Amy has MA degrees in History, English, and Theology. She has taught college English and religious education classes and currently works as a freelance writer.
The Multiannual Financial Framework
Do you ever sit down and plan your financial future? Do you try to set priorities for yourself and control what you spend? Do you deliberately decide to spend more money on one activity or area of your life than on others? Do you set a firm limit for your overall spending? If you do, then you are in good company, for the European Union does the very same thing with its Multiannual Financial Framework.
The Multiannual Financial Framework is the European Union's tool for long-term financial planning and spending control. The Framework sets ceilings for overall and annual spending, lays out spending categories that reflect the Union's priorities, sets spending limits for each of those categories, and provides financial discipline and order to help the Union meet its goals. Every few years, the European Commission proposes a new Multiannual Financial Framework, which then must receive the European Parliament's consent and the unanimous approval of the Council of the European Union.
The Multiannual Financial Framework covering the period from 2014-2020 sets a commitment ceiling of 960 billion Euros for that period. These funds come from the European Union's traditional own resources (TOR), like customs duties, taxes on the Union's member states, and standard contributions from member states. The Framework divides these 960 billion Euros into six spending categories, trying to make sure that everyone gets a fair slice of the Union's financial pie. We'll spend the rest of this lesson looking briefly at each of these categories.
Smart and Inclusive Growth
The Framework's first category is 'Smart and Inclusive Growth.' It gobbles up 47% of the Union's allocated funds. This category focuses on developing Europe's potential in science, education, business enterprises, and communication and transportation networks. For instance, the Horizon 2020 program for research and innovation receives its funding through this category. Horizon 2020 encourages science and industry to work together for positive social change. Erasmus+ (a program that offers young people opportunities in education, training, and sports), the Youth Employment Initiative, and the Cohesion Fund (which supports development in struggling countries) also fall under this category.
Sustainable Growth: Natural Resources
Another large chunk of the Framework's financial pie, 38.9% of it, goes to its second category: 'Sustainable Growth: Natural Resources.' This category encourages the proper use and conservation of Europe's vast natural resources. It helps fund rural development initiatives, like the European Agricultural Fund for Rural Development, offers income assistance to farmers, and manages environmental programs.
Security and Citizenship
A third, smaller chunk of the European Union's financial pie, only 1.6%, goes to the Framework's third category: 'Security and Citizenship.' Money allocated here goes to food safety and public health initiatives, like the Health for Growth program, consumer protection efforts, the Asylum and Migration Fund to assist immigrants and refugees, and the Internal Security Fund to aid law enforcement and border management.
The Multiannual Financial Framework's fourth category, 'Global Europe,' slurps up 6.1% of the European Union's allocated funds. Through this category, the Union interacts with nations outside its membership, providing humanitarian aid and development assistance throughout the world. This category pays for such programs as the European Neighbourhood Instrument, which strengthens relationships between the Union and other countries; the Instrument for Pre-Accession Assistance, which helps nations that are getting ready to join the Union; and the Common Foreign and Security Policy, which handles peace-keeping and self-defense issues.
Administration and Compensations
The last two categories of the Multiannual Financial Framework are 'Administration' and 'Compensations.'
The former, which consumes 6.4% of the European Union's financial pie, handles operating costs for the Union and its institutions. Basically, it takes care of everyday business.
The latter consists of a few temporary payments to countries who have recently joined the Union to help them cover the costs of new membership. The current Framework offers such compensation to Croatia for one year. While the funds used for this assistance make up such a small piece of the pie that they don't even register as 1%, they are still very important to the country receiving such aid.
The creators of the Multiannual Financial Framework are all too aware that unforeseen emergencies and necessities can and do arise. That's why they established several flexibility mechanisms to handle extra expenses. For instance, the Emergency Aid Reserve provides protection, crisis management, and humanitarian aid to countries in danger or desperate need, while the Solidarity Fund covers relief for countries suffering from natural disasters. Also, the Flexibility Instrument handles expenses within the Union that come up after the Framework is already firmly in place. It might cover things like new energy projects that take advantage of the latest developments.
Let's review. The Multiannual Financial Framework is the European Union's tool for long-term financial planning and spending control. The Framework sets ceilings for overall and annual spending, lays out spending categories that reflect the Union's priorities, sets spending limits for each of those categories, and provides financial discipline and order to help the Union meet its goals.
The Multiannual Financial Framework covering the period from 2014-2020 sets a commitment ceiling of 960 billion Euros for that period and divided these funds between six spending categories:
1. 'Smart and Inclusive Growth,' which focuses on developing Europe's potential in science, education, business enterprises, and communication and transportation networks
2. 'Sustainable Growth: Natural Resources,' which encourages the proper use and conservation of Europe's vast natural resources
3. 'Security and Citizenship,' which focuses on food safety, public health, consumer protection, immigration, and internal security
4. 'Global Europe,' which helps the Union interact with nations outside its membership
5. 'Administration,' which handles the operating costs for the Union and its institutions
6. 'Compensations,' which offers a few temporary payments to countries who have recently joined the Union
The creators of the Multiannual Financial Framework, realizing that unforeseen emergencies and necessities can and do arise, have established several flexibility mechanisms to pay for extra expenses that otherwise might make the European Union's carefully planned financial pie explode all over the place.
View this lesson, then display your ability to:
- Emphasize the goals of the Multiannual Financial Framework
- Enumerate the six spending categories of this framework
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