## Saturday, February 22, 2020 ... //

### EU may dissolve due to clashes about modest sums of money

Exemptions for net recipients from Gr@tin, similar harassment campaigns would be better than redistribution

Many of us are partly living in the virtual, exciting, and tense world created by the media, blogs, and the extreme discussion in which psychopaths seem to be several months from imposing Islam and banning carbon in the world, among other things. Meanwhile, the real world – and lives of ordinary enough people – continues to operate along less extreme lines. Instead of a Big Clash of Civilizations, mass conversion of tens of millions of people to the opposite sex, or the heretical status of carbon, the European Union may very well dissolve... because of a few petty billion dollars.

Net recipients and net payers to the EU budget a few years ago

The U.K. has happily left the European Union and it seems that it will be capable of avoiding the old payments to the EU, indeed. The U.K. has been paying below €9 billion to the EU budget annually, less than half a percent of its GDP (try to appreciate how tiny their percentage of the GDP sent to the EU budget relatively was – if you compare it with the relative importance of the EU in the political discussions in the U.K.). It's been a net payer, the second largest one (well) below Germany and (well) above France and Italy.

The U.K.'s "payments minus spent/received funds" difference was even smaller, well below €1 billion a year, but it may still be visible in the budget discussions. Now, EU27 or BEU, the Britless European Union, plans to pay some 1.07% of the GNI (resident-based cousin of GDP) – according to George Michel, the former Belgian PM who is leading the "European Council", the collection of heads of the nation states. For you to have an idea, the BEU budget is expected at roughly €150 billion a year now, corresponding to the BEU GDP a bit below €15 trillion.

Almost one-half of the budget is supposed to go to the "sustainable" silliness and one-quarter of the budget (a subset) is being promised to go to the complete insanity of the "fight against climate change". One quarter of the money managed by the damn continental institution should be paid to reduce the nightmares of a Scandinavian teenager with brain defects – and it won't be able to do even that, of course.

The biggest net recipients are getting much more from the EU budget than they are paying. So most visibly, Poland pays 0.7% of its GDP to the EU but spends 2.7% of the GDP that came from the EU. The difference is about 2% of their GDP for Poland but only about 1% of our GDP for Czechia. Italy has been a small net payer, Portugal+Spain+Greece+Ireland (plus Luxembourg for some bizarre reasons) have been the net recipients along with all the post-communist countries. OK, the European Council – highest-level representatives of the nation states – gathered in Brussels a day or two ago to discuss the 2021-2027 post-Brexit budget and they don't agree about many things.

The net recipients want to increase what they're getting, despite the disappearance of one of the wealthy uncles, the Briton. Of course, most of the net payers don't want that. The arrogance and unconstructiveness of the net recipients is particularly obvious in the case of the Czech PM Andrej Babiš, a member of the European Council, who especially wants to increase the huge agricultural and similar subsidies (the corporation in his trust gets some 1/6 of all those funds flowing to Czechia). The arrogance with which he can demand others to pour hundreds of millions of Euros into his own pocket is remarkable but you must understand that he may get a majority support even for this kind of behavior in Czechia and I am sometimes in the mood that I support him in his obviously unjustified effort as well – because I like the mess that it creates in the EU that I dislike for more fundamental reasons.

Denmark, Austria, Sweden, and the Netherlands are the "frugal" countries and NL and AT are expected to double their contributions to the EU budget, mostly to compensate the missing British uncle. While the new contributions would still be a small percentage of their GNI, the discontinuous relative increase of their contributions as a function of time would indeed be rather shocking and I completely understand that they dislike it.

Most of the arguments – but not all of them – may be parameterized as the difference between the 1.07% of the GNI for the budget, as proposed by Charles Michel and generally accepted by the net recipients; and demands of many net payers to lower this number below 1.00% of the GNI. Take your brain or your calculator and compute the difference: it's really 0.07% of the GNI that is causing these arguments that have some chance to dissolve the European Union now. 0.07% of the GNI (1/1400) is an undetectable amount of money and the fact that such clashes exist because of such a negligible percentage of the European countries' products proves the absence of generosity on all sides (especially the recipients' side).

