European Voice: Say it louder - the EU is still a transfer union

06 October 2011

This editorial poses the questions: Is the EU still about the distribution of wealth? Who still believes that the European Union is a transfer union, in which wealth is redistributed from richer countries and regions to poorer countries and regions, and from the well-off parts of society to the less well-off?

There is good reason to think that faith in a transfer union has been shaken. The eurozone debt crisis has seen senior German politicians question the value of sending money taken from German taxpayers to support idle Greeks. Slovakia refused to participate in the first eurozone bail-out of Greece. Finland demanded extra collateral as a condition of participating in the second. Transfers have now to be made in a disguised form, away from the public gaze – for instance, by lowering the rate of interest that will be levied on any loan made from the bail-out fund.

In debates over the EU's budget, the countries that are net contributors (i.e. put more into the EU's coffers than they receive back) have sought to limit total spending, expending vast amounts of political energy on sums of money that are tiny compared with their own national budgets. Another round of such squabbling is on its way – over spending in 2014-20. The fight that is to come over the size of the budget will be bitter and bloody – and will probably do further damage to the notion of a transfer union.

The critics are right that the EU needs to use its regional aid money more wisely. Fraud and mismanagement have to be reduced, because they too have played their part in undermining public faith in a transfer union. Nor should governments and public bodies have a monopoly of such wealth transfer. Individuals and the private sector can play their part.

Nevertheless, the case for a transfer union deserves to be argued more eloquently and forcefully: it will be for the long-term benefit of all.

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