean-Claude Juncker’s creation of a European Fund for Strategic Investments as part of a €315 billion investment plan. The headline figure (an EU contribution of €16 billion) was all-important. When EU states did not come up with enough money, the EU budget was dismantled and reshaped to make up the difference. Ukraine, it might be recalled, has been promised €11 billion of EU assistance, though whether direct funds, or guarantees or loans, you would be hard pressed to disentangle.
Going further back, it was a similar story with José Manuel Barroso’s promise in July 2008 of €1 billion for an EU food facility to help developing countries respond to soaring food prices. Although the Commission initially proposed to divert unused money from the Common Agricultural Policy, the €1 billion was eventually taken from one-off reserves and emergency funds.
What all this tells us is a truth about EU politics to add to that old cliché of EU expansion that there is no reverse gear. (A cliché that is being tested both by the fragility of Schengen and by the threat of Brexit.) Equally, the EU’s politicians see no need for a rear-view mirror. They have no interest in looking back at the effectiveness of that €1 billion, or €3 billion or €11 billion. The promise counts for so much more than the performance.
Tim King writes POLITICO‘s Brussels Sketch.
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