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Ukraine’s accession to the EU would entitle Kyiv to about €186bn over seven years, according to internal estimates of the union’s common budget, turning “many” existing member states into net payers for the first time.
The modelling, the first to emerge from Brussels on the potential accession of nine new member states, underlines the profound political and financial implications of expanding the union across the continent. Clearing a path for Ukrainian membership has been a top priority for EU leaders since Russia’s full-scale invasion last year.
EU officials this summer estimated the potential financial ramifications in a study seen by the Financial Times, which used existing rules for the union’s 2021-27 budget. These were applied to an enlarged union including Ukraine, Moldova, Georgia and six western Balkan states.
The financial tally of adding all nine members to the existing budget, known as the multiannual financial framework, would be €256.8bn, the paper estimates. The knock-on effects for existing member states would include a cut in farm subsidies of about a fifth.
Although full enlargement could take a decade or more and would force big reforms to existing budget arrangements, the estimated scale of change required would decisively tip the financial balance within the bloc.
“All member states will have to pay more to and receive less from the EU budget; many member states who are currently net receivers will become net contributors,” concluded the paper by the secretariat of the EU council.
With nine new member states, the current budget would increase by 21 per cent to €1.47tn, the paper estimates. That equates to about 1.4 per cent of the 36 countries’ gross national income.
The entry of nine states would force a number of “far-reaching” adjustments that could include a significant increase in net budget contributions from richer states such as Germany, France and the Netherlands. “Transitional periods and safeguard measures” would be necessary, the paper suggests.
Applying current rules to an expanded union, Ukraine would be eligible for €96.5bn from the EU’s Common Agricultural Policy over seven years. That financial shift would force cuts in farm subsidies to existing member states of about 20 per cent, according to the study.
Ukraine would also qualify for €61bn in payments from the EU’s cohesion funds, which aim to improve infrastructure in poorer member states. With nine additional member states, the Czech Republic, Estonia, Lithuania, Slovenia, Cyprus and Malta would no longer be eligible for cohesion funding, the study estimates.
The calculations by the general secretariat of the council, the body that represents the bloc’s 27 member state governments, come as the EU weighs up whether to agree to open formal accession negotiations with Ukraine by the end of this year, as Kyiv has requested.
A spokesperson for the EU council said: “We do not comment on leaks.”
EU leaders will meet in Spain on Friday for their first detailed discussions as a group on enlargement and the ways it would change the union.
The study employs a simple extrapolation of the EU’s existing budget rules, which would almost certainly be adjusted in the event of enlargement. It was not developed in conjunction with, or endorsed by, the European Commission, the bloc’s executive. It does not take into account the possible membership of Turkey.
“Whilst for several policies, opportunities may outweigh the costs/risks, and enlargement will bring benefits to the current member states, enlargement will also have far-reaching impacts on the EU budget,” the paper states.
It adds: “[these] very significant challenges for the EU . . . will need to be thoroughly addressed also in order for this new enlargement to be at least accepted, if not supported by our citizens”.
The paper outlines opportunities for the EU from enlargement, including bolstering the EU’s geopolitical clout, increasing the bloc’s internal market size by 66mn people to 517mn, and addressing labour shortages.
But it makes clear that Ukraine’s impact on the EU’s agricultural subsidy regime would be the most significant. Ukraine would be the bloc’s largest recipient, with 41.1mn hectares of utilised agricultural area, pushing France into second place. That would mean payments for existing recipients would fall by 20.3 per cent per hectare of qualifying farmland.
Aside from Ukraine, adding the other eight countries would cost a total of €29.9bn in CAP payments.
“These numbers aren’t going to work for anyone,” said Mujtaba Rahman, managing director for Europe at the Eurasia Group. “They make clear that root and branch reform of the EU budget and its major policies will be needed if Ukraine is to ever join, or that the entire Ukraine question will have to be dealt with innovatively and outside of existing EU budget structures.”
