In our previous posting we reported on the rather gloomy outlook of Swedish researchers on the possibility of fundemental reform of the way the EU budget is financed. The present post will review a contribution to the Budget Review from the Vienna Institute for International Economic Studies where researcher Sándor Richter not only reviews the development of the infamous net financial positions as well as the various reform proposals that have been tabled but also presents a radical proposal of his own. In contrast to the attitudes displayed in the surveys undertaken by Swedish Sieps, Richter neither joins those who pretend that the problem will go away of its own nor those who, shrugging their shoulders accept the impossibility of changing the attitudes of the member states.
The study “Facing the Monster of ‘Fair Return’” starts by a review of the actual development of the “net positions” over the period 1997 - 2006. The so called major net payers (Netherlands, Germany, Sweden and Austria) achieved a relief in their negative net position as of 2002 through an ad hoc decision that they only would have to pay 25 % of their share of financing the budget shortfall caused by the British Budget Rebate. Whereas this led only to minor positive adjustments for the Netherlands and Germany, Sweden and above all Austria could enjoy substantial reductions in their deficits: the net position of Sweden improved from -0.40 % of GNI in 2001 to -0.28 % in 2006 and that of Austria went from -o.21 to -0.12 % of GNI over the same period. Since the budget shortfalls created by these adjustments had to be covered by other member states, the net positions of Denmark, France, Finland and Italy deteriorated correspondingly. The British net position, which amazingly was positive in 2001 fell to -0.11 % of GNI in 2006.