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| A weekly newsletter zooming in on Europe through local perspectives. Every Friday, one topic explored by five independent newsrooms. | | IN THIS ISSUE | §01 · In focus — The Battle for EU Billions: Can the EU Strike a Budget Deal by the end of the year
§02 · The local view — Berlin, Riga, Warsaw, Vienna and Zagreb
§03 · The podcast — Listen to the latest episode and join the conversation
§04 · From the newsrooms — Recent reporting from the lensEU network |
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| §01 · IN FOCUS | The Battle for EU Billions: Can the EU Strike a Budget Deal by the end of the year | Croatia's prime minister had a busy start to the new political season. He opened a new kindergarten. He attended the signing of a contract to build a railway line. He was at the opening of a restored castle. He toured the renovated buildings of several university faculties. He opened a geothermal leisure park. Last week alone, he visited a refurbished museum, a faculty building, a restored spa resort, a hotel, and a botanical garden. | Andrej Plenković's schedule has indeed been packed in recent weeks. But by the standards of Croatian politics, there is nothing unusual about it. Contract-signing ceremonies and ribbon-cuttings have long been a staple of government PR here, largely thanks to European money. | Nearly all of these projects – the geothermal pools, the spa, the railway, the castle – were co-financed by the European Union through either the Recovery and Resilience Facility or the European Structural and Investment Funds. | EU money matters to the Croatian government for at least two reasons. The first is political: much of its PR is built on EU-funded projects. The second, and more important, is economic: Croatia is one of the member states whose development – especially in poorer regions such as Slavonia, in the east of the country – still depends almost entirely on European money. By the government's own estimates, around 70 percent of public investment in Croatia is funded from the EU budget. | Without EU funds, public investment in kindergartens, schools, swimming pools, railways, and water and sewage networks would not disappear, but it would be far smaller, and the state would probably have to borrow to pay for it. That is why the negotiations on the EU's next Multiannual Financial Framework (MFF), for the period 2028-2034, the bloc's long-term budget, matter so much to Croatia. | Talks about money in the EU are always long, bruising, and unpredictable, and these are no exception. Member states have split into two broad camps. On one side are the 17 so-called Friends of Cohesion, who want to protect funding for the EU's traditional spending policies: cohesion, which aims to narrow development gaps between regions, and agriculture. The group includes Italy, Spain, Portugal, Greece, Poland, Hungary, the Czech Republic… – as well as Croatia. | The other camp is smaller but carries significant economic and political weight. Led by Germany, its members are net contributors: they pay more into the EU budget than they get back. They argue that the proposed budget is too large and are pushing for deep cuts. | October's EU summit brought little progress and did little to narrow the gap between the two sides. European Council President António Costa has since taken personal charge of the talks and will present a new negotiating proposal ahead of an extraordinary summit on November 26–27. | Nearly every key question remains open. How much will the EU have to spend between 2028 and 2034? What will the money go on? How will it be split between "old" and "new" priorities? Does the EU really spend too much on cohesion and farming, or do these two traditional policies still deserve a large slice of the pie? | Has the time come to shift common funds decisively toward new priorities such as competitiveness, defense, and security? If so, should the overall budget be bigger, so that there is enough for everything? And finally, where will the money come from – which new "own resources," on top of existing revenue streams, are member states prepared to accept? | In this newsletter, and in this week's podcast, we try to answer some of these questions from the perspectives of Austria, Poland, Latvia, and Croatia. | But with the EU budget, it is not only the big picture that counts. The details matter too – details that attract little attention now but could have profound, long-term consequences for member states, their development, and their ability to catch up with richer, more competitive economies. | Chief among them is the proposed European Competitiveness Fund, a new instrument in the next long-term budget designed to help the EU invest more strategically and keep pace with global rivals such as China and the United States. | As currently proposed, the fund would have no national envelopes – sums reserved in advance for each member state, as under the structural and investment funds. Croatia is among the countries worried that its companies, start-ups, and research institutes would struggle to compete in such EU-wide tenders, and that most of the money would end up in regions that are already strong in innovation, science, and industry. | For the EU's less developed regions, the consequences could be devastating. Areas that have yet to catch up with wealthier parts of the Union could fall even further behind, and cohesion funds, earmarked for poorer regions, would simply not be enough to close a new and even wider development gap. | Although the loudest arguments are about