EU plans for AI chips and the Arctic paralyzed by budget deadlock - Politico
Kyiv • UNN
The dispute over the EU budget for 2028–2034 has left plans to develop AI chips and strengthen its presence in the Arctic without funding. Farmers and regions are also demanding guarantees.
Europe’s push to accelerate the production of artificial intelligence chips and its plan to strengthen its presence in the Arctic are among the key EU policy issues that have become bogged down in the deadlock surrounding the bloc’s seven-year budget in Brussels. Politico reports, UNN writes.
Details
European politicians say they cannot move forward with their initiatives without sufficient clarity on proposals related to EU funding, as the deadlock in negotiations over the size of the EU budget for 2028–2034 means that financial allocations after next year are unknown.
"There is an increase in sectoral legislation with objectives that require multiyear budget commitments," said a person involved in the EU budget negotiations. "But the budget negotiations are detached from the political discussions."
EU governments are rushing to reach an agreement among themselves on the overall size of the budget by the end of the year. The so-called frugal countries, which insist on significant cuts to budget spending—Germany, the Netherlands, Austria, Sweden, Denmark and Finland—have publicly stated that the proposal by the Irish presidency of the Council of the EU, which provides for spending cuts of €159 billion, is insufficient.
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The deadlock has not prevented the EU executive from repeatedly making its political plans and ambitions public, even though it cannot confidently secure the funds necessary to implement those plans, the publication notes.
A striking example is the European Commission’s recent presentation of its strategy to strengthen the EU’s presence in the Arctic amid growing military and commercial activity in the region. It included plans to develop transport networks, projects to supply critical raw materials, and establish a maritime security center in the region. But these plans were presented without any details on funding, the publication notes.
European Commissioner for International Partnerships Jozef Síkela said at the time that it was "impossible" to guarantee future funding because of the ongoing budget negotiations.
A similar warning appeared in the EU’s wide-ranging plan to develop semiconductor production, aimed at reducing dependence on foreign technologies and increasing the production of chips used in artificial intelligence models. The proposal clearly stated that it could not "anticipate or prejudge" the outcome of negotiations on the EU’s next seven-year budget, and that funding for the planned projects "may only be requested at a later stage."
These statements angered lawmakers in the parliaments of several countries in the bloc, who may not have been following the budget battles and the EU’s legal intricacies, the publication notes. Germany’s Bundesrat, as well as the lower house of Italy’s parliament and the Czech Senate, submitted their comments on the EU’s semiconductor production plan, asking the European Commission to clarify the available budget.
The Czech Senate’s resolution pointed to "uncertainty related to the long-term financing of the proposed measures" and called for the objectives to be "backed by adequate and predictable resources."
Budgetary uncertainty creates difficulties both for drafting legislation and for its implementation. Some governments have complained that they cannot comply with the rules without knowing how much funding will be available at the EU level to implement the plans.
Redistribution of funds
The uncertainty extends even to the regular main recipients of EU funding—farmers and regions, which do not know how much money they will receive in the coming years.
The main new idea in the European Commission’s next budget proposal is to give governments greater discretion to redistribute funds among different priorities.
European Commission officials regularly complain that the current budget, in which more than 90 percent of funding was initially earmarked, left them ill-prepared to deal with the COVID-19 pandemic, numerous energy crises and the war in Ukraine.
Although the new budget is intended to improve the readiness of Brussels and the governments of the bloc’s countries for unforeseen crises, it has come under criticism for its unpredictability.
For this reason, regional leaders and agriculture ministers, who together receive nearly half of all EU payments, are seeking to increase their share of such guaranteed funding during the ongoing negotiations, the publication notes.
Under the new budget architecture, regions and farmers are largely competing for the same financial package. Although the European Commission has allocated €217 billion for poorer regions over the next seven years, the governments of the bloc’s countries have considerable latitude in determining funding for wealthier regions. These changes have angered the regions, which are calling on the European Parliament to strengthen guarantees for local communities.