This is a sign showing a reality that is actually important, unlike those 0.07% of the GNI, namely that the leaders and nations of different countries don't really want to treat each other nicely. This is what should actually decide about the existence of the EU or at least about the degree of integration of the EU. The comparison with Czechoslovakia before the Velvet Divorce is truly ironic. Both of our nations agreed it was OK to be separated. The process was accelerated by the different results of the mid 1992 elections and therefore managed by Klaus and Mečiar from above (they always liked each other) but the whole nations really accepted it.

On the other hand, despite this divergent trend, everyone agreed to be generous enough because the potential risks from confrontations could have been much more serious than some small percentages of the GDP. In particular, the movable assets were divided to Czechia and Slovakia in the 2-to-1 ratio. That obviously wasn't the precise ratio of the populations although it was surprisingly close: 10.3 million over 5.3 million = 1.94. The ratio of areas was yet another number close to 2. If Czechs and Slovaks lacked the general desire to be harmonious and generous, Slovaks would start by demanding the ratio to be 1.94. Czechs would reply with some other biased proposal and cherry-picked argument, to make the things better for Czechia, and so on.

We didn't do it. The leaders didn't do it because they didn't care and they liked the new setup much more than the inconsequential difference between 2.00 and 1.94 or similar petty details. They knew that to scream that "I want something" isn't the same thing as to get it and we needed to behave cooperatively, in the sense of game theory. Slovak nationalists knew that their second independence in history was much more important than the difference 2.00-1.94, too. But not even the general populaces wanted this kind of pissing contests. So these pissing contests simply didn't happen. With those pissing contests, it would have been obvious that the arguments of (probably) both sides would have been biased and the whole – the territory of former Czechoslovakia – wouldn't gain anything positive.

For some reasons, the EU wants to argue about these trivial amounts of money now. I surely understand why Babiš finds it so important to argue – he is a greedy man and billions of crowns of his personal wealth are at stake (they still haven't been able to terminate the flow of the money into his pocket that clearly represents a conflict of interests and this conflict is more apparent now than at any moment in the past) – but in most of the other cases, the disharmony reflects a genuine disharmony between the whole nations. They just don't want to share things, they don't want to think as a single "demos" let alone a single nation. The interactions between the EU member states' leaders is an uncooperative game from game theory, very different from what the Velvet Divorce was displaying (Václav Klaus, also a nontrivial scholar in economics, loves to use this terminology involving game theory; I surely don't claim any originality).

If they listened to me, I would advise Charles Michel and others to abolish the redistribution altogether, abolish a maximum percentage of all the subsidies, and even abolish the explicit cohesion funds (redistribution from richer to poorer countries). Instead, I would allow the current net recipients to ignore the EU fight against climate change, i.e. primarily the restrictions on CO2, and perhaps some other things. Surely, if I were a leader in the net recipient country, I would instantly accept such a deal.

Again: The arguments about those 0.07% of the GNI primarily show that the EU nations don't think as a single "demos", don't think that everyone in the EU is "we", and they don't want to share. The right reaction to this observation should be to severely reduce the redistribution, severely reduce the homogenization and the production of laws and regulations and policies that are valid across the EU, and reduce the EU to the arrangements that are considered least controversial – to a trading bloc overlapping with a passport area.

At least verbally, my proposal is probably even more heretical – contradicting the Neo-Marxist-Sorosist ideology – than the proposals to change the countries' contributions or spending by a fraction of a percent of the GDP. But in the real world where the hypocrisy finally loses, it's plausible that my proposal could be more acceptable than any proposal that has been circulated so far. This proposal of mine involves some loosening (reversal of the recent integration) of the EU and/or a two-speed Europe and I think that this is exactly what would help everybody these days.