spending, revenues matter at least as much. There can be no political deal on the next budget without agreement on new sources of income – the so-called "own resources." | Several proposals are on the table, including resources linked to the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM), tobacco excise duties, uncollected electronic waste, and large companies operating in the single market. Here, too, there is no consensus. | Time, meanwhile, is running short. There is strong pressure to strike a deal by the end of this year, before a busy 2027 election calendar – including votes in France, Italy, and Poland – complicates the talks or turns the budget into a campaign issue. Not everyone, however, accepts this self-imposed deadline. | "Whether we will succeed [in reaching an agreement] by the end of the year is a big political question. Croatia's position is that the quality of the final agreement matters far more to us than a fixed timetable designed to avoid major political challenges next year," Plenković said. | If the November summit narrows the gaps, a deal could be sealed at the regular European Council in December. But positions remain so far apart that there is a real chance agreement will slip into 2027. | Irena Frlan Gašparović, journalist, Telegram.hr |
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| | Riga · Latvia · TVNET | Latvia Does Not Want to Lose Billions in EU Funding | Difficulties in reaching an agreement on the EU's next long-term budget are worrying news for Latvia. Between 2021 and 2027, the country was allocated €4.4 billion under the EU's cohesion policy - more than one-tenth of its GDP in 2024. | For the next budget period, the European Commission has provisionally earmarked €9.3 billion for Latvia, this time as part of a broader funding package that also includes agriculture and other priorities. | Latvia is a member of the "Friends of Cohesion" group and is pushing to preserve funding for regional development and farmers, while also seeking additional resources for defence, eastern border security and the troubled Rail Baltica project. Meanwhile, Latvian farmers fear a 20% cut in funding, equivalent to €650 million. | The Latvian government also supports the creation of a new European Competitiveness Fund, although securing money through EU-wide competitive calls without guaranteed national allocations could prove challenging. While some funding was previously reserved for individual member states, Latvian businesses may now have to compete more directly with their counterparts in wealthier EU countries, which often have greater resources at their disposal. | This could further widen economic disparities within the EU. The Latvian Association of Local and Regional Governments is therefore urging municipalities and other potential applicants to prepare their projects well in advance to avoid losing out to better-prepared competitors. | Andrejs Timofejevs, TVNET GRUPA, journalist |
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| | Warsaw · Poland · OKO.press | Poland: Keep the budget as big as proposed by the EC | Poland insists that the European Union’s next long-term budget, covering 2028–2034, should be no smaller than the European Commission’s original proposal, unveiled in July 2025. The Polish government has therefore criticised the negotiating box presented by Ireland’s presidency of the Council of the EU on October 10th, which envisages cutting the budget by 8% compared with the Commission’s initial proposal. | In the negotiations, Poland belongs to the group known as the “Friends of Cohesion”, which is pressing to preserve funding for both cohesion policy and the Common Agricultural Policy (CAP). Under the current 2021–2027 financial framework, Poland received the largest allocation of cohesion funding in absolute terms and was the fifth-largest beneficiary of the CAP. | At the same time, Poland has made clear that it would oppose any reduction in funding for security and defence. Donald Tusk, the prime minister, reportedly made that commitment at the EU summit in October. | Poland also supports the introduction of new sources of revenue for the EU budget, known as “own resources”. But Mr Tusk’s government wants Brussels to raise additional money primarily through the Carbon Border Adjustment Mechanism (CBAM) and, potentially, a new contribution from the largest companies, known as CORE. | It opposes diverting existing national revenues, such as proceeds from the EU Emissions Trading System (ETS) or tobacco excise duties, into the EU budget. The principle is that new own resources should generate genuinely additional revenue, rather than merely transfer money from national treasuries to Brussels. | There is also an important political complication. Any new decision on the EU’s own resources requires unanimous agreement among member states. In Poland, it must also be ratified by parliament and signed by the president. That gives Karol Nawrocki, Poland’s president, a potentially decisive role in the negotiations. | The Polish government also backs the Commission’s proposal to abolish the so-called budget rebates – correction mechanisms that reduce the contributions of five net contributors: Austria, Denmark, Germany, the Netherlands and Sweden. Warsaw argues that these arrangements shift a disproportionate share of the financial burden onto poorer member states, making the EU’s system of own resources more regressive and less equitable. | Paulina Pacuła, journalist, OKO.press |
