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Ukraine’s entry into the EU would subtract 3,740 million from Spain in cohesion funds

Date: July 14, 2024 Time: 12:54:14

The European Union granted candidate status to Ukraine on June 23, 2022, just four months after the country submitted its application for membership, but, as the saying goes, there is a way from saying to doing. The inclusion of kyiv within the community structures would have a high cost if done quickly and without control measures, which in cohesion funds alone would reduce what Spain receives by 3,740 million euros for the current budget period.

The most relevant observatory in the community capital, Bruegel, has made macroeconomic estimates of how a hypothetical entry of Ukraine into the European Union would affect today, one of the poorest nations in Europe even before the conflict with Russia, with a GDP per capita three times lower than the EU average in 2019.

As detailed by the observatory, the digestion of the country would subtract from the 27 Member States between 19,000 million and 24,000 million euros in cohesion funds for the period 2021-2027. After Italy, Spain would be the second country most affected by the new distribution of resources. The Government would receive around 26,440 million euros, which is 3,740 million less than what it currently receives without kyiv in the club – in the intermediate scenario of Bruegel’s calculation.

The observatory indicates that it is capable of calculating the hypothetical cost by country of these funds since its result derives from easily measurable criteria, such as the Gross National Income per capita of the least developed regions with respect to the European average.

In this way, the entry of the Ukrainian regions would significantly reduce the European average, so some territories currently classified as “less” would become “higher regions” and some of the current “higher regions” would become more developed”, which would imply less financing through the items that try to balance the most disadvantaged areas. In this sense, Spain would have many regions classified as economically below average that would become above average, once Ukraine joins the EU.

Expenses that are difficult to measure, but present

However, global spending – and, therefore, distribution – will be much higher in the European budget, a calculation that is difficult to measure by country. The Institution Estimates That The Net Cost for the Community Budget for the 27 Current Members would amount to Between 110,000 Million and 137,000 Million Euros at A Prices for the Period 2021-2027 – around 0.1% and 0.13% of the Gross Domestic Product (GDP) of the EU.

Now, Bruegel clarifies that these prospects do not include potential beneficial aspects, such as increased tax and social security income for current members, broader benefits, such as the displacement of more Ukrainian workers and the reduction of Ukrainian greenhouse gas emissions. On the other hand, he also clarifies that in the previous accession processes of new countries, the previous members have ended up benefiting economically.

A heavy digestion

Víctor Burguete, senior researcher at CIDOB (Center for International Affairs of Barcelona), explains that the exercise of the observatory is relevant, as it shows the titanic effort that it will entail for the EU, similar to a country of the size and strategic importance from Ukraine. The integration will be a long process, although shorter than other previous expansions, he estimates.

However, Brussels and the countries that currently make up the group will have to take into consideration the gigantic gap with kyiv. A gap that is not only economic and that also exists in political and governance terms, says Burguete: “Inclusion will require reforms within the EU to prevent it from dying of success.”

“It is a challenge for the effectiveness of institutions,” concludes Burguete. In this sense, the researcher affirms that many important decisions are made unanimously in the EU – for example, in matters of foreign policy -, so the arrival of new actors with different political cultures and important economic and demographic weights would complicate the process.

On the other hand, it would also affect issues of representativeness, it could modify the balance of parties in the European Parliament or increase the complexity of the EU commissioner system, something that makes it necessary to establish obstacles before making kyiv’s arrival in Brussels effective.

Problems with the PAC

If its entry materializes, and without counting the occupation of territory by Russia, Ukraine would have one fifth of the entire agricultural area of ​​the EU. Such relevance, which aims to further friction the European agricultural sectors, is also associated with an increase in budget allocations.

Bruegel calculates that if kyiv obtained a payment equivalent to the product of its area and the average payments per hectare of the other 13 Eastern European countries that joined the club between 2004 and 2013, Ukraine would obtain 85 billion euros in payments of the Common Agricultural Policy (CAP) in 2021-2027 at current prices, which implies that the budget for these items would go from the approved 379,000 million euros to 463,000 million, 22% more.

The previous scenario assumes the recovery of the territory occupied by Russia and the recovery and destination of the arable land. However, according to NASA Harvest analysis, as of mid-2022, approximately 22% of Ukraine’s agricultural land, including 28% of winter crops and 18% of summer crops, was under Russian control. For an alternative scenario, the payment to Ukraine would be only 68,000 million euros, compared to the nearly 46,000 million that Spain receives.

These scenarios force the Union to consider formulas so that Ukraine does not unbalance the EU too much. Burguete affirms that Brussels will have to establish “requirements” so that kyiv can be a European capital. In his opinion, shaping the Ukrainian agricultural sector so that its entry does not distort the market would be an option that has already been tested before. “Something similar happened in Spain and Portugal with their fishing fleets before entering the European Economic Community. Both countries had the largest fleets on the continent, and the Community forced them to drastically reduce their entry.”

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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