Last week, the European Council finally adopted the midterm revision of the EU’s Multi-annual Financial Framework (MFF)—the first of its kind in EU history. The most important element of it is undoubtedly the €50 billion aid package meant for Ukraine.
The budget review, however, has three major elements, none less important than the other. The other two pay special attention to the Western Balkan countries’ economic integration ahead of possible enlargement, as well as new financial instruments that help EU member states battle illegal migration at the Union’s external borders and beyond.
We sat down for an exclusive interview with Olivér Várhelyi, the EU Commissioner for Enlargement and Neighborhood, to talk about the different elements of the MFF review. What are the criteria for implementing the Ukraine funds, when can the Western Balkan countries expect to finally join the EU, and what’s behind the sudden ‘pivot to Africa’ in terms of Brussels’ migration management strategy? Finally, we also asked the commissioner about the recent scandal involving the UNRWA and what the Commission plans to do about it.
Why was the MFF review needed?
In short, because we ran out of money. We ran out of money because we were facing challenges that were not foreseeable when the MFF was created. We have Ukraine, something that has evolved along the way, where commitments were made together with the member states. We have the need to accelerate the integration of the Western Balkans, which is why we have a new facility for the Western Balkans. We also need to provide more funds to fight illegal migration, because it is on the rise again. Lastly, we need to do something about our internal competitiveness, as well, which is why the STEP program was proposed to help our companies better weather the economic crisis.
One of the three main pillars of the review was the €50 billion Ukraine Facility, which has been unanimously approved. What are the conditions that the Council agreed on, in terms of any oversight in how the funds are implemented, and why are they important?
This is a new approach we are trying to put in place. It is not only a rescue package for Ukraine to survive the war, but a package through which reconstruction of the country can start. We are providing funding on the condition that the country that is to emerge after the war will be a different one in the sense that it adheres more to our European standards. We provide funding, subject to the delivery of reforms and implementation of the EU set of rules basically in all sectors. The key challenges are fighting corruption and organized crime, better public financing management, creating a viable market economy, and I could go on.
What is the importance of the EU’s promise that the evaluation of the conditionality mechanism in terms of Hungary’s frozen funds will be fair and objective?
That is a decision by the European Council, not a decision by the Commission. I think the leaders have recalled what was agreed back in 2020. I would imagine that this is to reinforce those political agreements when it comes to the implementation of the budget, meaning applying equal standards in a fair manner vis-a-vis each and every member state.
How does the budget review intend to assist the accession of the Western Balkan states and how much money has been pledged?
We are coming up with a completely new approach. What we suggest is not only financing but also front loading all the benefits the accession will bring through so-called gradual integration. This means that they should be integrated into the European markets even before accession. Wherever they can implement our standards, they should be let into the EU single market. To give you one example, and this may be the first area to emerge, we have the Single Euro Payments Area, which, to simplify, makes it the same cost in Europe of banking when you are doing transactions across borders in the EU, significantly driving down business costs but also costs for citizens.
In the Balkans, for example, remittances are a very important source of the GDP. This would drive the costs down enormously once they fully implement our rules. After all, their banking system is largely run by banks owned by European banks, so it should be quite a simple task to apply the same rules pretty soon. Direct investment and doing business costs will also be significantly lower. So we try to frontload all areas where it is possible, and we also ask them to do the same with one another, meaning that they should apply the same principles among the Western Balkan partners as we apply to them with regard to the integration of markets.
Another element, of course, is that there is a significant development gap between the Western Balkans and the EU member states which makes it more difficult for them to compete in our markets. If we integrate them into our markets, it means that we should also help them not only technically and administratively to implement the EU rules, but also help them with the investments these rules require. For example, we should look at the environment and agriculture. Introducing the rules that we have requires a lot of investment in the public area but also in the private sector. We want to also frontload the structural financing, meaning that by the end of this MFF period, with the additional funding of 6 billion euros that was agreed upon as part of the package by the leaders, we could get them up to 90% of aid intensity per capita compared to the current cohesion and structural funds.
In your view, is this commitment to the Western Balkans sufficient?
It is very important. It is aimed at accelerating their accession, but of course, accession will only happen if the decisions related to getting them in are also made. It goes hand in hand. The institutional part of the accession would also have to be accelerated. We have to have more commitment from the EU to actually deliver. This is why you saw, last year, a debate about a possible target date for accession. I think that once we have put all the tools at their disposal to catch up faster and integrate them into the markets, this should trigger their accession. I’m really hopeful that by the end of the MFF, there will be no reason left for the EU to keep them out.
Why have the Western Balkan states been waiting for twenty years for EU membership while Ukraine is being fast-tracked?