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| | Vienna · Austria · Die Presse | Ride of the Valkyries: The EU budget negotiations are turning into a real drama | Negotiations on the EU’s financial framework follow their own logic, based on a fundamental rule of arithmetic: minus times minus always equals plus. Viewed from this perspective, the Irish Presidency’s proposal is heading in the right direction, as the Irish were widely criticised from all sides for their draft budget for 2028–2034. | For some, the proposed cut of 141 billion euros was too small; for others, it was too large. The decision to maintain agricultural subsidies drew praise from some quarters and criticism from others. The only point on which there was criticism across the board was the reduction in the reserve set aside for unforeseen expenditure. The Irish proposal wasn’t quite good enough for everyone to agree on it after an operetta-like tug-of-war at night-time summit meetings in Brussels. | Austria justifies its opposition to a massive increase in the Union’s budget on the grounds that, in times of austerity measures, a substantial surplus in the EU’s accounts cannot be sold to the electorate. However, this position is weakened by the insistence on a) the Austrian rebate on the EU budget (around 560 million euros annually), and b) the retention of EU subsidies for Austrian farmers. It simply won’t work out that way. | Of the three available options, the EU can only choose two: if it wants to support tried-and-tested measures and make savings, there will be hardly any money left for innovation. If it wants to promote innovation and make savings, this can only be at the expense of tried-and-tested measures. And if it does not want to give anything up, it cannot make savings. This is further complicated by the fact that the EU intends to begin repaying its COVID-19 debts from 2028 onwards. | Europeans must therefore manage to square this triangle of options. The risk of this manoeuvre failing is not particularly high, as in the event of a fiasco everyone would lose out – including net contributor Austria, as its rebate expires with the old budget. However, the 2027 election calendar restricts the room for manoeuvre, which increases the risk of an unintended failure. | And so, this time round, the budget negotiations are a grand opera – a Ride of the Valkyries. | Michael Laczynski, EU editor, Die Presse |
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| | Zagreb · Croatia · Telegram.hr | EU budget talks: high-stakes for Croatia's future | In the negotiations on the EU's next long-term budget, the Croatian government has two main goals. The first is to preserve adequate funding for cohesion and agriculture. Since Croatia joined the EU in 2013, these two policies have been the country's most important source of money for balanced regional development and for its farm sector. | The second is for Croatia to remain a net recipient – that is, to receive more from the EU budget than it pays in – throughout the next seven-year financial framework, which runs from 2028 to 2034. | That is harder than it was a decade ago. As its economy has grown, Croatia has been paying more into the common budget every year. According to Ministry of Finance data obtained by Telegram, its contribution rose from €710 million in 2024 to €825 million in 2025 and is expected to reach €970 million this year. The government estimates that annual contributions will average €1.5 billion over the next financial framework. | Even so, the government expects Croatia to remain a net recipient. Under the negotiating proposal published in October by the Irish presidency, Croatia would receive about €7 billion more than it pays in over the seven years, Prime Minister Andrej Plenković said in mid-October. The proposal has not been agreed upon, but the government is broadly satisfied with it. | It does, however, object to several of the proposed new "own resources" and rejects some outright. "A tax that would include tobacco products is in no way acceptable to Croatia," Andrea Metelko-Zgombić, a state secretary at the Ministry of Foreign and European Affairs, said. On other proposals, the government is open to negotiation. | Irena Frlan Gašparović, journalist, Telegram.hr |
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| §03 · THE PODCAST | The fight over the EU’s next Budget | Nearly 2 trillion euros, seven years, and no deal in sight. After the October summit in Brussels, EU leaders are still divided over the Union’s next long-term budget for 2028–2034, which covers everything from railways and schools to farms, research and defence. In this episode of EU Lens, we look at what is really at stake. | Why do net contributors like Germany and the Netherlands want a smaller budget, while Croatia and Poland are fighting to protect cohesion and agricultural funding? How much does Croatia’s development depend on EU money, and why does the Croatian government see the budget as a political issue as much as an economic one? | |
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| Will smaller and less developed countries lose out if more funding goes through EU-wide competitive programmes such as Horizon Europe and the new European Competitiveness Fund? Where will the new money come from: carbon border taxes, emissions trading revenue, a tobacco levy, or large corporations?
And why are Brussels and national capitals racing to close a deal before the 2027 elections in France, Italy and Poland, where Marine Le Pen promises to cut France’s EU contribution? Reporting from Zagreb comes from Telegram.hr, with a report from Warsaw by OKO.press. |
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