UNDERFUNDING WILL UNDERMINE EU IN LONGTERM.

• Position: European Union

There are few more glaring examples of the EU's so-called "democratic deficit" than matters budgetary. In theory, the power to define the Union's finances is split between the European Parliament and the Council of Ministers, which directly represents the EU's 25 national capitals.

National parliaments have this power as a check-and-balance guarantee against excessive or secretive government spending, and so does the Euro-Parliament, right? Wrong. In reality it is the Council which calls the shots, whatever the illusion of "co-decision" with the Euro-legislature. MEPs can tinker with budget-line allocations within an already-defined budget, but they have very little leverage over national governments to define what the budget itself should be.

Example: MEPs wanted an 11.5-percent increase to the EU's budget for 2005 to accomodate enlargement, a logical argument. But the Council pulled rank November 24 and cut this to 5.9 percent. Though Budget Commissioner Dalia Grybauskaite diplomatically hailed the decision as positive for everyone, more realistically-minded EU officials concede it was the usual bulldozer victory for Council.

Indeed, that very calculated victory will strengthen the "one-percenters" among the former EU-15 countries who want the Union's next financial envelope for 2007-2013 held to 1 percent of the EU's collective gross national income--or less. They also block the European Commission's eminently reasonable argument that the EU needs its own tax source to shield it...