I certainly have a personal view on this, but also an institutional one. My personal view is that the previous Commission missed a major opportunity not only to bring the Western Balkans in, but specifically it has declined to engage in any way with the Western Balkans to get them in. We have seen five years of telling them we don’t want them. Leaving a five-year gap has a major impact, also on their level of political motivation and belief that the EU means business. This is what we wanted to change when we took over four years ago, and it’s been quite a struggle to put this back on the tables of the leaders who have managed to make it clear to the Western Balkans that we mean business, we’re getting there, and with the Growth Plan mentioned previously, we want to put this on track so it cannot be reversed. Now, in the middle of this, we have this war created by Russia against Ukraine, which also triggered a new political drive to enlargement of the EU which I hope the Western Balkans will also benefit from.
The official part of my answer is that it is not a good idea to try to create a race between the Western Balkans and Ukraine. The conditions are the conditions, and they have to be applied equally to every single candidate. I do my best to deliver on that. Of course, we see that for some member states the Western Balkans are more of a priority, for other states Ukraine is the priority, or Moldova. What is clear is that the EU will not be complete without the candidate countries. We should work for all of them to get in, whoever meets the conditions first.
What steps are being taken to ensure minority rights in Ukraine during the accession process?
From very early on, we made it very clear that this is part and parcel of the Copenhagen Criteria as it has been with any candidate country or new member state. From Day 1, we made it very clear that compliance with the Copenhagen Criteria, very basic criteria related to fundamental human rights, was non-negotiable. All the proposals that we made were very clear also. It was also made very clear by the European Council that before we can start the actual negotiations, minority rights will have to be addressed in compliance with the recommendations of the Venice Commission.
How much is being spent on migration and what are the instruments that will be funded through this package?
The most important element is the fact that we are receiving additional funding for the Maghreb region to create new partnerships. This agenda should address the root causes of migration. We are also getting additional funding for fighting illegal migration, something I started working on already from the beginning of the mandate and we ran out of money because of the success we have been able to create in the sense that by now it is clear to the Maghreb region as well that illegal migration is not something that is only a danger for the EU member states or Europe as a continent, but equally a danger for the countries of the Maghreb region because the link between organized crime and illegal migration has become very clear.
The link between terrorism, organized crime, and illegal migration is now also apparent to everyone, and it is also clear that these groups can gain significant economic and political influence that makes them perfectly capable of destabilizing these countries. This is why these new partnerships, where we offer our contribution to create more resilient economies, jobs, and growth locally so that the youth emerging in these regions can get real economic and social opportunities back home. We also help these countries protect their borders, return illegal migrants to sub-Saharan Africa, and crack down on the smuggler’s networks. These partnerships are starting to deliver. If you look at the case of Morocco, which has been a frontrunner, we can say that we have been able to address the main challenges and the economic development part is also going ahead.
We also worked with Tunisia, and we’re working with Egypt. I think you will see a different approach being reinforced by these funds.
Is it your view that the strategy of involving African governments in curbing illegal migration and human trafficking is effective?
Yes. Definitely. It is the only strategy.
What has changed with regard to the EU’s migration strategy during your term?
The most important thing that we had to explain, first in Brussels, then in the capitals, is that illegal migration is not something that will just go away by providing shelter to the migrants who are exposed to the smugglers. We need border protection to be built up and reinforced; illegals should not have the right to stay and should be returned home. Otherwise, everybody will continue to turn to the smugglers to get them to Europe. It is not for the smugglers to decide who gets to enter the EU. It should be for the EU and its member states to decide who to let in and who not to let in. That was not obvious back in 2019, but by now I think it is the line across the board.
Is there an estimated timeline for this strategy?
I hope the next Commission will continue this. What we are building now is here to last, but it will only last if it is continued. We are laying the foundation now, and I think that these partnerships are in the interests of the EU and are very much demanded by our partner countries, as well.
The largest EU states have cut funding to the UNRWA but the Commission still hasn’t decided yet. Why?
We have very clearly decided what needs to be done. We expect UNRWA to address a number of issues. We expect UNRWA to have a full inquiry of what has happened by a third party. The Secretary General of the UN has started the process, and we would also like to be involved in that because we would like to see what happens. We want full discovery. We want UNRWA to fully check every staff member to discern whether there are more cases than those already known to the public. We will have to discern, after an assessment, whether they can be a trusted partner to carry out financial operations independently. So we need a lot to clear by UNRWA before we can continue.
Is the funding suspended until the investigation is concluded?
There is no funding imminent. We need UNRWA to first clarify these things and come up with measures to address the problems and prevent anything like this from happening in the future.
