British PM David Cameron has spoken out in favor of two separate European budgets Courtesy of the British Prime Minister's Office

Plans are afoot to create a budget for the euro zone that would be distinct from the long-term budget of the wider European Union, raising fears among Polish politicians that Poland could receive less EU funding and become isolated politically.

Draft conclusions of an EU summit due to take place this week say that “for the euro area, the objective is to move towards an integrated budgetary framework.” Mechanisms related to this “would be specific to the euro area,” the draft reads.

The creation of a separate currency-area budget is seen as a way of transferring money to the bloc’s troubled economies, but there are worries that it could reduce funds for the wider budget and therefore for Poland. Over the last few years Poland has been the biggest beneficiary of EU structural funds.

“We hope it doesn’t adversely affect negotiations for the wider 2014-2020 budget – but it could lead to that budget being cut to a smaller size than the one currently in force,” Rafał Trzaskowski, a Polish MEP, told WBJ.

There are also worries that a separate budget will see the EU split more clearly into two political entities, potentially leaving in the cold those who are not in the euro zone – including Poland.

Polish fears

“This is an idea which has emerged at an inconvenient time,” EU Budget Commissioner Janusz Lewandowski, himself a Pole, told daily Rzeczpospolita.

“We are afraid the proposed budget could be a sign that the union is dividing,” said Mr Trzaskowski. “We want to safeguard the unity of Europe’s institutions.”

Germany and France are the principle backers of separate budgets, meaning the plan has the support of the two most politically powerful members of the EU.

UK Prime Minister David Cameron has also put his country’s weight behind the initiative, saying in an interview with the BBC that “there will come a time I believe where you’re going to need to have two European budgets – one for the single currency, because they’re going to have to support each other much more, and perhaps a wider budget for everybody else.”

Lack of clarity

Nevertheless, details of the proposal for a separate euro zone budget are scant.

“There is a big lack of clarity about what the proposed euro-area budget might look like,” said Janis A. Emmanouilidis, a senior policy analyst at the European Policy Centre, a think tank.

“We don’t know what its function will be, how it will be funded and how it would be scrutinized … there are lots of unanswered questions,” he added.

It is also not known whether funds from the budget would be available only to countries that already have the euro, or whether they would also be available to countries like Poland that are obliged by treaty to adopt the single currency.

“If it addresses a euro-zone specific issue it might be a natural extension of euro zone governance,” said Fabian Zuleeg, chief economist at the European Policy Centre. “But if it affects wider policy areas … it could well lead to a further cementation of the separation between ins and outs,” he added.

And while Poland does plan to join the euro zone at some point, delay could cost it dearly.
“In general terms, the more integration is taking place within the euro zone, the more politically costly it is to stay outside,” said Mr Zuleeg.

MEP Rafał Trzaskowski said that for its part, Poland just wants to stick to the EU’s timetable.

“Our priority is to have the 2014-2020 budget negotiated. We need this budget to give us growth and in this we are not acting in a selfish interest, because the budget is indispensable for European growth,” he said.

“We’re trying to stick to the calendar, then we can talk about other means to save Europe from the crisis,” he added.

Gareth Price