Migration Costs

Refugee Crisis Sparks Brussels Budget Debate

mogherini brok unhcr by action press
Calls began this week in Brussels to ease E.U. budget constraints to deal with the costs of the refugee crisis. On Wednesday, the E.U. foreign secretary, Federica Mogherini discussed the issue with Antonio Guterres, the U.N. high representative for refugee issues, and Elmar Brok, a member of the European Parliament.
  • Why it matters

    Why it matters

    The refugee crisis could lead to calls for a further softening of the Stability and Growth Pact, which could pose a risk to the euro single currency it was designed to protect.

  • Facts

    Facts

    • Austria and Italy want the cost of caring for refugees to be taken into account in E.U. budget deficit limits, in what would amount to yet another watering down of the Stability and Growth Pact.
    • The German government is opposed to such an exemption but in Germany too, regional politicians are calling for a relaxation of a national fiscal rule called the “debt brake” that commits federal and regional states to balance their budgets.
    • E.U. Commission President Jean-Claude Juncker, who is known for a flexible approach to the stability pact, may grant the exemptions Italy and Austria are seeking.
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    Audio

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“A country mustn’t be punished for being humane and taking in a particularly large number of refugees,” said Austrian Finance Minister Hans-Jörg Schelling.

His country and Italy, another front line state in the refugee crisis, want the European Commission to take the costs of caring for asylum-seekers into account in assessing whether their budgets meet E.U. rules under the so-called Stability and Growth Pact, a set of spending constraints imposed on countries using the euro single currency.

Germany, which demanded the set of austerity mandates back in the 1990s when the euro was created, is predictably against the idea. German government sources said the refugee crisis shouldn’t be mixed with deficit rules, and the finance minister, Wolfgang Schäuble, made his opposition plain to his E.U. colleagues at their last meeting.

But the proposal will be discussed anyway at the next meeting of E.U. finance ministers on October 5 and 6. The Germans may be fighting a losing battle. The E.U. Commission may well grant more budget leeway in response to the worst refugee crisis Europe has experienced since World War II.

Budget discipline is no longer the top priority in Brussels these days. Commission President Jean-Claude Juncker is focusing on economic growth and investments and has said the pact should be interpreted more “flexibly.”

In the current climate, budget rule-breakers don’t have much to fear from him.

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