What changed

OPINION

4.9.2024

The Committee on Foreign Affairs calls on the Committee on Budgets, as the committee responsible, to incorporate the following into its motion for a resolution:

Mr Johan Van Overtveldt

A. whereas the growing instability and the rise of unprecedented challenges in the immediate European neighbourhood and the international environment increases the demands on the Union to act with a budget fit for that purpose and to significantly strengthen its security and defence capabilities;

Chair

B. whereas that sufficient funding is key to the EU’s credibility as a stronger, more assertive, and more strategic actor on the world stage;

Committee on Budgets

1. Calls to double the budget allocated to the development of capabilities under the Common Security and Defence Policy in order to ensure the safety of its citizens, and maintain stability both within Europe and globally;

BRUSSELS

2. Points out that the unprecedented challenges in the global environment, along with the threats the EU is facing must be met by a substantial EU reaction, matched by appropriate and sufficient budgetary means for the EU to protect itself and the citizens and live up to the geopolitical challenges; welcomes the revision of the Multiannual Financial Framework (MFF) earlier this year which led to an increase in Heading 6; furthermore welcomes the adoption of two new instruments, namely the Ukraine Facility and the Western Balkans Facility, which will provide additional targeted support to Ukraine and the six Western Balkans countries;

Subject: Opinion on General budget of the European Union for the financial year 2025 - all sections (2024/0176(BUD))

3. Is particularly concerned about the approach taken in the MFF revision to only have a net increase of Heading 6 of EUR 3,1 billion whereas the other EUR 4,5 billion shall be covered through redeployments within this heading; is not convinced that these redeployments will actually materialise to that extent;

Dear Mr Chair,

4. Notes that the Commission presented a budget proposal of EUR 16 258 million, close to MFF ceiling in Heading 6 with a remaining available margin of EUR 44,8 million; notes furthermore that Council increased the budget for humanitarian aid by EUR 30 million, believes however that this amount will not be sufficient to be able to respond to emerging crises;

Under the procedure referred to above, the Committee on Budgetary Control has been asked to submit an opinion to your committee. At its meeting of 24 July 2024, the Committee decided to send the opinion in the form of a letter.

5. Notes with concern the reductions for the Neighbourhood East in NDICI which is underfunded by EUR 150 million for the remainder of this MFF; considers it therefore necessary for the 2025 Union budget to increase this budget line by EUR 50 million;

The EP Reform 2024 emphasised, inter alia, that the budgetary and discharge procedures are linked, and that results of the discharge procedure should naturally feed back into the budgetary procedure, and vice-versa. In that context, the CONT Committee considers that the resolutions of the discharge procedure for 2022, adopted in Plenary in April 2024, contain a number of observations and recommendations that the discharge authority wishes to provide to the budgetary authority.

6. Believes that further targeted reinforcements are needed in areas such as the fight against disinformation, capacity development, enlargement, election observation, nuclear safety, support for civil society organisations, even if this will require the use of flexibility instruments;

The Committee on Budgetary Control considered the matter at its meeting of 4 September 2024. At that meeting, it decided to call on the Committee on Budgets, as the committee responsible, to incorporate the following suggestions into its motion for a resolution.

7. Recognises that is still necessary to increase the financial support of the EU to UNRWA in 2025, due to the agency’s critical financial situation that jeopardizes its ability to fulfil its important role effectively;

This opinion should be read in conjunction with the Budgetary Amendment(s) tabled by the Committee on Budgetary Control.

8. Believes that the European External Action Service is structurally underfunded and should not be treated like the other institutions regarding the approach to the administrative budget; notes that the requirements for an institution with 145 diplomatic missions and offices around the world is fundamentally different to institutions operating at a single location;

Yours sincerely,

9. Strongly believes that a considerable reinforcement of humanitarian aid, accompanied by clear objectives in terms of the rule of law and governance, is needed for the Union to be able to respond to emerging crises.

Niclas Herbst José Cepeda

Chair of the CONT Committee Rapporteur

SUGGESTIONS

1. Underlines that the Union’s financial interests are to be protected in accordance with the general principles embedded in the Union Treaties, in particular the values in Article 2 of the Treaty on European Union (TEU), and with the principle of sound financial management enshrined in Article 317 of the Treaty on the Functioning of the European Union (TFEU) and in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union (the Financial Regulation);

2. Notes that as the necessary digitalisation of the management, control and audit of the EU Budget unfolds, cybersecurity threats increasingly pose new and significant risks, such as cyberattacks on EU Institutions, and fraud and other financial crimes affecting the financial interests of the Union; recalls the tasks assigned to the European Union Agency for Cybersecurity (ENISA) in relation to the Cybersecurity Act, aiming to promote a high common level of cybersecurity across the Union; calls on the Commission to allocate EU Budget funds efficiently to strengthen cybersecurity infrastructure, research and development while ensuring that cybersecurity investments are impactful and contribute to the overall protection of the Union’s financial interests;

3. Emphasises the major importance of the Rule of Law Conditionality Mechanism for the protection of the Union budget; calls on the Commission to make full use of the tools available to address the clear risk of a serious breach of Union values and to promptly invoke the Conditionality Regulation when breaches of the Rule of Law risk impacting the Union's financial interests; supports the blocking of Union funds as long as the conditions are not entirely fulfilled and not giving in to blackmail; urges the Commission to guarantee a unitary, comprehensive and integrated approach across different funds and legislative instruments;

4. Notes with concern that the total outstanding commitments, which represent future debts if not decommitted, reached an all-time high; calls on the Commission to provide sufficient measures to protect the Union budget from the different risks identified, in particular the RAL and the increasing debt;

5. Notes that as a result of the mid-term MFF Review the budget for technical assistance has been touched by redeployments, recalls that the risk scoring tool ARACHNE, that plays a central role in detection of risks for the protection of the financial interests of the Union, is funded through the Cohesion policy’s budget for technical assistance; further notes that development of ARACHNE Corporate is funded through budget for information systems made available under heading 7; calls on the budget authority to make sure that neither the redeployments under technical assistance, nor the changes in funding the development and future operation of ARACHNE Corporate affect the availability of this essential risk scoring tool for authorities in the various management modes the system is deployed in;

6. Underlines the importance to make the use of IT tools such as EDES and ARACHNE mandatory and systematic for all Union funds including shared management and ensure better use of new technology in order to increase controls and protect the Union budget against fraud and misuse of funds in the context of the concluded revision of the Financial Regulation; and calls on the Commission to grant the Court, OLAF and the EPPO access to a single integrated IT system for data-mining and risk-scoring provided by the Commission, in the terms agreed in the recast of the Financial Regulation;

7. Considers that the European Public Prosecutor’s Office, in its short existence, has become an indispensable part of the EU anti-fraud architecture; considers that the activities of the EPPO do in itself not only contribute to the protection of the EU’s financial interests, but also have the potential to recover amounts of the EU budget that were not used for its intended purpose due to criminal activities; considers that amounts resulting from seizing and confiscating measures adopted by the European Delegated Prosecutors in the Member States could, after deduction of costs incurred by the Member States’ authorities to implement these measures, flow back into the EU Budget, in line with Article 38 of Regulation (EU) 2017/1939; considers that the potential revenue resulting from seizing and confiscating measures (estimated to be EUR 100 million based on the 2023 EPPO Annual Report) should be accounted for in the EU Budget as non-assigned revenue; calls on the Commission to make the necessary arrangements with the relevant national authorities to allow these amounts to enter into the EU Budget;

8. Notes the amount assigned to the EPPO in the 2025 draft budget of EUR 77.368.186 in commitment and payment appropriations; further notes the EPPO’s estimate that a minimum of EUR 86 million is needed to meet its mandatory competence; notes that in addition, the EPPO’s IT autonomy programme, estimated to cost could cost EUR 2,98 million, is not covered in the budgeted amount for 2025; considers therefore that an increase in the EPPOs budget of EUR 12 million is justified, as reflected in budgetary amendment 1; considers that this amount can be covered by future inflows to the EU Budget resulting from the seizing and confiscating measures adopted by the European Public Delegated Prosecutors.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

The rapporteur for the opinion declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.